Guide to Economic Indicators, Making Sense of Economics

Guide to Economic Indicators, Making Sense of Economics

Turner, Sue

Guide to Economic Indicators, Making Sense of Economics, The Economist, £20, ISBN 978-1-86197-947-6

One of a well-established series produced by The Economist, thisguide purportsto explain all you need to know in order to understand and interpret economicfigures. It contains three introductory sections and ten other chapters covering a wide variety of the more commonly quoted economic statistics, from the Big Mac index to the sourcesof economic growth by way of business confidence and the savings ratio. There is a good index and a list of good websites. It iswritten for the non-specialist but intelligent reader, hence the expectation that it should be of use to an A level economist.

The opening chaptersexplain the sources of economic statistics and cover the essential mechanics-index numbers, weighting, measuring change, volume and value, current and constant, and how to measure an economy. There isa useful paragraph devoted to the problems of reliability. One of the most useful sect ions is on interpretation of data, which sets out and discusses the first questions to ask when you come across any indicators.

* Who produced the figures?

* Will the data be revised?

* To what period do the figures relate?

* Are the data seasonally adjusted?

* What were the start points and end points for changes?

* What about inflation?

* What other yard sticks will aid interpretation?

This provides a useful toolkit for students undertaking any examination in which they are presented with data. Those required to evaluate data, for instance for AQA paper ECN4W, could do worse than memorise the list as an automatic response to seeing any tables of statistics.

Much of what follows in chapters 4 to 13 covers the essential language of economics, one reads of cycles, circular flow, trends, capacity and much more. It applies a standard format to each of the measures covered. For example, it sets out for capacity use and utilisation:

Measures: Extent to which plant and machinery isin use

Sgnificance: Indicator of output and inflationary pressures

Presented as: Percentage of total capacity

Focus on: Absolute level and trends

Yardstick: 80-90%; more may be inflationary, less indicates room for growth

Released: Monthly, 1-3 monthsin arrears; revised

The overview on utilisation briefly discusses relevant conceptssuch as capital investment, capacity use and total capacity. As an exercise in compact economic writing it has much to recommend it.

The chapter on growth: trendsand cycles is particularly excellent, with the paragraph on expansion applying economic terminology to the explanation of events in a model fashion. I read the start of the chapter on the balance of payments to my students and was delighted to find that someone else believes that this account is perfectly straightforward, and not the stuff of nightmare as some of them believe.

Now, by no stretch, isthisthe most exciting item on the bookshop shelf. Despite The Economist itself being full of coloured graphs, photographs and cartoons, you will search in vain for the tiniest gesture towardsthe need to capture the reader’s imagination – functionality is all. All graphs are severely set out in black and white and even the paper has a feel of the 1960s textbook (some of us can remember that far back I’m sad to say). So your students will not be riveted by the publishing technology.

Each chapter starts with a (mostly) whimsical quotation by someone famous, such as Kirk Kerkorian’s observation that: “If economists were any good at business, they would be rich men instead of advisers to rich men.” It is a pity that, with all the resources of The Economist, some more unusual quotes were not deployed. However, the book performs the task as claimed on the dust jacket -a practical account of the main indicators. At £20 for the hardback version, it would be an expensive investment to buy for every pupil, but I would recommend one or two copies per school and suggest setting an early investigative task requiring students to use the text as an aid to explaining some statistical items found on the web. Definitely one for the economics or business department library.

Sue Turner, review s editor.

Copyright Economics and Business Education Association Summer 2007

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