Last week I drew attention to the routine nature of statistical revision. However, some commentators seem to believe that revision of already published statistics implies that errors requiring rectification have been uncovered and that this throws doubt on the competence of those gathering and disseminating the data.
Others have suggested that statistical revision involves a conspiracy to change data to appease powerful interests - for example, raising gross domestic product (GDP) or reducing unemployment rates, to improve perceptions of government performance.
Last week's column cited a paper by Len Cook, a respected statistician and the head of the British Office of National Statistics, in which he argued that "revisions to official statistics are expected and inevitable".
This week, Cook's explanation for this is set out in greater detail, as it has relevance wherever official statistics are gathered, disseminated, analysed and revised.
"Official statistics involve a good number of simplifying assumptions. These are required to approximate in a timely fashion the complexity, richness and interdependence of the economy," Cook explains.
This is achieved through the rapid operation of highly standardised processes and an understanding of sampling variability.
"The core process used to calculate many key economic measures is a weighting together of transaction information sampled from large numbers of disparate businesses, using price and product mixings to generate 'whole economy' estimates from a sample of economic activity."
"This relies on assumptions of continuity for structures and structural relationships for fixed periods. From time to time the underlying structural assumptions are updated, but inevitably only in retrospect, giving rise to potential revisions," Cook says.
Are these revisions the result of incompetence or inadequacy on the part of the agency collecting statistics?
Very rarely, says Cook. "Revisions are a necessary consequence of normal statistical processes, with very few of them arising as a result of mistakes or 'errors' in the popular sense of the word."
"All estimates, by definition, are subject to statistical 'error', but in this context the word refers to the uncertainty inherent in any process of calculation that uses sampling estimates or modelling."
"Most revisions are planned, and reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable 'errors' such as human mistakes or system failures."
Cook juxtaposes two examples from the recent history of official statistics in Britain to explain this distinction.
In 2002, regional estimates were withdrawn after a processing error was found. This involved what might be termed "human error" or "system failure".
On the other hand, "revisions to historic annual estimates of GDP, to quarterly growth of GDP in 2003, and to monthly estimates of industrial production and of retail sales in September 2003 were not the result of avoidable errors".
The magnitude of routine statistical revision depends, to a large extent, on the stability of the business register used for the drawing of samples.
Over the past few years, Statistics SA has developed a new business register based primarily on information derived from the SA Revenue Service's VAT database. The increased coverage this new register provides has led and will lead to revision of some statistics.
However, there are other important factors that determine the necessity for revision.
As Cook puts it: "The world around is in a state of continuous change. A more rapid rate of change means that revisions are potentially bigger when systems and methods are updated."
"Globalisation and the growing use of information and communications technologies to change business practices have widened the scope of the economy, as has the acceleration in the growth of new products."
There can be little surprise that Stats SA, along with most credible official statistics agencies in the world, revises statistics from time to time, and that these revisions are invariably the result of improvements in the quality of the data gathered and the methodologies and tools used.
Pali Lehohla is South Africa's statistician-general and head of Statistics SA. Len Cook's unpublished paper is titled Revisions to Statistics: Their Role in Measuring Economic Progress. For more information on Stats SA and its statistical outputs, visit www.statssa.gov.