November 16, 2011

Goodhart’s Law and Argentinian hamburgers

Goodhart’s Law says Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.

The Big Mac Index has been used to compare prices across countries, as we have noted before.  Brazil Argentina currently has very high prices due to a combination of inflation and a strong economy, and this shows up glaringly in the Big Mac Index.

Tyler Cowen reports (translating a Spanish original) that the Brazilian Argentinian government has persuaded McDonalds to lower the price of the Big Mac (relative  to other McDonalds items, and relative to competing hamburgers), so that Brazil’s Big Mac Index becomes more competitive.

 

Updated: I actually do know that Argentina and Brazil are different countries, and that Brazil doesn’t speak Spanish.

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Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »

Comments

  • avatar
    Richard Penny

    In Argentina it’s actually worse. Some years ago the government ordered the statistical office there to alter its basket of goods that it priced as the CPI increase was starting to trend up. Recently they have threatened statisticians producing alternatives to the “official” CPI with sanctions. See the International Statistical Institute position http://isi-web.org/about/methodological-concerns-argentine-cpi

    2 years ago Reply

  • avatar
    Idi Unga

    You have misrepresented Tyler Cowen’s post. He does not mention Brazil. Neither does the original story (in Spanish).

    2 years ago Reply

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