I have always wondered about authenticity of statistics quoted in popular journalism. Say CRO earnings in pharmaceuticals in India or CRO/BPO projects lost/gained by Indian Industry. Many times numbers are too large to comprehend for a middle class mind. But the numbers are attractive enough to remember & tempting enough to pass on to each other after 4 beers.
One would ask , what is the harm ?
Actually right question would be , where is the beaf ?!!
I have always intuitively felt that , major workforce stems from the middleclass which contributes to churning out the value in any organisation. That workforce is too busy to verify the statistics. Their decisions about continuing in the present job are propelled by how green they think is the grass on other side of the fence. Incorrect money statistics leads to wrong perception. Persons are lured into quitting the jobs , based upon what they think is their market value elsewhere.
Wrong statistics leads to wrong moves. I need not elaborate the cascade effects it may illicit thru out the industry segment.
I am quoting here one article which describes the 'Phantom Figures' in circulation on IP lost in USA due to piracy.
http://arstechnica.com/articles/culture/dodgy-digits-behind-the-war-on-piracy.ars/1" target="_blank">http://arstechnica.com/articles/culture/dodgy-digits-behind-the-war-on-piracy.ars/1
If you pay any attention to the endless debates over intellectual property policy in the United States, you'll hear two numbers invoked over and over again, like the stuttering chorus of some Philip Glassopera: 750,000 and $200 to $250 billion. The first is the number of U.S. jobs supposedly lost to intellectual property theft; the second is the annual dollar cost of IP infringement to the U.S. economy.These statistics are brandished like a talisman each time Congress isasked to step up enforcement to protect the ever-beleaguered U.S.content industry. And both, as far as an extended investigation byArs Technica has been able to determine, are utterly bogus. "I have said it thrice," wrote Lewis Carroll in his poem The Huntingof the Snark, "what I tell you three times is true." And by thatstandard, the Pythagorean Theorem is but schoolyard gossip comparedwith our hoary figures. As our colleagues at Wired noted earlier thisweek, the 750,000 jobs figure can be found cited by the U.S.Department of Commerce, Customs and Border Patrol, and the U.S.Chamber of Commerce, among others. Both feature prominently onTheTrueCosts.org, an industry site devoted to trumpeting the harms ofpiracy. They're invoked by the deputy director of the U.S. Patent andTrademark Office. And, of course, they're a staple of indignant pressreleases from the congressional sponsors of tough-on-piracy legislation. By more conventional standards of empirical verification, however,the numbers fare less well. Try to follow the thread of citations totheir source, and you encounter a fractal tangle of recursivereference that resembles nothing so much as the children's gameknown, in less-PC times, as "Chinese whispers," and these days moreoften called "Telephone." Usually, the most respectable-sounding authority to cite for the numbers (the FBI for the dollar amount,Customs for the jobs figure) is also the most prevalent, but in each case, that authoritative "source" proves to be a mere waystation on along and tortuous journey. So what is the secret origin of these ubiquitous statistics? What doomed planet's desperate alien statisticians rocketed them to Kansas? Ars did its best to find the fountainhead. Here's what we discovered.
Looking for lost jobs First, the estimate of 750,000 jobs lost. (Is that supposed to be per year? A cumulative total over some undefined span? Those who cite thefigure seldom say.) Customs is most often given as the source forthis, and indeed, you can find press releases from as recently as2002 giving that figure as a U.S. Customs and Border Patrol estimate.Eureka! But when we contacted CBP to determine how they had arrivedat that imposing figure, we were informed that it was, in essence, agoof. The figure, Customs assured us, came from somewhere else, andwas mistakenly described as the agency's own. This should come as no great surprise: CBP is an enforcement agency, whereas calculating thetotal loss of jobs from IP infringement would require someterrifyingly complex counterfactual modeling by trained economists. Similar claims have appeared in Customs releases dating back at least to 1993, but a CBP spokesperson assured us that the agency has neverbeen in the business of developing such estimates in-house. With Customs a dead end, we dove into press archives, hoping to findthe earliest public mention of the elusive 750,000 jobs number. And we found it in (this is not a typo ) 1986. Yes, back in the days when"Papa Don't Preach" and "You Give Love a Bad Name" topped the charts,The Christian Science Monitor quoted then-Commerce Secretary MalcomBaldridge, trumpeting Ronald Reagan's own precursor to the recentlypassed PRO-IP bill. Baldridge estimated the number of jobs lost tothe counterfeiting of U.S. goods at "anywhere from 130,000 to 750,000." Where did that preposterously broad range come from? As with thenumber of licks needed to denude a Tootsie Pop, the world may neverknow. Ars submitted a Freedom of Information Act request to the Department of Commerce this summer, hoping to uncover the basis ofBaldridge's claim (or any other Commerce Department estimates of joblosses to piracy) but came up empty. So whatever marvelous proof the late secretary discovered was not to be found in the margins of any document in the government's vaults. But no matter: By 1987, that Brobdignagian statistical span had been reduced, as far as the presswere concerned, to "as many as 750,000" jobs. Subsequent reportage dropped the qualifier. The 750,000 figure was still being bandied about this summer in support of the aforementioned PRO-IP bill. $250 billion? What's that in real money? What, then, of that $200 to $250 billion range? Often, it's attributed to the Federal Bureau of Investigation, and indeed, theBureau routinely cites those numbers. According to FBI spokespersonCatherine Milhoan, the figure "was derived through our coordinationwith industry, trade associations, rights holders, and other lawenforcement agencies" at a 2002 anti-piracy confab. But neither theBureau nor the National Intellectual Property Rights CoordinationCenter, which assembled the inter-agency powwow, could find anyrecord of how that number was computed. At this point, it's necessary to get a little speculative. As withCustoms, the FBI is not in the habit of doing sophisticated economicanalysis in-house. And the last time the government conducted anysort of verifiably rigorous study of the costs of IP theft=97aboutwhich more presently=97it was a protracted undertaking that involvedsending detailed questionnaires to hundreds of businesses, whichgovernment economists concluded was still insufficient to produce areliable figure for the economy as a whole. However, $250 billion is about the number you come up with if you start with $200 billion in1993 dollars and adjust for inflation to 2002. And that lower end ofthe range, $200 billion, happens to date back to 1993. Another group that routinely uses the $200 to $250 billion figure isthe International Anti-Counterfeiting Coalition, which (along withthe FBI) is often given as the source of the number. Thatorganization's white papers, as recently as 2005, footnote the figureto 1995 congressional testimony urging passage of what became theAnticounterfeiting Consumer Protection Act of 1996. So Ars dug intothe archives at the Library of Congress to discover where thewitnesses before the House and Senate Judiciary Committees got theirdata. Several of the witnesses were conspicuously vague about theirsources. An IACC factsheet submitted for the hearings said the groupitself "estimates the economic cost due to product counterfeiting toexceed $200 billion each year," a number repeated by the group's then-president, John Bliss. Congressman Bob Goodlatte (R-VA) gave the samefigure without sourcing. But several witnesses pointed to Forbesmagazine as the source of the number. Rep. John Conyers (D-MI) notedthat the International Trade Commission had placed the size of thecounterfeit market at $60 billion in 1988 and that "a more recentestimate by Forbes Magazine says that American businesses are losingover $200 billion each year as a result of illegal counterfeiting."Finally, Charlotte Simmons-Gill of the International TrademarkAssociation was kind enough to give a precise citation: the October25, 1993 issue of Forbes. Ars eagerly hunted down that issue and found a short article oncounterfeiting, in which the reader is informed that "counterfeitmerchandise" is "a $200 billion enterprise worldwide and growingfaster than many of the industries it's preying on." No furthersource is given. Quite possibly, the authors of the article called up an industrygroup like the IACC and got a ballpark guess. At any rate, there isnothing to indicate that Forbes itself had produced the estimate, Mr.Conyers' assertion notwithstanding. What is very clear, however, isthat even assuming the figure is accurate, it is not an estimate ofthe cost to the U.S. economy of IP piracy. It's an estimate of thesize of the entire global market in counterfeit goods. Despite theefforts of several witnesses to equate them, it is plainly not on parwith the earlier calculation by the ITC that many had also cited. But here, at last, we have a solid number to sink our claws into,right? Sure, it's 20 years old, but the U.S. International TradeCommission at least produced a reputable study yielding a definitefigure for the cost of piracy to the U.S. economy: $60 billion annually. Well, not quite. "Biased & self-serving" The number the ITC actually came up with, based on a survey ofseveral hundred business selected for their likely reliance on IP forrevenue, was $23.8 billion=97the estimated losses to their respondents.That number was based on industry estimates that the authors of the study noted "could admittedly be biased and self-serving," since the firms had every incentive to paint the situation in the most dire terms as a means of spurring government action. But the figures atleast appeared to be consistent and reasonable, both internally andacross sectors. The $60 billion number comes from a two-page appendix, in which theauthors note that it's impossible to extrapolate from a self-selecting group of IP-heavy respondents to the economy as a whole.But taking a wild stab and assuming that firms outside their sampleexperienced losses totaling a quarter to half those of theirrespondents, the ITC guessed that the aggregate losses to the economymight be on the order of "$43 billion to $61 billion." The survey also, incidentally, asked respondents to estimate thenumber of job losses they could attribute to inadequate intellectualproperty protection. The number they came up with was 5,374. If weassume, very crudely, that job losses are proportionate to dollarlosses, then the ITC's high-end estimate of $61 billion in totaleconomic costs would correspond to a loss of not 750,000 jobs, but 13,774. If we want to be very precise, however, we should note that the ITCwas not calculating losses from IP "theft," but rather "inadequateprotection" of intellectual property. And "inadequate protection" wasinterpreted to mean protection falling short of the level provided byU.S. law. The protection provided by a foreign country might bedeemed "inadequate," the study explained, if "exceptions to exclusiverights are overly broad" for example, if a country's law contained"broad exceptions for public performances in hotels or film clips" or"too broad exceptions for educational photocopying." A legal regime could be "inadequate" because "terms of protection are too short" or because of "inadequate" civil or criminal remedies, meaning monetarydamages or criminal penalties for infringers were not high enough. Calculating the net cost of piracy to the economy One final, slightly theoretical point deserves emphasis here. All theprojections we've discussed, the rigorous and the suspect alike,calculate losses in sales or royalties to U.S. firms. This is oftenconflated with the net "cost to the U.S. economy." But those numbers (whatever they might be ) are almost certainly not the same. When someone torrents a $12 album that they would have otherwise purchased, the record industry loses $12, to be sure. But that doesn't mean that $12 has magically vanished from the economy. On the contrary: someone has gotten the value of the album and still has $12 to spend somewhere else. In economic jargon, charging anything for pure IP "which has a marginal cost approaching zero once it has been produced" creates a deadweight economic loss, at least in static terms. The actual net loss of IP infringement is an allocative loss that only appears in a dynamic analysis. Simply put, when people pirate IP, the market is not accurately signaling how highly people value the effort that was put into creating it, which leads to under production of new IP. To calculate the net loss to the economy over the long run, you'd need to figure out the value of the lost innovation in which IP owners would have invested the marginal dollar lost to piracy, and subtract from that the value of the second-best allocation which is to say,whatever the consumer of the pirated good spent his money on instead and the value of the deadweight loss (free music or software is a neteconomic benefit to someone) incurred by pricing IP at all. If that sounds incredibly complicated, it is. And in fact, it's more complicated than that, because as Yochai Benkler has argued persuasively, IP is an input to innovation as well as the product of innovation. So under certain very specfic conditions, "piracy" can produce net gains. While it seems extremely unlikely that this is the case in the aggregate theft almost certainly does impose neteconomic costs simply calculating lost sales and licencing fees, assuming someone could produce a credible figure, would not provide a complete picture of the economic impact of IP infringement. It would give us, at most, one side of the ledger. Conclusions But enough theory and speculation; here is what we can say forcertain: the two numbers that are invariably invoked wheneverCongress considers the need for more stringent IP enforcement are, atbest, highly dubious. They are phantoms. We have no good reason tothink that either is remotely reliable. Perhaps more importantly, both numbers are seemingly decades old,gaining a patina of currency and credibility by virtue of having beenlaundered through a relay race of respectable sources, even as theirorigin recedes into the mists. That's especially significant,because these numbers are always invoked as proof that the piracy problem is still dire that everything we've done to step upinternational enforcement of intellectual property laws has been invain. But of course, if you simply recycle the same numbers from 15 and 20 years ago remember that IACC's 2005 publications still citethat 1995 congressional testimony, from which it seems safe to inferthat they have no more recent source then it will necessarily seem as though no ground has been gained. Neither figure is terribly plausible on its face. As Wired noted earlier this week, 750,000 jobs is fully 8 percent of the currentnumber of unemployed in the United States. And $250 billion is morethan the combined 2005 gross domestic revenues of the movie, music,software, and video game industries. Still, anything is possible: The figures could happen to be more or less accurate. But given the shady provenance of the data, the onething we know for certain is that we don't know for certain. Andwe're making policy on the basis of our ignorance.
