DISCOVERING STATISTICS USING SPSS

Discovering Statistics Using SPSS

Discovering Statistics Using SPSS

Introduction

The importance of information in economic and political processes is widely recognised by modern theories. This information, coupled with the advancements in Information and Communication Technologies (ICT) has changed the way in which markets and societies work. The availability of the Internet and other advanced forms of media have made information more accessible to citizens than ever before. Therefore, the ideal of the “fully informed decision maker” should be a reality. Unfortunately, this is far from the case. As Einstein put it, “information is not knowledge” and although citizens are bombarded by information on a constant basis, this bombardment does not necessarily bring about knowledge.

Can statistics tell us anything important about politics?

Several studies have analysed the characteristics of the knowledge society, as well as its impact on the production of “official” statistics. In this paper we will not enter into this debate, but we will try to analyse the role of statistics in building a knowledge society and improving the democratic control of policy makers. The paper is organised as follows: in the next section we analyse the relationships between information, expectations and economic theory, highlighting how the latter has emphasised the role of asymmetric information to explain the behaviour of economic agents. In the third section the euro changeover will be discussed to show the problems that can arise when a country does not trust official statistics. In the fourth section the nexus between information and political sciences will be discussed, while the fifth section is devoted to show how indicators can be useful to improve democratic processes. Various approaches to the measurement of societal progress and the role of “key indicators” in this respect are analysed in the sixth and seventh sections. Some concluding remarks will follow.

The relationship between information and economic theory was first analysed by neoclassical economists. In the context of Walrasian equilibrium, economic agents are supposed to not only act in a perfectly rational way, but to also be fully informed about relevant economic facts, such as the quality of goods, prices, etc. This assumption has been criticised by more recent theories and models. In particular, since Nash and others developed “Games Theory”, economics has changed quite a bit. The introduction of asymmetric and incomplete information in economic models stimulated new approaches in microeconomic, macroeconomic and public economic analyses. In short, the neoclassical point of view, in which all that is needed for functioning markets and the achievement of social welfare is the presence of a price system, a government that supplies public goods and makes contracts enforceable, is now considered unsustainable.

For example, Akerlof (1970), studying the market for car “lemons” (i.e. the market in which the seller has private information about the quality of goods supplied, while the buyer has not) demonstrated that, in such a situation, the buyers have to make an expectation on the quality of the car and that, in equilibrium, only bad quality cars are ...