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As long as the metrics are consistent, then for most applications it doesn't matter whether they precisely measure actual unemployment, only that they track it.

As long as the metrics are consistent, then for most applications it doesn't matter whether they precisely measure actual unemployment, only that they track it. The second graph indicates that this generally holds true, with some divergence due to the Great Recession. Public policy initiatives are pretty blunt instruments, and it is usually enough to say that they are working when the unemployment index is going down and not working when it's going up. Anything beyond that is relying on a level of precision that neither the measurements nor the policies justify.

trendia 10y ago
That's not entirely true. Consider the metric "Yearly Income" which has been consistently measured for decades. It is a proxy for "Total Compensation" but isn't exactly the same because the latter includes health benefits, vacation pay, etc. In the last decade, total compensation has risen drastically while income has not. If you only measure income, then it will appear as though the lowest paid fulltime workers did not see as great of gains as the highest-paid workers, when in fact the difference is much smaller when you include health benefits. So, income is an example of a consistently-measured metric that does not really corelate with the attribute that most people would care about (total compensation) and thus does not act as a good proxy for the measured attribute.
- vannevar 10y ago
  But in the employment case, the proposed 'improved' metric tracks very closely, with some divergence around the recession. Obviously, if that divergence continued indefinitely so that the metrics didn't track together anymore, your argument would hold. As a side note, the increase in income inequality is not "much smaller" when benefits are included. See for example https://ourworldindata.org/incomes-across-the-distribution/ https://ourworldindata.org/incomes-across-the-distribution/. The gap is almost entirely due to soaring executive compensation, and since there is no correlation between performance and executive compensation (some studies even show an inverse correlation: https://cooleypubco.com/2016/07/25/new-study-shows-inverse-correlation-between-ceo-pay-and-performance-over-the-long-term/ https://cooleypubco.com/2016/07/25/new-study-shows-inverse-c...), any natural brake on the spiraling salaries seems to have failed.

trendia 10y ago

That's not entirely true. Consider the metric "Yearly Income" which has been consistently measured for decades. It is a proxy for "Total Compensation" but isn't exactly the same because the latter includes health benefits, vacation pay, etc. In the last decade, total compensation has risen drastically while income has not. If you only measure income, then it will appear as though the lowest paid fulltime workers did not see as great of gains as the highest-paid workers, when in fact the difference is much smaller when you include health benefits. So, income is an example of a consistently-measured metric that does not really corelate with the attribute that most people would care about (total compensation) and thus does not act as a good proxy for the measured attribute.

vannevar 10y ago
But in the employment case, the proposed 'improved' metric tracks very closely, with some divergence around the recession. Obviously, if that divergence continued indefinitely so that the metrics didn't track together anymore, your argument would hold. As a side note, the increase in income inequality is not "much smaller" when benefits are included. See for example https://ourworldindata.org/incomes-across-the-distribution/ https://ourworldindata.org/incomes-across-the-distribution/. The gap is almost entirely due to soaring executive compensation, and since there is no correlation between performance and executive compensation (some studies even show an inverse correlation: https://cooleypubco.com/2016/07/25/new-study-shows-inverse-correlation-between-ceo-pay-and-performance-over-the-long-term/ https://cooleypubco.com/2016/07/25/new-study-shows-inverse-c...), any natural brake on the spiraling salaries seems to have failed.