Ofgem's blind faith in Wikipedia
This entry was added to http://www.reckon.co.uk/headlines-franckblog on 28 March 2007.
I was intrigued by the following "definition" of total factor productivity in the glossary of Ofgem's latest consultation on gas distribution price controls (this is another of these Ofgem documents annoyingly split into two PDF files; the glossary is at the end of the main document rather than in the supplementary appendices):
Total factor productivity (TFP)
TFP addresses any effects in total output not caused by inputs or productivity. It is also known as the Solow residual.
This has quite a few obvious problems:
- The choice of words is wonky: what does "address" mean here? what sort of "effect" is this about? how, exactly, does TFP "address" an "effect"?
- How does a reference to the "Solow residual" help Ofgem's "target audience", identified on the front page as "consumers and their representatives, gas distribution networks, independent gas transporters, gas shippers and suppliers and any other interested parties"?
- It is rather odd (i.e., wrong) that total factor productivity should be defined to exclude productivity. Ofgem's paper does not disclose enough details of its approach to using productivity data to be sure, but there are no grounds to believe that the method it used is as wrong as the definition quoted above would imply.
Of course, to normal people, total factor productivity growth means output growth less input growth, where both input and output growth are measured as weighted averages of volume growth measures.
It is a productivity growth measure: an increase in TFP is the extent to which more outputs are being produced for the same inputs, or less inputs are being used to produce the same outputs.
There are some problems and arguments about the details (e.g. the weights, the choice of inputs and outputs to be taken into account, and the measurement of input and output volumes, in particular for capital inputs and output quality), and the use of TFP concepts to estimate necessary expenditure for something like a gas distribution network is questionable.
But the essence of the concept and the wrongness of the Ofgem definition quoted above are not in doubt.
Ofgem helpfully sources its text in a footnote (set, for some obscure reason, in a specially large font).
The source is Wikipedia, that well-known fountain of truth.
Ofgem's first sentence is indeed a word-for-word copy of the first sentence of the Wikipedia page http://en.wikipedia.org/wiki/Total_factor_productivity since May 2005. (The reference to the current Wikipedia page is deliberately not a working link: I don't want to encourage Google to think that this page is worth returning as a search result.)
The reference to Solow appears to be an independent addition by Ofgem, as the footnote placement in Ofgem's document correctly (credit where credit is due) indicates.
Exactly the same glossary entry is in Ofgem's previous consultation document on the gas distribution price control review, even with the same careless error in the alphabetical order (To should come before Tr).
Google confirms that Wikipedia is the "authority" for this garbage. And amusingly I find out from Google that Ofgem is not the only collection of civil servants with a misplaced blind faith in Wikipedia:
- Some UN bureaucrats in Sri Lanka have produced a document (5 pages, PDF) which copies a large part of the Wikipedia article without even acknowledging its source.
- This Canadian government report also uses the "definition" without acknowledging its source (footnote 14).
So is this all a plot by Wikipedians to detect credulous Government economists who copy their policy documents from the Internet without checking them? After all, the Wikipedia editor responsible for the words copied by Ofgem, "Feco", is an administrator (now inactive) with a special interest in copyright violations ("I use Google to spot check passages of articles that appear suspicious").
Links
Ofgem's papers on the gas distribution price control from 2008:
- First consultation, December 2005
- Second consultation, July 2006
- Third consultation, November 2006
- Fourth consultation, March 2007
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Entry added by Franck Latrémolière on 28 March 2007.
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Last changed by Franck at 9:01 AM on Wednesday 28 March 2007.