There is often a trade-off in practical economics between getting the answer to big questions roughly right and being precise with answers to more limited questions but getting the big picture wrong.
“Roughly right” always wins in my book.
When the Treasury claimed its tax and benefit measures were “progressive”, that result came because it omitted difficult to assess changes such as cuts to housing benefit. Any fool knows that changes to these hit lower income families. By answering a limited but precise question accurately and passing it off as an assessment of the full Budget effects, George Osborne, the chancellor had actually assumed that housing benefit changes have no effect on anything except the exchequer. That was nonsense and soon exposed by a “roughly right” analysis by the Institute for Fiscal Studies.
Today, two news organisations have had a go at answering questions about household income prospects. Read more