Tag Archives: Igor Birman

“Facts” Everybody Knows – Statistical Cautions about the BRICs (in honor of Igor Birman)

In business and finance, statistics and quantitative comparisons are daily companions.  Sometimes, however, key statistics can become too familiar, and reify, i.e. harden into “facts” that everybody knows.  In so doing, they play a large part in strategic surprises.

In the late 1980s, for example, the US Intelligence Community “knew” that Soviet GDP was $2.5 trillion, i.e. about 52 percent of the US GDP of $4.8 trillion.  How?  Their computer models told them so.  These models relied upon – among other things – assumptions about ruble-dollar Purchasing Power Parity (PPP).

Western academic Sovietologists also “knew” the USSR’s economy was about $2.5 trillion.  How?  Mostly, they relied on an authoritative source:  the CIA.

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