One of the main themes of this blog – if there are any themes – is the importance of setting aside fact from opinion, and using them for their proper purpose. Facts can lag and lead the economy, they can tell us what is likely to happen and they can quantify what has happened. Opinions can help us give colour to those indicators.

In an earlier entry, I suggested that one of the problems which lay at the heart of the Irish economy was an under-reliance on using indicators for their proper purpose, and an over-reliance on anecdote and conjecture. Simon and Garfunkel (while not universally recognised as economists or social anthropologists) did note the common trait of tending to hear what we want to hear, and disregarding the rest.

We are all guilty of poring through factual datasets and indicators which conclusively prove something we don’t want to hear, and totally ignoring their conclusions the moment we get chatting to someone who tells us something we like. The bathroom scales tell us we’re putting on weight, but a friend tells us we’re looking slim – who do we believe? Who do we want to believe? How does the information have an impact on our actions? Answer: We ignore the scales, we listen to the friend and we order desert with our meal. Result!

Evidence-based policy research has long been at the heart of political science. By using evidence, properly captured, professionally analysed and rigorously compared we can get an idea on where policy should be focused. More and more, political parties, interest groups and businesses are moving their businesses, informed by evidence-based research. Good quality, timely data attracts a high value, and there has been a large increase in using focus groups; brought together to help policy-makers sift through a range of opinions and experiences to give colour to the facts.

When I write a survey for a client, I like to give respondents a chance to add their own comments after they have ticked a box. It helps me understand why they answered their question and it explains something of their motivation. It’s another strand of evidence which informs the client what their customers as thinking. The aggregate data is still the most important outcome of the survey, but the comments often give useful insights.

One concern in using evidence-based research to direct policy is that indicators are used in the wrong way. The Romans, as ever, had a phrase for it - Post hoc ergo propter hoc – just because something happened after an event, it doesn’t follow that it was caused by the event.

Here’s an anecdote. In 1977, when Elvis Presley died, there were 37 Elvis impersonators in the world; by 1993, there were 48,000 of them. This year, if the trend has continued, there are 2.5 billion Elvis impersonators worldwide. The global population is roughly 6.8 billion people – therefore one in three people are Elvis impersonators. 1.63 million of them live in Ireland – more than the entire population of Greater Dublin.

The data tells clothing manufacturers to invest in sequins jumpsuits and it tells political parties that if there are plenty of votes to be obtained in promising to reduce VAT on medallions. The Elvis data clearly points us in the wrong direction. A simple piece of real-world research tells us that it’s highly unlikely that every third person – man, woman and child – is an Elvis impersonator.

Using one indictor on which to base an economic forecast, policy statement or business decision does not work. There is no way of knowing if you’re falling into the logical error of confusing a cause with a consequence, until you’ve a warehouse full of white leather suits, CDs of Heartbreak Hotel and a failing business. It’s only by using all possible evidence, cross-referenced, double checked and supplemented with new research that truly evidence-based research can have a real impact.