Growing Pains and Percentages

We're seeing a lot of column inches telling us that Britain's economy is growing faster than virtually any other economy, but this is a relative increase and one has to consider that the UK has been one of the hardest hit economies in the world due to Covid because of longer lockdowns.

The UK getting back to equilibrium produces a far greater rate of increase than an economy which has been hit in only a minor way. It's good news, but not an indicator of growth following getting back to pre-pandemic levels of economic activity and nothing to necessarily crow about. When everyone has been locked down for a long time, the bounce back will occur over a short time at a very fast rate and then level off. All things being equal, any economy which has been hard hit by Covid will have a faster growth rate than one that hasn't been hit at all. 

Imagine the economy is a spring and the effect of Covid is pressure on the spring compressing it; when the pressure is released, a highly compressed spring - or an economy that's been highly affected - will spring back to its pre-compressed size at a rate of knots compared to one that's been only slightly compressed; however, the rate of bounce back will decrease as the pressure releases due to parts of the economy having been demolished and businesses having gone bust, as many have.

In the absence of any additional stimulus, the rate of growth is an indication of just how severely the economy was hit and nothing more. It certainly no guarantee that the economy will bounce back stronger than before Covid.

Similarly, when newspapers report that eating a particular food increases the risk of a certain disease by x%, that particular snippet it meaningless without knowing the base risk. If the base risk is low, then even a doubling of the risk is still low, but the media prefers spectacular numbers, regardless of what they actually mean.

We occasionally see reference to a particular political party or religion being the fastest growing in whatever country. If that party starts with half a dozen members and that increases to 18 over the period of a year, then that's a roaring rate of increase, but still a smaller absolute increase than a party with hundreds of thousands of members that increases its membership by a few hundred.

The media's misuse of statistics is woeful and nowhere more misleading than when reporting on science or economics but, as I said, percentages attract attention, and that's the reason they love to quote them without reference to the starting point.