THE VALUE OF NATIONAL STATISTICS IN THE UNITED STATES

PEOPLE in the United States and other countries rely on data and statistics to live their lives, often without realizing it. They may check weather, traffic, or air quality reports and other readily available data to guide how they go about their day. They may use data to inform key family and personal decisions, such as where to live, based on information about housing, crime, schools, and jobs. In their own jobs, people may use data to guide policies and programs, make investment decisions, plan for the future, and develop knowledge.

People in a democracy also rely on accurate and trustworthy information to carry out their civic duties and maintain a government that protects and serves their interests. An informed citizenry must judge the merits of government actions through periodic votes for elected officials, and to become informed it depends on widely distributed information available both directly and through the media. Making every vote count requires that lawmakers have accurate population statistics for drawing up legislative districts. Identifying problems to address and opportunities to pursue requires that policy makers in both the governmental and private sectors have objective and timely information on the society and economy. Adding to knowledge about the society and the economy, in turn, requires detailed information for researchers to analyze in a wide range of fields.

The cornucopia of information that people use in all these ways and often take for granted comes from a wide range of sources—censuses, surveys, sensors, commercial transactions, and records of all kinds. The information is made available not only by governmental entities, but also

by businesses, the media, and other organizations in tables, graphs, maps, datasets, and other formats available today through the Internet and other modes of access.

To be useful, information on a nation’s society and economy must be credible and trustworthy. The consumers of the information must believe that the information is objective and not affected by any political or ideological perspective concerning the phenomena being measured. They must trust that the technical expertise of the producers of the information is sufficient to produce statistics that will meet their needs, which include consistency so that one can judge whether things are getting better or worse over time and can compare different parts of the country.

Who produces such information to power the myriad needs and requirements of democracies and to inform societal and economic planning, decision making, and knowledge generation? Many actors provide useful information, but, across the world, central governments have the role of producing key national statistics in ways that maximize their credibility and utility to inform policy makers and the public.

The United Nations General Assembly in 2014 formally endorsed Fundamental Principles of Official Statistics (see Appendix C).¹ The first of these principles accords worldwide recognition to the indispensable role of official statistics:

In that regard, national statistical information forms a data infrastructure that resembles the role of physical infrastructure for a nation, like interstate highways, national defense assets, interstate utility grids, and basic scientific research. All of these national investments serve the common good. Their benefits are sometimes relatively small for each

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¹ These were originally adopted by the United Nations Statistical Commission in 1994; see Appendix C.

individual, but they are essential to the welfare of the whole country. In some sense, these infrastructures are among the threads of the fabric of society.

In their day-to-day lives, most people do not think about the benefits of highways and bridges—until they exhibit a problem, perhaps being closed for repairs, or worse, when they fail and collapse. So too, when statistical information is disrupted or compromised, its value is vividly illustrated by decisions that, in retrospect, appear misguided. As just one example, inadequate information that results in underestimating the depth of a looming recession or, conversely, an economic boom, can lead to less-than-optimal policies to rekindle or rein in growth (see Reamer, 2014).

How Statistical Information Powers Government and Policy Making

Following are a few examples of the many ways that statistical information provided by federal agencies serves the nation.

Informing political representation. The U.S. Constitution mandates a decennial census of the population every 10 years (the first census was taken in 1790) for determining the allocation of seats in the U.S. House of Representatives among the states. Reapportionment in turn triggers the redistricting process, by which states, using census data, redraw the boundaries of congressional districts to accommodate changes in the number of seats and in the geographic distribution of the population. States and many local governments also use census and other data to reapportion and redistrict their legislative bodies.

Informing economic decision making. Federal statistics drive important decisions. The federal government currently labels 36 statistics—such as gross domestic product (GDP), the employment situation, monthly wholesale trade, weekly natural gas storage, crop production, consumer credit, and others—as “principal federal economic indicators.”² The Office of Management and Budget’s (OMB’s) Statistical Policy Directive No. 3 requires these indicators to be published by the cognizant statistical agency on specified release dates under procedures designed to protect the integrity and credibility of the estimates and ensure that they are not subject to manipulation and do not give any user an unfair advantage,

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² See Statistical Policy Directive No. 3 in Appendix A.

so that businesses and the public can be confident the statistics are objective (see Appendix A; and Practice 2 in Part III).

The indicators often lead the headlines upon their release, contribute significantly to public and private sector decision making, and help inform the public as to where the nation has been and where it is going. They and many other federal social and economic statistics have real consequences: the Consumer Price Index (CPI) determines annual cost-of-living adjustments to Social Security monthly benefits, which in May 2020 amounted to $89.9 billion provided to 69.7 million people.³ Annual changes in the CPI also affect commercial and residential rents, public- and private-sector wages, and components of the federal income tax code. Annual changes in prices for geographic areas enter into local decisions, and monthly changes in prices are a major input into Federal Reserve Board decisions on short-term interest rates.

Informing business decisions. The U.S. and global economies are powered by data.⁴ Whether starting or expanding a business, exploring prospects for different occupations, anticipating demand for products, projecting the labor force, evaluating effects of trade patterns, targeting investments, forecasting energy prices, planning for hurricanes, funding pension plans, devising better ways to serve customers with disabilities, or finding suppliers—business owners and community members rely every day on data produced by the federal government. Beginning in the 1960s, data provided by the U.S. government in computer form spurred the development of a new sector: firms that provide government-data related products to households, businesses, and organizations. This sector alone generates as much as $221 billion of revenue each year, which by itself is much more than the federal government pays to produce the statistics. There are countless other uses by businesses and governments (see, e.g., Hughes-Cromwick and Coronado, 2019; U.S. Department of Commerce, 2014).

Helping federal, state, and local governments take action. Federal statistics provide high-quality, comparable information across the country. The American Community Survey (ACS), for example, provides key information that states and local governments use for disaster preparedness, economic development and workforce planning, public

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³ See https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html?number. [February 2021]

⁴ See https://www.weforum.org/agenda/2016/01/a-global-economy-powered-by-data. [February 2021]

health surveillance, and regional transportation planning (see National Academies of Science, Engineering, and Medicine [NASEM] 2019a; National Research Council [NRC] 2013a, 2007b). Data from the decennial census and the ACS are used to distribute hundreds of billions of dollars to states and localities for Medicaid, housing programs, education, food assistance, veterans programs, transportation programs, safety, and many other programs.⁵

Monitoring the social and economic health of the nation, states, and localities. Regularly published social and economic indicators from statistical agencies are widely cited in the media and consulted by the public to identify trends and, when estimates are available for state and local areas, to compare across areas. Some examples include America’s Children: Key National Indicators of Well-Being from the Interagency Forum on Child and Family Statistics; the Condition of Education from the National Center for Education Statistics; Criminal Victimization from the Bureau of Justice Statistics; Statistics of Income from the IRS; Income and Poverty in the United States from the U.S. Census Bureau; and Science and Engineering Indicators from the National Science Board and National Center for Science and Engineering Statistics.⁶

Providing empirical evidence for developing and evaluating federal, state, local, and private-sector programs. Data on the condition of housing and finance to inform housing policy come from the ongoing American Housing Survey (see NRC, 2008c). Statistics on the various types of energy used for heating, cooling, information technology, and other uses are provided by energy consumption surveys for commercial buildings and for residences (see NRC, 2012).

Providing input to important social science research that, in turn, informs the public and policy makers. Many policy-relevant insights have resulted from analysis of long-running federally funded surveys, including longitudinal surveys that follow individuals over time (see, e.g., NRC, 2005d). Some examples: the National Center for Education Statistics runs a number of longitudinal surveys following children through K–12 education and postsecondary education and beyond to look at the

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⁵ See https://gwipp.gwu.edu/counting-dollars-2020-role-decennial-census-geographic-distribution-federal-funds#Briefs. [February 2021]

⁶ Websites for the cited series are, in the order cited: https://www.childstats.gov/americaschildren/; https://nces.ed.gov/programs/coe/; https://www.bjs.gov/index.cfm?ty=tp&tid=9; https://www.irs.gov/statistics; https://www.census.gov/library/publications/2019/demo/p60-266.html; and https://ncses.nsf.gov/pubs/nsb20201. [February 2021]

transitions from high school and college to the labor force; the Bureau of Labor Statistics’ National Longitudinal surveys follow young adults through their working lives to look at career paths; and the Health and Retirement Study of the University of Michigan, supported by the National Institute on Aging and the Social Security Administration, follows older adults through retirement to look at health and well-being.⁷

The Costs and Benefits of Federal Statistics

The cost of federal statistical programs is a tiny fraction of overall U.S. federal spending. Even including the once-a-decade population census, the combined budgets for all the major statistical agencies and other statistical programs in federal agencies in fiscal 2020 totaled $11.9 billion.⁸ This amount is about 0.2 percent of the total budget of about $4.8 trillion for the federal government, and it is equivalent to about $36 for every U.S. resident.⁹

The benefits from this investment in federal data collection and statistics permeate every corner of the United States. It is impossible to capture the full economic and societal value of having reliable data on economic, social, health, agricultural, industrial, and environmental characteristics of the country.¹⁰ Some estimates have given the annual value of making federal data “open,” that is, freely available to the public from statistical and program agencies, as hundreds of billions of dollars.¹¹ The United Nations (2018) report, Recommendations for Promoting, Measuring, and Communicating the Value of Official Statistics,¹² argued that official statistics have value far beyond their dollar worth. If the federal government

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⁷ See https://nces.ed.gov/surveys/; https://www.bls.gov/nls/; and http://hrsonline.isr.umich.edu/. [February 2021]

⁸ See https://www.whitehouse.gov/wp-content/uploads/2020/12/statistical-programs-20192020.pdf. OMB includes all statistical programs with at least $3 million in estimated or direct funding in FY 2017, FY 2018, FY 2019, or FY 2020. [February 2021]

⁹ Based on a total population of 330,000,000.

¹⁰https://www.commerce.gov/sites/default/files/migrated/reports/the-value-of-the-acs.pdf tells how the American Community Survey is used by federal, state, and local governments and by businesses, school districts, and academic researchers. A panel from the American Enterprise Institute (https://www.aei.org/wp-content/uploads/2017/02/170302-AEI-Vital-Role-of-Government-Statistics.pdf) discussed the immense value of government data for commerce, as well as the private companies that, essentially, repackage and sell government data. [February 2021]

¹¹ Making data collected by the federal government available to the public at no cost in a machine-readable format without restrictions on its use is referred to as “open data,” and the value has been noted by the following: http://reports.opendataenterprise.org/2017OpenDataRT1-EconomicGrowth.pdf. [February 2021]

¹² See https://www.unece.org/fileadmin/DAM/stats/publications/2018/ECECESSTAT20182.pdf. [February 2021]

did not collect such data, the private sector might fill the breach—but likely at a greater cost to obtain data of comparable quality because response rates would be lower compared with federal surveys, with no guarantee of continuance or continuity, and possibly with a two-tier system whereby only those who could pay would have access to the data they need.

The fundamental characteristic of federal statistics as a public good (see Box I-1) and the demonstrated policy, planning, research, and informational value of today’s portfolio of statistical programs justify adequate budgets for federal statistics. Such funding needs to provide for research and development for continuous improvement in relevance, accuracy, timeliness, and accessibility (see Practice 5). In turn, it is incumbent on federal statistical agencies to communicate the value of their programs to policy makers and others and to analyze the cost-effectiveness and value of their programs on a continuing basis so that they can ensure the best return possible on the tax dollars invested in them.