[Insight & Opinion] Statistics Do Not Lie

[Asia Economy] The Chinese government announced that the number of COVID-19 infection deaths across China in the month following the abandonment of the so-called zero-COVID policy was 11. This announcement came amid a situation in Beijing where daily deaths surged by thousands, causing a shortage of crematorium capacity. The Chinese government explained that deaths of COVID-infected individuals with underlying conditions were excluded from the statistics. Statistics convey facts. However, facts are only a piece of the truth. Therefore, knowing the facts and understanding the whole truth are often different.

The Board of Audit and Inspection is currently investigating allegations that during the previous administration, statistics were manipulated to conceal failures in economic policies such as widening income inequality, rising housing prices, and increasing non-regular employment. It is difficult to predict the outcome of the audit, but finding conclusive evidence of manipulation will not be easy. Simply changing statistical criteria does not necessarily mean manipulation. In fact, statistics involve subjective choices at every stage of data collection. For example, in the Consumer Price Index compiled by the U.S. Bureau of Labor Statistics, housing costs account for about 32%, whereas in South Korea, housing costs make up only 9.7% of the overall Consumer Price Index. Regardless of the calculation method, it is hard to label either as manipulation.

Statistics are a means for us to view the world objectively. However, no statistic can show all aspects of the truth at once. South Korea’s research and development (R&D) investment was 94 trillion won in 2020, ranking fifth globally after the U.S., China, Japan, and Germany. Per capita R&D expenditure ranks second worldwide after the U.S., and the number of published papers is around 12th globally. However, the number of citations per paper, an indicator of the qualitative level of scientific research, is 7.57, ranking 34th worldwide. All these indicators are factual, but conclusions vary depending on which indicator is given more weight. Statistics do not lie. People do not lie either. We simply tend to see what we want to see. Confirmation bias is a human instinct.

This is precisely the problem. Those advocating for lowering the top corporate tax rate point out that South Korea’s top rate of 25% is higher than the OECD average of 21.5%. On the other hand, those who see no reason to lower the rate emphasize that the effective tax rate actually decreased from about 19% in 2019 to the 17% range in 2020. Both indicators are true. When predicting the stock prices of Samsung Electronics and SK Hynix, those who believe a turnaround in semiconductor stocks is unlikely for the time being focus on falling semiconductor prices, while those expecting a rise emphasize the effects of production cuts. Neither side is lying.

Statistics are often called a mirror reflecting phenomena. Statistics are not just simple numbers. They influence public opinion and cause the movement of money and power. Without statistics, rational decision-making and policy formulation are impossible. However, to use statistics properly, they must be viewed as they are. They should be produced by the most objective methods and interpreted accurately without addition or omission. The Ministry of Economy and Finance announced that one-third of comprehensive real estate tax payers earn less than 20 million won annually. However, income data collected by the National Tax Service mostly exclude income from stock investments or unreported rental income. While it is right to correct flawed tax systems, there is no need to persuade with misleading statistics.

It is said that a mathematician, an accountant, and an economist interviewed for the same job. When asked by the interviewer what 2 plus 2 equals, the mathematician undoubtedly answered 4, and the accountant said that even with a 10% increase or decrease, it is ultimately 4. The economist, however, asked the interviewer, "What do you want it to be?" Let us not be deceived by numbers.

Kim Sang-cheol, Economic Columnist

This content was produced with the assistance of AI translation services.