In the early 1960s, Canadian economic historian Marvin McInnis started digging through the Dominion Bureau of Statistics archives, looking for city-level information on rental prices. While there, he discovered something strange and disturbing:
A prominent theme of my career has been to reveal anomalies in what has been put forward as evidence. One instance is known only to me. In 1961 I was doing research for my doctoral thesis at what was then called the Dominion Bureau of Statistics. I wanted to know spatial price level differences across Canada. The data were collected for several major cities across the country but only changes over time for those cities were published as the CPI. I wanted geographical differences. I was on good terms with Simon Goldberg, the Assistant Dominion Statistician and he said , OK just go into the archive where the original reports from the cities were stored and dig out what you need. So I did.
What I discovered is that the clerks who recorded the data were under an instruction that, since the CPI was to represent prices paid by better off working class families, to edit out any rental figures what were above a designated threshold. By the end of the 1950s they were throwing out more than half of the reported rents. There had been a serious downward bias in a price that got fairly heavy weight in the CPI. I reported that to Simon but I don't think any alteration was ever made. It was water under the bridge. - Marvin McInnis, personal communication, November 23, 2016
I have reproduced this story, with Professor McInnis's permission, partly so that the information is in the public record.
Professor McInnis's story is also a valuable reminder that data is political. Its objectivity cannot be taken for granted. We do not know who made the decision to edit out "too high" rents from the CPI index, or why. We do not even know if the decision had any real consequences. But it is plausible that the understatement of rental prices and misrepresentation of inflation could have had political benefits for some people.
His story also illustrates just how many judgement calls must be made in any estimate of "the cost of living". Does a basic standard of living include owning a cell phone? Eating meat once a day? A child having his or her own bedroom? Any measure of the cost of living contains implicit assumptions about what a "typical" or "average" person needs to get by.
It's easy to mock the Dominion Bureau of Statistics for throwing away "too high" rents in an attempt to get a realistic estimate of the cost of living. Yet Canadian statistics still contain arbitrary elements. As this recent Statistics Canada report explains, Canada has no official poverty line. We use a variety of different measures, one of which, the Low Income Cut Off (LICO), is still defined on the basis of1992 expenditure data. Canadian poverty trends over time look quite different, depending upon which measure is used. For example, the 2014 child poverty rate – that is, the estimated percentage of Canadians under 18 living in low income – ranged from 8.5 percent, if the after tax LICO was used, to 14.7 percent, with the Low Income Measure (data obtained by manipulating CANSIM table 206-0041 here). A canny analyst knows their low income measures, and picks the one that best supports whatever argument they are trying to make.
Doctoral students no longer spend their days in the Dominion Bureau of Statistics archives. But the need for constant vigilance with regards to data quality is as great as it ever was.
Worthwhile Canadian Initiative 
Valuable information to keep in front of people in an era when data can be “lost” or discarded.
Linda, thanks. Have you ever spoken to Marvin about his work on history of the family in Prince Edward county (the ontario one)? It’s absolutely fascinating stuff.
Adam Smith already observed that necessities include anything that is needed not only for survival and getting by, but participation in society as a member in good standing. That included the ability to wear a clean linen shirt every day.
Today, it includes cell phones, as without one it has become nearly impossible to make a phone call outside one’s residence, without begging somebody to use their phone.
It also includes an own bedroom and fashion-appropriate clothing, shoes, and other accessories, so they are not treated as pariahs by the other kids. And that’s not just by loudmouth bullies, but also silently by many others who decide they prefer to associate with somebody else. As an adult, it continues in a slightly different form by being questioned over not driving an income/image appropriate car, missing out on important conversation topics like the latest consumer widgets, entertainment shows, etc., leading to being cut out of conversations and eventually being socially sidelined, which at work also has material career consequences.
Also today you are expected to be able to go to some web site any time, or use an app to get some service that will simply not be given to you in any other form (or only at the price of increased inconvenience). So not only “cell” phone but “smart” phone.
When a business or institution has to contact you back, you are expected to give a cell phone number or email address, and you will be expected to be available to respond during business hours.
Great post Frances.
Livio – thanks! I hoped it might interest you.
If CPI is calculated wrong, then of course we know that all of Real GDP growth is wrong for that period. If CPI is underestimated then golly! GDP ends up bigger than expected. Well, that would be a sign of our excellent economic management.
Every government everywhere would like to be able to print money and not have any consequences of inflation.
Thanks for bringing this to the public’s attention, Frances.
Have you spoken to anybody at Statistics Canada about this? What is their response?
Amazed to learn that StatsCan may not publish, (& Econs don’t demand!), complete, open, and detailed specifications for collection, publication and QC of any & all Data produced at public expense and/or used to determine flows of public funds.
Eric, no, I should I guess!