OECD’s Self-Serving Metrics

September 16, 2009

George Ford of the Phoenix Center does a great job of debunking the OECD’s latest self-serving set of metrics covering mobile prices in his latest research piece: “Be careful what you ask for: a comment on the OECD’s mobile price metrics.

The OECD’s mobile metric approach reminds me of the old adage that you can get statistics to say anything you want — if you beat them up enough. As George’s white paper shows, the OECD had to really work over the data to get it to reach the upside-down conclusion that Europe’s average wireless prices are lower than the U.S.

First, the OECD ignored the pesky notion of overall wireless usage, because if they looked at usage they would have to include the pesky fact that Americans use massively more wireless minutes of use than their European counterparts — roughly 2-6 times more depending on the country.

Second, ignoring usage allows the OECD to ignore economics and common sense, because if people were told Americans use the most wireless minutes of use, someone might obviously connect-the-dots of supply & demand and conclude that Americans’ more minutes of use are a result of lower average prices than other countries.

Third, George pointed out that the OECD selectively chose certain usage price points on the usage curve to best make their case. However, if one looks at the entire distribution of the curve, their selective conclusion looks all the more “selective” and suspect.

Fourth, the OECD based its method on one type of one carrier’s prices, which is nonsensically biased against competition and the average competitive price in a market. Given that the OECD tends to favor government-regulation-policy over competitive markets — it should not be surprising that the OECD chose selectively what it deems as the “best” prices to compare. It probably did not occur to the OECD statisticians to think that the best price for the study would be the overall average price per minute consumers effectively pay.

It will be interesting to see if the OECD statistics, as they reflect input from others, ultimately and fairly reflect economic reality in the marketplace, and not a pre-determined view that reflexively pats European countries on the back for a job well done in most always favoring regulation over market competition to achieve the best value for customers.

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