The Importance of Data

• Author: Robert Heath
• Pages: 58-58

58 FINANCE & DEVELOPMENT | June 2018

The Importance

of Data

STATISTICS AND DATA are often seen as importa nt

but dry subjects. Willia m Deringer’s book on the

use of calculated va lues in late 17th and 18th cen-

tury Britain c hallenges this image with a story of

remarkable events in which dat a plays a central role.

e “Glorious Revolution” of 1688 brought

William of Orange to t he English throne. e

subsequent increased authority of Parliament over

budgetary mea sures, the development of a two-

party system, and the freeing of the press created

an environment in which political ly motivated

individuals (dubbed “calculators” by Deringer) used

calculated va lues to publicly hold the government

and government-supported companies to account.

e public use of data in this way di stinguished

Britain at the time. Ca lculators competed and

challenged each ot her’s calculations to prove polit-

ical points. By the 1720s, the government under

Robert Walpole increasingly relied on calc ulators

to support policy decisions.

e book focuses on the early 18th centur y, with its

increasingly vitriolic debates over government expen-

diture, taxat ion, and debt as well as the trade balance.

As the century wore on, the role and authority of

data widened from nancia l and economic aairs

to social and geographic settings, including in the

British colonies. Indeed, the author considers that

the period left its greatest legacy in the United

States, with its heavy rel iance on quantitative modes

of accounting, eva luation, and decision-making.

e book highlights t he use of a number of emerg-

ing statistica l techniques. e South Sea Bubble—a

story of asymmet ric information, misaligned incen-

tives, and misled investors in a period of  nancial

innovation—showcases t he use of plausibility anal-

ysis to depict the absurdity of the sha re price at its

height. e story of the “Equivalence” exemplie s

the use of present value techniques to ma ke a precise

estimate of England ’s payment to Scotland at the

time of their unicat ion. ere are also examples

of scenario building , early forms of regression anal-

ysis, and the introduction of actua rial calculations.

Measures of social happines s emerged.

e competitive nature of the calcu lators high-

lighted measurement issues, some of which rema in

to this day. e measurement of bilateral trade

between Engla nd and France in a mercantile envi-

ronment of winners and losers raised issues, as it

does today, regarding the recording of reexports,

the reliability of reported cu stoms data, and the

valuation of goods. Partisan debate over the size

of government debt and whether it was increasing

or decreasing raised t he ecacy of using market

value. e calculators a lso drew attention to the

importance of identif ying the hidden assumptions

behind calculations.

Deringer tells these viv id stories with a rich-

ness of research that brin gs to life not only the

events surrounding them but al so the many famous

characters involved. We can learn f rom the 18th

century debate, he says, by promoting new and

diverse computational approaches to stimulate

public debate and oset what he fears is grow ing

anti-quantitative sentiment. As Deringer notes,

data can often be a tool for generating debate as

much as for providing denitive ans wers.

ROBERT HEATH, former deputy director of the IMF’s

Statistics Department

William Deringer

Calculated Values:

Finance, Politics, and the

Quantitative Age

Harvard University Press,

Cambridge, MA, 2018, 440 pp., $45

Data can often be a tool for

generating debate.

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