Not long ago, on the PBS program “NewsHour”, I was listening to David Brooks, Op-Ed columnist for the New York Times, talk about politicians’ apparent inability to differentiate between a million, a billion, and a trillion: “They should put a poster up in Congress to show the difference between a million, a billion and a trillion. Our problems are in trillions. And to argue about millions, it is pointless."1 Which made me think: “How many people can really conceptualize or visualize the difference between such large numbers? Come to think of it, can I?”
The UK government has recently changed the basis on which it calculates increases to benefits and pensions. It used to base them on the RPI, the Retail Price Index. Now it bases them on the CPI, the Consumer Price Index. What is the difference, and what does the change mean?
It is a complex subject, and even experienced economists have asked the Royal Statistical Society for a definitive account of the changes and what they imply, and whether or not they are justified. Here we provide that definitive account.
It is not for beginners. For those who want a basic introduction, see the accounts by Andrew McCulloch that we published here and here back in May. Nor is it short. It is several times the length of our usual website pieces. Nevertheless we post it here; we believe that financial professionals, economists, analysts and others may find it useful, now and to refer to in the future. It is written by Jill Leyland, who is the Chair of the RSS National Statistics Working Party.
One of the top news stories of this week has been the publication of findings by the Office for National Statistics (ONS) showing that the average public sector worker receives an hourly wage that is 7.8% higher than that of the average private sector worker.
Not only that, but this gap has increased from 5.3% in 2007 (that is, across the recession), with this news coming just a week after the public sector strikes of the 30th June. On the face of it, this certainly looks like an ungrateful group of workers who don’t appreciate the generous working conditions that their employers have provided for them.