Fighting fake news

Weekly Updates

Last year a report was published suggesting an imminent exodus of wealth from the UK. The report received widespread, sensationalized media attention. Its conclusions shaped the UK’s policy debate. But now the report’s issuer has backed away from the exodus idea.
Wealth measurement is not precise. Economic data focuses on flows like income, not stock levels. Wealth estimation uses mathematical models with margins of error. Even allowing for that imprecision, this particular report did not make sense. People in the UK earning over GBP 500,000 surged more than 27% over the last four years. Soaring numbers of high income earners are not generally consistent with a wealth exodus. Many wealth management professionals rightly suspected the movement of wealth into and out of the UK was not economically significant.
The real risk here is not modelling errors, but the ease with which “fake news” can influence policy and public opinion. Fake news travels faster and further over social media than does the truth, because fake news is often customized to appeal to emotions. The truth is often unhelpfully dull.
Until we reach the perfect state where economists run everything, the lesson from this episode is that economists need to focus more on their communication skills. Just being right is no longer enough.