In wake of Great Recession, policy makers are shooting in the dark

Posted on September 13, 2013 in Governance Debates – ROBcommentary/ROBinsight
Sep. 12 2013.   David Parkinson

To borrow part of a phrase from our compatriot Neil Young, Statistics Canada’s National Household Survey looks like Hiroshima. It’s a barren statistical wasteland of flawed data scarred by the fallout from Ottawa’s 2010 demolition of the long-form census. At best, it’s a deeply flawed guide for policy makers – especially regarding the people most in need of government policy.

The long-awaited survey on income and housing trends, taken in 2011 but not released until Wednesday, is supposed to be the first large-scale measure of where Canadians stand economically since the Great Recession of 2008-09, which segments of our population have bounced back and which were left behind, whether gaps of inequality have closed or have become gulfs.

It doesn’t do that – because it can’t.

While the survey is in theory supposed to be a follow-up to the prerecession data from the 2006 census, the two use wildly different methodologies. One was a compulsory national census, with a response rate of 93.5 per cent. It was replaced with a voluntary survey of less than one-third of Canadian households, with a response rate of 68.6 per cent. Like any survey, it must be extrapolated over the entire population, it has margins of error, it has statistical biases based on who was willing to respond and who wasn’t. (For example, it’s generally accepted that the lowest-income segments of the population are typically the least likely to respond to voluntary surveys.)

In short, the two methods simply don’t make for apples-to-apples comparisons. In the all-important income survey report, Statscan doesn’t even try. It treats the survey as a new, standalone set of statistics with no previous benchmarks against which to measure it.

While this is all fine and good as a snapshot in time, and as a benchmark against which to measure future surveys, this means that Canada as a nation has no reliable way to gauge the impact of the biggest economic downturn in 70 years on its population. We’ve missed it. It’s gone.

For example, we know from analysis of available U.S. data that in the first three years of recovery following the Great Recession, 95 per cent of the income gains in the United States went to the top 1 per cent of earners. We can be suitably appalled by such a statistic. Did something similar happen in Canada, or are we much more egalitarian, have much better social supports to prop up lower incomes in times of recession and recovery, etc.? We have no idea. We just don’t have two reliably comparable sets of data, pre- and post-recession, to accurately draw any such conclusions.

Where this matters most is with Canada’s lowest-income earners – and it’s this segment that Statistics Canada singles out with its most damning assessment of the inadequacy of the survey.

“Low-income estimates from the 2011 National Household Survey [NHS] compared with previous censuses show markedly different trends than those derived from other surveys and administrative data such as the Survey of Labour and Income Dynamics or the T1 Family File,” Statscan noted in its report, referring to other statistical estimates the national agency compiles. “Data to support quality estimates of low-income trends require a stable methodology over time that has similar response patterns. With the new methodology of the NHS, estimates of low income are not comparable with the census-based estimates produced in the past.”

So, the people potentially most hurt by the recession – and, based on the U.S. finding, perhaps least participating in the recovery – don’t appear to be accurately measured or represented by this survey. For governments, that means that perhaps the most crucial information in terms of guiding and assessing the past success and future direction of social policy isn’t there. Now, they must operate in a statistical wasteland of their own making.

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers

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