dr. D.K. (Daniel) Mügge dr. D.K. (Daniel) Mügge Faculty of Social and Behavioural Science Programme group: Political Economy and Transnational Governance

The Political Economy of Macroeconomic Measurement

FickleFormulas in 3’12”

Prof. dr. Daniel Mügge
Political Science Department,
University of Amsterdam

Statistics about economic activities are critical to governance. Measurements of growth, unemployment and inflation rates, public debts – they all tell us ‘how our economies are doing’ and inform policy. Citizens punish politicians who fail to deliver on them.

FickleFormulas has integrated two research projects at the University of Amsterdam that ran from 2014 to 2020. Its researchers have studied the origins of the formulas behind these indicators: why do we measure our economies the way we do? After all, it is far from self-evident how to define and measure economic indicators. Our choices have deeply distributional consequences, producing winners and losers, and they shape our future, for example when GDP figures hide the cost of environmental destruction.

Which factors shape the formulas?

Criticisms of particular measures are hardly new. GDP in particular has been denounced as a deeply deficient measure of production at best and a fundamentally misleading guidepost for human development at worst. But also measures of inflation, balances of payments and trade, unemployment figures, productivity or public debt hide unsolved and maybe insoluble problems. In FickleFormulas we have asked: which social, political and economic factors shape the formulas used to calculate macroeconomic indicators?

Talking to the people who live and breathe them

In our quest for answers we have mobilized scholarship and expertise scattered across academic disciplines - a wealth of knowledge brought together for example here. We have reconstructed expert-deliberations of past decades, but mostly we wanted to learn from those who actually design macroeconomic indicators: statisticians at national statistical offices or organizations such as the OECD, the UN, the IMF, or the World Bank. For us, understanding macroeconomic indicators has been impossible without talking to the people who live and breathe them.

An academic and a practical face

The FickleFormulas project has had both an academic face and a practical one. As scholars we have been intrigued that macroeconomic indicators have been so much of a social-scientific blind spot, while they stand so central in how we run our societies and planet. As citizens, we have felt the mission to create awareness among of the political choices that are built into economic indicators like unemployment estimates and inflation measures.

Essential to understand

We neither believe that indicators are plain wrong, and that we have accurate alternatives, nor that pressing our societies into spreadsheet columns inevitably generates bad policy. Governance by numbers has its faults, but for the time being it will remain part of our toolbox. Collective decisions – about pensions, environmental policies or job creation – require that we simplify the infinitely complex world in which we live. Numbers are indispensable to that task. The point therefore is not to do away with them, but to improve our understanding of their origins, biases, limits and unseen effects.

A broad team of scholars

During its lifetime, a broad range of scholars have worked on FickleFormulas, led by Daniel Mügge as principal investigator. They include, with links to some of their key publications, Juliette Alenda-Demoutiez, Roberto Aragão, Ana Carillo-Lopez, Daniel DeRock, Joan van Heijster, Lukas Linsi, Tobias Tesche, and Jessica de Vlieger.


Funding and Grants

Our research has been generously financed by the European Research Council (ERC Starting Grant [637883]) and by the Netherlands Organisation for Scientific Research (Nederlandse Organisatie voor Wetenschappelijk Onderzoek, Vidi grant [016.145.395]).