Lies, damn lies and statistics, goes the old saying by Mark Twain. Weak arguments, dicey financial statements, shoddy elections: you could always count on statistics to save the day.
But now, in the age of supercomputers that can work out complicated logarithms in milliseconds, the days of cooking the books may be coming to an end.
At the weekend, EU data crunchers released an analysis of all 27 EU economies - focusing on deficits, debt, revenue and expenditure - and "discovered" what most of us have believed for the past three years. Greece, it turns out, fiddled its budgetary statistics to hide billions in liabilities when it joined the euro zone in 2000.
So it turns out that the last three years of this Grecian economic drama, with the survival of the euro zone at stake, could have been avoided. How so? The analysts employed a very neat mathematical principle known as Benford's Law. The law suggests that there are trends in naturally occurring numbers, such as populations or budgets. The numbers 1 and 2 occur more frequently as the first digit of very large numbers; statistical analysis, then, should catch creative accounting.
Since 2009, Benford's Law has routinely been used to check economic data, but who believes this is the end of this kind of trickery? The fault, we suspect, lies not in the numbers, but in ourselves.
