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Home Publications Blogs Beat the Press What Is the Point of Budget Reporting?

What Is the Point of Budget Reporting?

Friday, 19 July 2013 04:10

That is a serious question. What are newspapers, radio and television stations, and Internet sites trying to accomplish when they report on the budget?

Presumably they are trying to convey information to their audience. This raises the question of why they so frequently just report budget numbers in billions or trillions of dollars; numbers that will be almost completely meaningless to the overwhelming majority of their audience.

This point is simple and straightforward. When a newspaper tells its readers that the government will spend $76 billion this year on food stamps, as the NYT did recently, the number is virtually meaningless to almost everyone who sees it. Most people, even the well-educated readers of the NYT, are not budget wonks. They know $76 billion is a big number, way more than they will ever see in their lifetime, but spending on food stamps would also be a really big number to most of us if were $7.6 billion or $760 billion. When the NYT tells us that we are spending $76 billion on food stamps it is not informing readers as to whether this level of spending is a big item in their tax bill or a major contributor to the budget deficit.

It turns out that it is not just NYT readers who get confused by large numbers. Apparently NYT reporters and/or editors have the same problem. The NYT article on food stamps last month described food stamps as a $760 billion program. The NYT later printed a correction, but this was a pretty egregious error to slip by the editors. The paper went one step further this month when it reported Italy's debt as $2.6 billion. The correct number is $2.6 trillion, three orders of magnitude larger.

Mistakes like these find their way into print because even NYT editors are not hugely familiar with the budget. It is highly unlikely that they would have printed that food stamp spending is 22 percent of the budget, as opposed to the actual 2.2 percent number for 2013. Editors would know that the food stamp program does not take up more than one fifth of the budget. Similarly, they never would have written that Italy's debt is 0.1 percent of GDP, as opposed to the actual number of approximately 130 percent.

Reporting these huge budget numbers without any context is simply bad reporting. It's not a question of time or space. It takes less than one second for a reporter to put these numbers in percentages. In terms of space, if an article is really that space constrained that it cannot include an extra clause in a sentence, then it would make more sense to exclude the dollars (which are meaningless to almost everyone) and just include the percentage figure.

Media Matters did a nice report looking at budget coverage in the NYT, Washington Post, and Wall Street Journal over the first half of 2013. It found that all three just reported the raw numbers in more than half of their budget stories. Still there were differences. In the Washington Post, 73 percent of the budget articles only included the raw numbers. By comparison, in the Wall Street Journal only 56 percent of the articles included the numbers devoid of any context. Twenty nine percent of the WSJ articles expressed the numbers as shares of the total budget, almost twice the 15 percent share of budget articles at the WAPO. The NYT came in the middle in both categories.

While the WSJ can take a bow for being the best of the big three, there is still no excuse for reporting numbers without any context in 56 percent of its budget stories. This is not just a dilettantish concern for good reporting. Polls consistently show that the public is enormously confused about the budget. They have no idea where their tax dollars are going. A poll from 2011 found that the public on average believes that 27 percent of the budget goes to foreign aid. The actual number is less than 1.0 percent. A CNN poll from the same year found that the median respondent thought that food stamps accounted for 10 percent of the budget, while subsidies to the Corporation for Public Broadcasting accounted for 5 percent of the budget. (The actual number is less than 0.01 percent.)

It is impossible to have serious policy debates when the public is so poorly informed about where their tax dollars are going. What does it mean when most people think that foreign aid should be cut because they think that we should only spend 5 percent of the budget on foreign aid (close to 10 times current spending levels)?

Obviously prejudices enter into these misperceptions. There are people who want to believe that all their tax dollars go to foreign aid or food stamps and who will not allow their opinions to be influenced by the data. However, there is a very large segment of the public that does not fall into this category who are similarly misinformed. It is unlikely that if they heard the media continually repeat that foreign aid was 0.7 percent of the budget (instead of $23 billion), that they would still believe that it accounted for more than one quarter of the budget. This would allow us to have a budget debate that reflected people's actual priorities rather than their misperceptions.

So what is the argument on the other side? No reporter really believes that they are providing information to most of their audience when they tell them we will spend $76 billion on food stamps this year. Why do it? Yes, that is the way that it has always been done, but they used to write stories with typewriters, too. 

Change is possible. There is no excuse for not presenting news in the way that makes it most understandable to the audience. It's time for the media to take their responsibilities to the public seriously.






Comments (19)Add Comment
Absolutely: A Rising Economic Tide Can Only Lift Boats Relative to Each Other
written by Last Mover, July 19, 2013 6:31

Economics used to be the dismal science.

Now economics is the tabloid science.

The immoral relativism of Dean Baker et al has destroyed the absolutist values on which America was founded.

Not to mention the shock value of absolutist values.

Relatively speaking of course.
obvious answer
written by jonny bakho, July 19, 2013 6:55
Budget and budget numbers are used as political weapons to win political arguments. Those making the "We spend too much" try to terrify the reader with numbers that contain lots of zeros. Those promoting spending use the less worrisome percent of GDP numbers.

Right now, much of the public is in the "we can't afford it" or I would rather have lower tax than public goods and services. Those who want to cut social spending use these arguments and imply that individuals can be better off economically with the tax cut than the goods and services. In reality, tax cuts are often small relative to personal income while benefits of government goods and services escape attention. It is all about the politics of expanding or contracting social spending. A reasoned approach to affordability needs to consider percent of GDP. Often, policy advocates want an emotional reaction, not a reasoned one.
please keep repeating yourself on this problem - worth it
written by JaaaaayCeeeee, July 19, 2013 7:07

Many commentators make the (admittedly human) assumption that because reporting spending figures in terms of % of budget is something they themselves can work around, it's not very important.

Unfortunately this doesn't help those voters who aren't econ or finance types, care about understanding, but who have just had the ladder pulled up higher away from them; worse, just in time for upcoming budgeting debates.

Thank you for crusading for an actually easy and informative change to reporting government spending, when it's never been more important.
written by Chris Engel, July 19, 2013 7:11
It takes 30 seconds to send a quick email to the editor of NY Times public@nytimes.com and just write something short about how misleading numbers can be without context etc.

Eventually they'll get it.

I give kudos to FT, Bloomberg, WSJ -- they are much better with context. WaPo not so much.
lying with statistics
written by bill turner, July 19, 2013 7:17
It has long been recognized that one can lie with statistics by using a single number out of context. It is amazing to me how frequently even intelligent people are unaware that they are being manipulated, even if unintentionally, in such a fashion. It doesn't have to be just numbers, of course. Here I am thinking about an anti-smoking commercial that is running here in Minnesota that shows the amount of fat that accumulated in an artery (or vein) to the heart of a smoker.

In "Calculated Risks: How to Know When Numbers Deceive You" by Gerd Gigerenzer talked a lot about biases, and ways to make numbers simpler to understand. What was amazing was how often doctors were confused about the value of various tests, test results and procedures given the poor way the numbers were presented. Innumeracy is rampant in this country.
To fill up space (& time)
written by wkj, July 19, 2013 8:04
The point of budget reporting, like much other reporting, is to fill up space (or time on radio & tv) with something that doesn't take too much work and sounds serious.

This is illustrated by the p.m. radio news on WETA, the Washington area classical music station, where the announcer concludes the p.m. news with the phrase "just some of the items we're following".

He doesn't say that these are the newest or the most important items, they are just "some". He has time to fill & that's what he does.

written by watermelonpunch, July 19, 2013 8:05
jonny bakho makes a good point, but doesn't even go far enough.

What irks me is that people aren't informed enough to know that things that public services do are worth something, and they're going to pay for it one way or another.

One example is the Pennsylvania Roads.
Not spending to fix the roads is costing everyone, probably more than they'd pay in more taxes to fix the roads, because of the bad roads.

It's the same thing with almost everything.
You stop taking care of civilization, and it costs severely to live in a less civilized society.

The problem is framing.
Public services are NOT altruistic charity.
They are the foundation of CIVILIZATION.

Journalism has failed to communicate & educate the less obvious ways in which various public services benefit us all. Anymore, they don't even bother to report the obvious stuff.
Simple Explanation
written by jonny bakho, July 19, 2013 8:19
Journalists report the numbers they are given. Many are journalists are innumerate, and/or inexpert in budget and economic matters. Many don't know where to find numbers on total budget or GDP to use as the denominator or may not even know how to calculate percentages, even with the aid of a computer or calculator if they had those numbers presented to them. Even if a reporter knows where to find the information and how to calculate percentages, the reporter may not have the time to do them and meet deadline.

Therefore, they cut and paste the numbers that they are given by people who want to make a political point about spending (see obvious explanation above).
Politics and Math
written by Jennifer, July 19, 2013 8:55
As previous comments have stated, poor budget reporting is frequently the result of political agendas on the behalf of people reporting-either on purpose or out of ignorance. The agendas are the same that rarely point out the usefulness of public services and the downside of privatization. But a lot of it is what bill turner suggests-innumeracy is rampant in this country. It goes far deeper than statistics, it never ceases to amaze me the real adversion otherwise educated people have to math. Add to that the big numbers that are typical of budget reporting-most people don't encounter those kind of numbers in real life-and people just disengage completely.
written by AlanInAZ, July 19, 2013 10:05
Food stamps and foreign aid are a very small part of the federal budget and that should be understood more widely. But I think another point is that Federal taxes are only a part of the overall tax burden. When you consider all taxes (payroll, sales, local, property, etc. ) the percentage dedicated to stuff like federally funded food stamps and foreign aid is even more miniscule.
written by Ryan, July 19, 2013 10:09
Amen brother Dean! I'm curious as to the cause; is it simple laziness (or time constraints), in-depth knowledge of the budget that isn't communicated to the audience, or is it a lack of curiosity that precludes reporters and pundits from asking, "well, how big is that in context?"? One day, I shall go back and read these types of pieces from the 1950s to see if it's ever been better.
Denier Accounting
written by Jay, July 19, 2013 11:25
What percentage of the reports mention the monthly budget numbers do not follow Generally Accepted Accounting Principles?
Perhaps its because economists refuse to provide meaningful numbers they can report!
written by Perplexed, July 19, 2013 12:55
Don't economists have the math skills to know the amount the government spends through tax expenditures? How about monopoly profit expenditures? Can they not develop reasonable estimates of other rents and add them up?

When economists support the ruse and concealment of these "expenditures" why would they expect people to buy into these budget numbers (and percentages of them)as meaningful? Maybe "We the People" need specialists with better math skills to properly inform us of where the money actually goes in our economy. Why do we put up with this obfuscation of the real information needed to make governing decisions with?

How is it that "We the People" can possibly be self governing when economists can't even tell us what the real government expenses are, and what % of the GDP is rents? What other CEO, CFO, or board of directors would put up with such obfuscation and out right refusal to provide these crucial measurements?

If economists refuse to provide meaningful numbers and measurements of where the peoples' money goes and how our laws redistribute that money, why would we expect the press to overcome this lack of information? Why would we insist they go along with the "budget" ruse? Maybe they're doing us a favor by not lending credibility to obfuscated numbers and exposing that we're flying blind without instruments so that those who benefit can maintain their advantages. Why is one meaningless number more meaningful than another meaningless number?

Let's start with meaningful numbers and then complain when they don't print them instead of the other way around.
written by liberal, July 19, 2013 1:12
bill turner wrote,
In "Calculated Risks: How to Know When Numbers Deceive You" by Gerd Gigerenzer talked a lot about biases, and ways to make numbers simpler to understand.

Man, that's a great book.

Most of it focusses on physicians, but he also demonstrates that e.g. Alan Dershowitz either is a liar or hasn't the least understanding of conditional probability.
Not stupidity
written by John Emerson, July 19, 2013 1:16
They're trying to reinforce and propagate the present political line of the people who care.

People who say stupid things aren't necessarily stupid. They could be knowingly deceiving people, or (more likely) they're probably just saying what their boss wants them to say.

For thirty-40 years a well-organized movement has been trying to turn the clock back to pre-Teddy Roosevelt, and most of the media are on board with that program.
written by liberal, July 19, 2013 1:17
Perplexed wrote,
How is it that "We the People" can possibly be self governing when economists can't even tell us what the real government expenses are, and what % of the GDP is rents?

Now that's a tough one. Not even Dean seems to understand that land rent is, well, rent, and that it is the biggest source of rent in the economy.
Jonny Bakho nailed it
written by Oarboar, July 19, 2013 2:08
Most inside-the-Beltway reporters are frighteningly bad at their jobs. Their only skillsets are rewriting GOP press releases and going to cocktail parties. I doubt half of them could even figure out how much to tip at a restaurant, let alone balance their checkbook. My journalism degree has been a source of embarrassment for years now.

It doesn't help that I got into the business to be a sportswriter. Sportswriters at least have a basic grasp of context. 16 wins is a great season for an NFL team, but in Major League Baseball, that's just a good season for an individual pitcher or an above-.500 month. Ten points is a crappy night for LeBron James; ten goals is a phenomenal amount of scoring for a hockey or a soccer team.

But for the Beltway crowd, context makes their head hurt. It's too much like work, which is what only little people do.
Why does NPR prefer raw numbers, too?
written by Peter T, July 19, 2013 3:11
NPR reports every day on the movement of the stock market: the Dow is so many points up, the NASDAQ so many points down, and the S&P500 so many points up. I wonder if more than 5% of the listeners know which point changes are large and which one are small.

I asked NPR once per email to report all changes in percent with 0.1% resolution, because it would allow average listeners to process the information better. I never got an answer.

Why does NPR report the raw numbers? Do they want to show Wall Street how serious their economic reporting is (because if you work on Wll Street, raw number DO mean something for you)? I thought that NPR was for the average listeners, but sometimes I doubt it.
Keep Beating the Press
written by Widgetmaker, July 19, 2013 5:42
Right on, Dr Baker. It's sad to see how few reporters get it. If they were actually doing their jobs right they would care enough to provide context to their readers. But they don't seem to; it's just do enough to get by the same as everyone else does.

I respect your tireless efforts to get this point across. It seems so obvious to me. I hope reporters can get a copy of this article sent to them every time they make such an error. You would be doing a great public service if you had one of your staff members send this out everytime this transgression is caught.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.