United Nations Statistics Division Backcasting. Overview Any change in classifications creates a...
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Transcript of United Nations Statistics Division Backcasting. Overview Any change in classifications creates a...
United Nations Statistics Division
BackcastingBackcasting
Overview Any change in classifications creates
a break in time series, since they are suddenly based on differently formed categories
Backcasting is a process to describe data collected before the “break” in terms of the new classification
Overview There is no single “best method” Factors influencing a decision include:
type of statistical series that requires backcasting (raw data, aggregates, indices, growth rates, ...)
statistical domain of the time series availability of micro-data availability of "dual coded" micro-data (i.e.
businesses are classified according to both the old and the new classification)
length of the "dual coded" period frequency of the existing time series required level of detail of the backcast series cost / resource considerations
Main methods
“Micro-data approach” (re-working of individual data)
“Macro-data approach” (proportional approach)
Hybrids thereof
Micro-data approach Consists of assigning a new activity
code (= new classification) to all units in every period in the past (as far back as backcasting is desired) No other change is required Statistics are then compiled by standard
aggregation
Census vs. survey (weight adjustment issue)
Micro-data approach
Requires detailed information from past periods (for all units to be recoded) More detailed than just the old code
If information is available, results are more reliable than those from macro-approaches
Micro-data approach
Issues: Resource intensive Need solutions if unit information is not
available for a period (not collected, not responded) Nearest neighbor vs. transition matrix
approach
Macro-data approach Also called “proportional method” This method calculates a ratio
(“proportion”, “conversion coefficients”) in a fixed dual coding period that is then applied to all previous periods
The ratios are calculated at the macro level Could be based on number of units only
Low resource approach
Has a more approximate character
Macro-data approach
In simple form, applies growth rates of former time series to the revised level for the whole historical period
More sophisticated methods may use adjustments based on experts’ knowledge Example: mobile phones
Macro-data approach Assumes that the same set of
coefficients applies to all periods This means it is assumed that the
distribution of the variable of interest has not changed between the old and the new classification
Applied to aggregates; does not consider micro-data
Relatively simple and cheap to implement
Macro-data approach Steps:
1 – estimation of conversion coefficients Done for dual-coding period
Longer/multiple periods help in overcoming “infant problems’ of the new classification and allow for correction of data
Based on selection of specific variable 2 – calculation of aggregates using the conversion
coefficients Weighted linear combination
3 – linking the different segments Old – overlap – new series Breaks caused by mainly by change in field of
observation Simple factor or “wedging”
4 – final adjustment Seasonal etc.
Comparison Micro-data approach better retains structural
evolution of the economy Micro-data approach does not require choice of a
special variable Macro-data approach reflects evolution based on fixed
ratio for a fixed variable Seasonal patterns may be distorted
Macro-data approach is more cost-efficient No consideration of micro-data necessary
Assumptions underlying the macro-data approach become invalid over longer periods “Benchmark years” might help to measure the effect,
if data is available
Other options Combinations of both approaches are
possible Ratios for the macro-data approach could be
calculated for shorter periods only Micro-data approach could be used for specific
years and the macro-data approach for interpolation between these years E.g. based on availability of census data
Many factors can influence the choice (see beginning) but data availability is a key practical factor