Tyranny of numbers

The Ahmadinejad-Karrubi debate: and the loser is …

Posted in General, Inequality, Macroeconomy by Djavad on June 8, 2009

Statistics.  Between the two of them it was hard to tell who won that debate on June 6, 2009.  But statistics was a certain loser.  Mr. Ahmadinejad provided a series of charts to defend his economic record (which, by the way, was not under attack that night) but Mr. Karrubi dismissed them by simply saying that his numbers were wrong.  Most of the numbers I was able to see on the television screen seemed right to me.  But, unfortunately, numbers were not the point of the debate.

It is a good thing that at election times politicians should defend their record.  It provides the incentive to implement policies that can be defended.  Overall, there is more of this in this election than in past elections.  But, on this particular night there was little serous accounting as far as the economy is concerned.  There was instead attack on the producers of the numbers, who need to be defended if the performance of elected officials (as distinct from their personalities) is to become the point of election debates.

I can’t vouch for the veracity of all the numbers that Mr. Ahmadinejad presented that night, but a couple were easy to verify.  His claim that the economy had grown by over 6 percent per year during his administration is based on the Central Bank data, which I see no reason to dispute. Past data from CBIRI has held up to scrutiny and I doubt they would risk their reputation by bending the numbers to suit Mr. Ahmadinejad.  After all, there was an oil boom for which the President cannot take any credit, and it is natural for some sectors in the economy to grow when outside resources increase.   Services and import-dependent industries always gain with cheap foreign exchange.  Mr. Karrubi could have easily hit back by pointing why the economy grew, as well as how it grew: some tradable sectors, such as textiles and sugar, lost big time.  Further, he could have blamed the current recession for over-spending in earlier years by Mr. Ahmadinejad. But Mr. Karrubi chose to say that numbers are not trustworthy, which is to throw the baby with the bath water.

The other statistic I can believe is that inflation is down to 15 percent.  Of course, Mr. Ahmadinejad was talking about the annualized inflation rate of the most recent month, not for 1387 (2008-09) for which inflation was 25 percent.  Besides this, Mr. Karrubi could have pointed out to the fact that inflation is down despite, not because of, Mr. Ahmadinejad; that the Central Bank governor, Mr. Tahmasb Mazaheri, lost his job trying to bring inflation down, for which Mr. Ahmadijead not wants to take credit.

Finally, I suspect that Mr. Ahmadinejad’s claim about increasing equality in recent years is true.  As I showed in my last post, available data (from the Expenditure Survey for 2007-08) indicate that during 2006-07 per capita expenditures in poor households increased at a faster rate than in rich households.  What has happened in 2008-09 is difficult to verify because the numbers have not been released to independent researchers.

Mr. Karrubi is reputed to have a strong team on the economy. If true, the team’s power was not on display on this particular night.

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3 Responses

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  1. سهیل said, on June 9, 2009 at 4:09 am

    According to latest statistics of the SCI (which I think has recently been published), It seems that the Gini coefficient is the same as Mr. Ahmadinezhad mentioned in his debate!

    http://www.sci.org.ir/content/userfiles/_project/project/fresults/gini_87-2.pdf

    P.S: I think you should correct the central bank governor to Mr. Mazaheri.

    • dsalehi said, on June 9, 2009 at 4:18 am

      Thank you Soheil for providing the link to this interesting and unusual document. Two quick questions: how different will the results be when the final file is made available, and what is the total inequality? The latter is important because inequality can decline withing urban and rural areas while the overall inequality increases if the rural-urban gap widens, as it did in 1386.

      P.S. Thanks for pointing out my error in mixing Mr. Mazaheri;s first and last name!

  2. کیوان said, on June 9, 2009 at 12:42 am

    This is a great post because it shows the need for reasoned discussion on Iran’s economy. I don’t think that Iran is exceptional in its heavy politicization of all economic figures for middle income countries, but it certainly detracts from the ability of political debate to identify the important areas for an election of a new government. On the other hand, when the US relies on journalists like Azadeh Moaveni to present an accurate picture of Iran’s economy, then who are we to cast stones!

    Karroubi famously said he was assembling a group of experts (pun intended) on the economy to return Iran’s management to a more firm tiller’s hand. He should have hired some PR guys instead who knew how to make some excel graphs. Still, these are all signs of an emerging democratic society – did you ever see Russia’s debates in the early 1990s?

    Djavad – I am headed back to Iran for ten months via a conference in Yerevan tomorrow – but someday I would love a post on the Management and Planning Office of Iran. Some New Yorker told us you might have been involved there at one point.


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