Thursday, February 19, 2009

"Lies, Damn Lies and Statistics"* #1

I am considering a series on anecdotal and "statistical" data that is often used to justify conclusions about how the workers' compensation system is operating. This is the first (and maybe the last).

Early this month NCCI published Gauging Current Conditions: The Economic Outlook and Its Impact on Workers Compensation, a report on workers' compensation trends in light of the current downturn of the national economy. Based on research by Moody's/, it draws conclusions from national trends and historical data that may apply in Oklahoma. At least they point to areas of vigilance as our state begins to feel the full impact of declining production and rising unemployment. They include:

  1. Ongoing Job Losses in 2009 Suggest Declines in Exposure and Downward Pressure on Claim Frequency;
  2. Moderating Wage Gains May Dampen Increases in Indemnity Severity;
  3. Accelerating Medical Care Price Increases Suggest Further Upward Pressure on Medical Severity; and,
  4. Low Interest Rates and Volatile Stock Prices May Constrain Returns on Property and Casualty Investment Portfolios.
The article is a fairly low-tech discussion of the likely advantages and risks arising from the 2009 economic outlook. For Oklahoma it's a mixed bag, and the trend in costs/premiums depends on how the local indicators are breaking.

* part of a phrase attributed to Benjamin Disraeli and popularised in the United States by Mark Twain: "There are three kinds of lies: lies, damn lies, and statistics." The statement refers to the persuasive power of numbers, the use of statistics to bolster weak arguments, and the tendency of people to disparage statistics that do not support their

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