GAB is pleased to publish this Guest Post by Maya Forstater, well-known analyst on business and sustainable development, on a topic of continuing concern to scholars and activists working on corruption and development matters.
Are unreliable guesstimates and made-up statistics mildly irritating, indispensably powerful or potentially dangerous in the public debates on corruption? The topic comes up so often on the Global Anti-Corruption Blog that it has been given its own own three-letter acronym: WAGs (or Wild Ass Guesses).
Those at the sharp end of advocacy maintain, with some justification, that in the battle for attention, an arrestingly big number makes all the difference. But as Rick has argued, overinflated figures can also cause harm.
Something similar happens on the related topic of tax and illicit flows. One example of this is the widespread belief that ‘developing countries lose three times more to the tax avoidance by multinational companies than they receive in aid’. This much quoted WAG gives the impression of huge potential gains for the poorest countries, but is based on a chain of misunderstandings . In practice the magnitudes of revenues at stake are likely to be several times smaller than aid for the countries where that comparison matters.
Similarly, broad estimates of illicit flows or the scale of the black economy (“trillions”) are often presented in ways that suggest that the sums to be gained from tackling corporate tax avoidance are larger than any serious analysis supports.
But what harm do such numbers do, compared to their power at getting people talking about the issues? Is it really worth pointing out misunderstandings and myths in pursuit of a more rigorous and careful approach to evidence? (Or as I have been asked‘ Do you ever wonder how much you help the tax abusers?’)
I see four key dangers from inflated perceptions of the numbers: Continue reading