THIRD JOINT EUROPEAN COMMISSION OECD WORKSHOP ON INTERNATIONAL

THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 Results of first coordinated international survey on what people know about key statistical indicators produced by official statistics by Marco Malgarini ISAE - Institute for Studies and Economic Analyses 1

The OECD Global Project on “Measuring and Fostering the progress of Societies” • In June 2007, an exceptional group of 1200 people from about 130 countries gathered in Istanbul to attend the second OECD World Forum on "Statistics, Knowledge and Policy“ • At the end of the Forum, the OECD, the European Commission, the Organisation of the Islamic Conference, the United Nations, the UN Development Programme and the World Bank released the Istanbul declaration, affirming their willingness to: • Foster a global conversation about what progress actually means • Galvanise people and institutions to action • Improve the effectiveness of indicator work and their use for policy making • Make a key contribution to the international discussion THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 2

The OECD Global Project on “Measuring and Fostering the progress of Societies” • The time frame to achieve this goals is 2007 -2015 • In this period, the Global Project will carry out activities in the following areas: • Statistical research on the measurement of societal progress in all its dimensions, in particular: • Publish comparative results based on an international survey on what citizens know about the progress of their society • Design, develop and promote the use of innovative ICT tools to facilitate the transformation of statistics into knowledge • Establish a global network to foster the measurement of progress in each and every country • Develop a global infrastructure to facilitate the assessment of societal progress at national and global levels to bring about evidence-based policy discussions and decision-making THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 3

First results of International surveys on what people know: the Eurobarometer Survey • In the framework of the standard Eurobarometer survey in April-May 2007 a number of questions have been added regarding: • the knowledge of key statistical indicators • The “necessity” to know this information • Whether political decisions are made on the basis of them. • The general level of trust the public has in official statistical data. • First evidence suggests that: • A large majority of people “do not know” about official data on GDP and Unemployment • People tend to affirm that they know about inflation, even if the share of wrong answer exceeds 50% in all countries • The percentage of people not knowing official figures ranges from more than 85% of people in Romania concerning the unemployment rate, to less than 10% in Greece for inflation. THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 4

First results of International surveys on what people know: GDP growth THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 5

First results of International surveys on what people know: inflation THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 6

First results of International surveys on what people know: trust in official statistics and political decisions THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 7

The survey on Statistical Knowledge • During 2007, a number of questions have been added to the usual ISAE monthly survey on Italian Consumers • Questions concerned the statistical knowledge of Italian citizens on: • MARCH-APRIL 07: GDP growth, Inflation rate, Unemployment rate, Deficit/ GDP ratio • MARCH & APRIL: two questions on the importance and desire of being informed and on the media used to gather relevant information • MAY-SEPTEMBER 2007: two questions on statistical literacy, specific to the knowledge of Inflation statistics THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 8

The survey on Statistical Knowledge • LOW Response rates to quantitative questions • On average, Italian citizens tend to be OVEROPTIMISTIC about GDP growth and PESSIMISTIC for the remaining variables • UNCERTANTY among respondents was rather HIGH - as indicated by Std. Dev • The MEDIAN is generally closer to true values than the mean, indicating that answers distributions are RIGHT- SKEWED THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 9

The survey on Statistical Knowledge How important is to be informed on the issues we have discussed so far? Extremely important Average (%) 24. 4 Important 46. 1 Not very important 12. 4 Don't know Refuse to answer • More than 15% believe that information is not very important or not important at all • More than 40% of the respondents do not want to be more informed about these issues 3. 2 4 1. 7 Would you like to be more informed on these issues? Yes 54. 8 No 40. 5 Don’t Know/ Refuse to Answer Italian citizens believing that information is “extremely” or “very” important are only a 33% of the population 8. 2 Very important Not important • 4. 7 THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 10

The survey on Statistical Knowledge • TELEVISION is the most often cited channel used to acquire statistical information • NEWSPAPERS & INTERNET are cited by respectively 52 and 23% of the respondents • Opinions shared among friends and relatives (cited by 11, 2% of respondents) and political and civic leaders (7%) lag behind the radio (almost 19%) as other relevant sources of statistical information Information channels % Television 82 Radio 18. 6 Newspapers, periodicals 51. 9 Internet 23. 3 Political, opinion leaders Friends, relative Refuse to answer 7 11. 2 1. 8 THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 11

The survey on Statistical Knowledge THIRD JOINT EUROPEAN COMMISSION – OECD WORKSHOP ON INTERNATIONAL DEVELOPMENT OF BUSINESS AND CONSUMER TENDENCY SURVEYS BRUSSELS 12 – 13 NOVEMBER 2007 12

Building a Knowledge Score • What are the determinants of statistical knowledge? Method employed: Ø Construct a “Knowledge Score” aggregating the answers to the 5 five questions included in March’s questionnaire Ø Assign a score to each respondent based on the accuracy of individual answers to each specific knowledge question Ø Compute the ABSOLUTE VALUE of the individuals errors (i. e. the difference between individual answer and official data) Ø SORT Individual errors and calculate a “RAW SCORE” for each question Ø Compute a PERCENTILE RANK SCORE (PRS) Ø AGGREGATE Score” by averaging each PRS and get the “Knowledge

A Model for Knowledge - CONCEPT • Model estimation using the Knowledge score as dependent variable allowing the residuals to be heteroskedastic and use robust methods in the OLS estimates : Ø Ki = f (SDi, Si) + ui § Ki = knowledge score § SDi = socio-demographic characteristics of the respondent § Di = desire of being informed § Si = source used for being informed § ui = unobserved error term, assumed to be uncorrelated with the regressors

A Model for Knowledge - VARIABLES • Control variables § § § • GENDER (M/F) AGE ( <30 years, 30 - 49, 50 -64, and 65+) ZONE OF RESIDENCE (North West, North East, Center and South of Italy) EMPLOYMENT STATUS (self-employed, unemployed and out of LF) LEVEL OF EDUCATION (Primary school, Secondary school and University level and higher), and INCOME (divided into quartiles). Desire to be informed and the channels used to acquire information are measured on the basis of the answers provided to the survey questions

OUTCOMES- Socio-demographic factors VARIABLES BETA STD DEV T-STAT 4. 1 1. 7 2. 3 1 1. 1 0. 9 1. 4 0. 4 3. 5 30 -50 years 4. 01 2. 1 1. 91 * 50 -65 years 9. 49 2. 15 4. 41 *** > 65 years 1. 88 2. 35 0. 8 -12. 08 1. 12 -10. 75 0. 01 1. 62 0. 01 Center -0. 94 1. 6 -0. 59 South -5. 7 1. 46 -3. 91 *** High School or less 5. 05 1. 27 3. 99 *** University degree 8. 72 1. 89 4. 62 *** -0. 25 1. 56 -0. 16 0. 7 1. 57 0. 44 2. 03 1. 51 1. 34 Professional category (baseline: Employed) Self employed Unemployed Out of labour force • ** § For men with respect to women *** Age (baseline: up to 30 years) § For people between 30 and 65 years of age § For better educated people Gender (baseline: Male) Female *** Zone of residence (baseline: North-West) North-East § For self-employed and inactive people (including students) with respect to dependent workers Education (baseline: primary school) Income (baseline: 1 st quartile) Second Quartile Third Quartile Fourth Quartile Statistically Significance : * = 10% ** = 5% *** = 1% Knowledge is HIGHER: • It is LOWER for people leaving in the South of Italy • It is NOT INFLUENCED by income

OUTCOMES- Importance and desire to be informed VARIABLES BETA STD DEV T-STAT • Knowledge is NOT STATISTICALLY SIGNIFICANT for people thinking it is VERY important to be informed • Knowledge is NOT SIGNIFICANTLY influenced by the desired to be more informed about these subjects Importance of being informed (baseline: Extremely important) Very Important Not very important Absolutely not important -1. 8 1. 99 -0. 9 -7. 42 1. 86 -3. 98 *** -11. 45 2. 47 -4. 64 *** -19. 29 4. 15 -4. 65 Desire to be more informed (baseline: No Desire) Yes 0. 71 ***= Statistically Significant at 1% 1. 26 0. 56 ***

OUTCOMES- Information Channels • VARIABLES BETA Std Dev Television 0. 43 1. 58 0. 27 Radio 1. 39 1. 37 1. 01 Newspapers 5. 15 1. 15 4. 46 Internet 2. 95 1. 47 2 Political, civic leaders -2. 08 1. 73 -1. 2 Friends, relatives -0. 19 1. 74 -0. 11 **= 5% ***= 1% T-STAT Knowledge SIGNIFICANTLY for: HIGHER Ø Italians reading NEWSPAPERS to achieve economic information *** Ø Italians using INTERNET ** • NO significant EFFECTS of watching television, listening to the radio and discussing economic issues among friends and relatives or political and civic leaders

Conclusions • • • European and Italian consumers have shown a low level of knowledge of economic data There exist a complex interaction between trust in official statistical agencies, opinion on the political process and the willingness to be informed on economic data Knowledge results to be significantly influenced by socio demographic characteristics of the respondents, – – • • people attributing lower importance to being informed being also those scoring worst results people reading newspapers and using the Internet show a better knowledge of key economic data Is there some “irrationality” of Italian and European consumers? Or is it a case of “rational inattention” (Curtin, 2007)?

Conclusions • • Results stress the importance of developing new measurement of societal progress, along the lines suggested in the OECD Global Project on Measuring and Fostering the progress of societies. An important step in this direction may be that of extending the survey on statistical knowledge at the international level, having the goal of measuring: – The public level of trust in official statistics; the possibility of providing a comparison of the level of trust in official statistics with the general level of trust in societies may also be explored – The public appraisement on the political process, particularly regarding the role statistic information plays in shaping political decisions – The public desire/willingness of being informed on statistical issues – The media used to acquire statistical information – The knowledge of: • • • statistical data (economic, socio demographic data) Statistical metadata (goods and services comprised in the calculation of inflation; meaning of the GDP concept) Else?