Proem

A few days ago, President Gloria Arroyo was ecstatic to announce that the Gross Domestic Product (GDP) of the Philippines grew by 7.5% for the second quarter of year 2007. She claimed that the growth was triggered by spending in the construction industry.

The GDP is computed by the National Statistics Office from a complicated bunch of data. The GDP refers to the total movement of the economy within the country like local manufacturing, local salaries and how they are spent, local construction, etc. It does not factor in the foreign loans and their payment because it will belong to the Gross National Product (GNP).

People's Disbelief

When a news reporter asked the President how it could be, President GMA displayed her vaunted hot temper by saying, "Do you mean that the statisticians at the National Statistics Office are lying?"

She said that it was triggered by the construction industry. Those who were listening to the President were in disbelief. They knew that during the second quarter of year 2007 there was a ban on public construction because of the local election. How could the construction industry have triggered the GDP growth?

Awed by Statistics

After studying plenty of statistics, I am surprised why people are awed and intimidated by it. Statistics is just a tool and just like any tool, it has its proper use. The saying in computer programming is, "garbage in, garbage out."

To Disabuse Your Mind

Here is my usual example to help my students from being intimidated with statistics. I let them draw a clock in a piece of paper with the hands pointing to 3 o'clock. I tell them that I have a clock that loses 20 seconds every day. I will set it also at 3 o'clock.

I asked my students, which of the two; your drawing or my clock is the more accurate recorder of time? Or course everybody will answer that it is my clock that would be accurate.

In reality my clock that losses 20 seconds everyday will give the correct time of 3 o'clock 90 days from today. Meanwhile, your drawing will be correct twice a day because there are two 3 o'clock in one day. By means of statistics, your drawing made a correct tally of 181 three o'clock while my clock made only two tallies. Therefore by means of statistics your drawing is overwhelmingly accurate compared to my clock. My students will not accept it, but they could not help but agree because statistics have demonstrated it! Imagine, 181 versus 2!

Now where is the catch? The difference is actually in the purpose. My clock is telling time. In other words it is trying to follow the movement of time as best it could. The drawing is recording time. It just waited for 3 o'clock to come around and when the two coincided, it is recorded.

The 7.5% GPD Increase

The 7.5% GDP increase is both telling and recording the GPD that is why it is confusing. The NSO is recording the remittances of our Overseas Foreign Workers (OFW) and included it in the computation of the GDP because it is spent here in the Philippines. But the NSO is also telling us the amount of output of the factories, etc. The computation should have been only based on one purpose be it "telling" or "recording."

I am sure that if the dollar remittances are excluded from the computation of the GDP, it will show a lower figure. If the dollar remittances are used, then exclude the output from the factories, and again you will have a lower result of GDP.

So that is it, the NSO statisticians are not lying, they only have a different bases for computation, and their result is just another statistics, which may not be the same from what you expected.