Eurostats - True or False?

Summary

Podcast Summary: “Eurostats – True or False?”

Podcast: More or Less
Host: Ruth Alexander (standing in for Tim Harford)
Broadcast Date: April 13, 2012
Theme:
This episode of More or Less, broadcast on the BBC World Service, scrutinizes some of the most headline-grabbing statistics from the Eurozone crisis. Ruth Alexander and her team peel back the layers on claims about tax, luxury cars, and unemployment in Greece, Italy, and Spain, separating myth from reality and revealing the truth (or lack thereof) behind “Eurostats.”

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Key Discussion Points & Insights

1. Are There More Porsche Cayennes Than High-Earners in Greece?

• [01:05] Myth: “There are more Porsche Cayennes registered in Greece than taxpayers declaring an income of €50,000 or more.”
• Luxurious Porsche Cayennes are emblematic of wealth; if the claim were true, it would suggest massive tax evasion.
• Source Trackdown: Ruth’s team found the claim originated from Professor Heracles Polemarchus, an economic advisor, who admitted it was “casual” and not based on hard data.

  "He said his remark was casual... he didn't really have much to back it up." — C [01:29]

• The Facts:
  • In 2010, there were 311,428 people in Greece declaring incomes above €50,000.
  • Fewer than 1,500 Porsche Cayennes sold in Greece since 2003.

  "Not even 1%." — B, Lucas Kunze of Porsche [02:46]

• Conclusion: The Porsche Cayenne claim is wildly exaggerated and unsubstantiated.
• Big Picture: There is some basis to the idea of underreported income, given that income tax receipts are the lowest in the Eurozone at 4.7% of GDP.

  "This is because for some people, what they actually earn and what they put on their tax forms are often quite different figures." — C [03:14]

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2. How Many Chauffeur-driven Executive Cars in Italy?

• [03:36] Reported Claim: 30,000 executive cars for politicians cost Italian taxpayers €2 billion/year; some reports suggested an even higher 629,000.
• The Truth:
  • Italian ministry review found 72,000 government vehicles, but only 5,000 are chauffeur-driven for politicians and executives, plus 10,000 other chauffeured vehicles.
  • The majority are service vehicles (maintenance, staff).

  "When you strip these out, you're left with 5,000 chauffeur driven cars for the exclusive use of politicians and executives." — C [04:40]

• The original inflated figures were echoed in reputable publications, but originated in ministerial statements without robust sourcing.
• Conclusion: Figures were significantly overstated; the myth is debunked.

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3. Is Youth Unemployment in Spain Really Over 50%?

• [05:07] Reported Statistic: Spain’s youth unemployment exceeded 50% by February 2012.
• Some critics argue the statistic is inflated by the “shadow economy” (unreported work).
• Expert opinion:
  • Prof. Friedrich Schneider: Unemployment leads young people to seek informal, low-wage jobs, growing the shadow economy, not vice versa.

    "Not the other way round, because no one has a job. He looks around, whether he can do some gardening or cleaning or whatever..." — E [06:01]

• Contributing Factors:
  • High school dropout rates (30% among under-18s—twice the EU15 average) fueled by a former construction boom.
  • Post-2008 crisis, many youth lacked qualifications for other sectors.

  "Young people found good earning jobs in the construction sector... when the bubble burst, then the unemployment began to rise." — F, Elvira Gonzalez [06:36]

• Understating the Problem:
  • More young Spaniards are now staying in education, masking the true extent of youth unemployment.
  • ILO Definition: Unemployed = ages 15-74, without work, available, actively seeking in last four weeks or have a job starting soon.
  • If you broaden the definition (look for a job in the last 12 months), the youth unemployment rate rises even further.

  "If you took into account people who had looked for work in the last 12 months, then youth unemployment was around 10 percentage points higher at over 50%." — C [08:12]

• Conclusion: While official numbers are shocking, the true number may be higher or lower depending on the definition used, but the job crisis is real and severe.

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Notable Quotes & Memorable Moments

• B, Lucas Kunze (Porsche spokesperson) [02:24, 02:46]:

  "This story is so ridiculous." "Not even 1%."

• C (on exaggerated Italian car numbers) [04:19]:

  "Yeah, and also not true. Not even slightly true."

• E, Prof. Friedrich Schneider [06:01]:

  “Not the other way round, because no one has a job. He looks around, whether he can do some gardening or cleaning or whatever, to earn at least a little bit of extra money due to the unemployment compensation, which is not high in Spain.”

• F, Economist Elvira Gonzalez [06:36]:

  “Young people found good earning jobs in the construction sector... when in 2007, 2008, the construction bubble has burst, then the unemployment began to rise enormously among these young persons. And now, since they are very low qualified, they found a lot of difficulties in the present labour market.”

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Timestamps for Key Segments

• Opening & Theme: [00:00–00:56]
• Greece: Porsche Cayenne Statistic Debunked: [00:57–02:48]
• Tax Receipts & Underreporting in Greece: [02:48–03:36]
• Italian Politicians’ Executive Cars: [03:36–05:07]
• Spain: Youth Unemployment Myth Explored: [05:07–08:46]

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Tone & Style

The episode maintains a sharp, skeptical, sometimes wry tone (e.g., poking fun at hyperbolic “Eurostats” and bringing in a German laughing at the Greek car myth). The explanations strive for clarity, dismantling statistical untruths with precision and good humor.

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Takeaway

More or Less expertly investigates and debunks sensationalist statistics from the Eurozone crisis, revealing that many widely-repeated “facts”—about luxury cars, millionaire tax evaders, and soaring youth unemployment—don’t stand up to scrutiny. The truth is often more nuanced and complicated, and the team emphasizes the importance of understanding how numbers are produced and what they really mean.

Transcript

[A]

This is more or less the programme which finds light at the end of every statistical tunnel. We make an edition of the programme for BBC Radio 4, but this episode was broadcast on the World Service. Hello and welcome to More or Less on the BBC World Service. We're your weekly guide to the numbers in the news and in life. And I'm Ruth Alexander, standing in for Tim Harford, who's currently trying to provide a one man fiscal stimulus to the Portuguese beach economy. This week's program. This program is dedicated to Eurostats, those surprising statistics that have emerged from the Eurozone crisis. Which ones are true facts and which ones are slippery untruths? Here's an early clue. 1. Eurostat is so wrong. We made this German laugh.

[B]

This story is so ridiculous.

[A]

Wesley Stevenson has been gathering some of the more startling statistical claims.

[C]

Yes, let's kick things off with those Greeks. A number of stories that fit the narrative of Greece being a basket case have been circulating, including this one.

[D]

There are more Porsche Cayennes registered in Greece than taxpayers declaring an income of €50,000 or more.

[A]

Well, these cars cost about US$63,000, so this is outrageous if true.

[C]

Yeah, if true. The original claim was made by someone who you think would be a reliable source and an economic advisor to the former Prime Minister of Greece, a man called Professor Heracles Polemarchus. But when I asked him, he said his remark was casual. And he said it was based on what had been circulating in policy circles in Greece a few years back, and he didn't really have much to back it up. He told me the only hard fact he was aware of was that the per capita number of Porsches in the city of Larissa was one for every two and a half thousand, which was twice the amount of Porsche Cayennes in the OECD countries.

[A]

Back up his original assertion. Let's have a look at the facts here. In 2010, there were 311,428 people with declared incomes of more than €50,000, or about US$65,000, who were paying tax in Greece.

[C]

Armed with this fact, I rang a really nice man called Lucas Kunze at Portia. And this was his reaction to our numbers.

[B]

This story is so ridiculous.

[C]

So I asked him exactly how many Porsche Cayennes had been sold in Greece

[B]

since the start of the Cayenne. In 2003, we sold around 1,500 Cayennes,

[C]

which is not very much like 311,428.

[B]

Not even 1%.

[A]

OK, so the Porsche Cayenne Thing is wrong. But there was a broader implication here that the Greeks don't pay tax.

[C]

Now, let's not tar everyone with the same brush. Of course some Greeks pay tax. In fact, most do. But income tax receipts as a percentage of gdp are only 4.7%, which is the lowest in the Eurozone.

[A]

It would be good to think that this is just because Greece has rock bottom tax rates. But it hasn't.

[C]

No, this is because for some people, what they actually earn and what they put on their tax forms are often quite different figures. As Horst Reichenbach, who's head of the EU task force offering technical help to the Greek government, said late year, the amount of unpaid tax was estimated to be in the order of 60 billion euros, or US$80 billion.

[A]

Another automotive number that has made it into our Eurostats list was reported in One of the UK's broadsheet newspapers, the Daily Telegraph. It said that Italian politicians are chauffeured

[B]

around in expensive Alfa Romeos, Maseratis and Audis with tinted windows. There are a staggering 30,000 of these executive cars and they cost the Italian taxpayer an estimated 2 billion euros a

[C]

year, which is about $2.6 billion. Now, I really like this one because initially when I looked at this, I found an even more staggering figure that suggested there were actually 629,000 of these cars.

[A]

Astonishing.

[C]

Yeah, and also not true. Not even slightly true. And rumours of these figures have been swirling in the Italian press for a while, which prompted a review by the country's Ministry of Public Administration. Now, this found There were only 72,000 vehicles operated by central, regional and local governments.

[A]

And that's still more than the original report said.

[C]

Yes, but if you look at the detail, you'll see that the majority of these are service vehicles. So they're used for things like maintenance and deliveries and for staff to get around. So when you strip these out, you're left with 5,000 chauffeur driven cars for the exclusive use of politicians and executives and. And 10,000 other cars with chauffeurs.

[A]

So the Telegraph article was wrong?

[C]

Yes, but to be fair, they were only repeating what the Minister of Public Administration in Italy was saying when this article was originally written.

[A]

Let's have some of that music again. To Spain, where it's been reported that youth unemployment had gone over 50% by February this year.

[C]

There have been some criticisms of this figure, though, because some economists have suggested that the reason it's so high is because there's a big shadow economy in Spain.

[A]

So the young people are working in the shadow economy and appear to be unemployed.

[C]

Yeah, that's right. But which came first, the shadow economy or the unemployment? I put this to Friedrich Schneider, a professor from the University of Linz in Austria and a leading expert on shadow economies.

[A]

Shadow economist. Cool.

[C]

Yeah, even cooler than an undercover economist. And he says that the unemployment probably caused the growth of the shadow economy,

[E]

not the other way around, because no one has a job. He looks around, whether he can do some gardening or cleaning or whatever, to earn at least a little bit of extra money due to the unemployment compensation, which is not high in Spain.

[A]

How does this compare to other Eurozone countries?

[C]

The average figure for the Eurozone is a lot lower. It's 21.5%.

[A]

So why is there such a problem in Spain?

[C]

I spoke to economist Elvira Gonzalez and she told me that in the middle of the last decade, school dropout rates for Spaniards below the age of of 18 stood at 30%, which is double the average for the EU 15. They're countries that joined the EU before 2004. And she told me there's a very good reason for this.

[F]

Young people found good earning jobs in the construction sector. That's why they left school. And when in 2007, 2008, the construction bubble has burst, then the unemployment began to rise enormously among these young persons. And now, since they are very low qualified, they found a lot of difficulties in the present labour market.

[C]

And we're now seeing the flip side of that trend. Young Spaniards are now staying on in education for as long as they can, which is why the alarming figure of 50% youth unemployment might even be understating the problem.

[A]

Because along with those registered as unemployed, there are others who would like a job but aren't officially unemployed.

[C]

And this all comes down to the definition of who is unemployed, which is a standard set by the International Labour Organisation. And unemployed people are those aged 15 to 74 who in a given week are without work, available to start work within a fortnight, and have been actively seeking work in the past four weeks or had already found a job to start within the next three months.

[A]

But what about those people who haven't been actively seeking work in the last four weeks? What if it's five or six weeks since you last looked for work?

[C]

Well, these people are deemed to be outside of the labour force, and in a lot of countries this number is growing. So to address this problem, the International Labour Organization decided to recalculate the figures from 2010. Now, this is when Spain's youth unemployment rate was a bit lower at 41%. And they calculated that if you took into account the people who had looked for work in the last 12 months, then youth unemployment was around 10 percentage points higher at over 50%.

[A]

So why don't they do this normally?

[C]

Well, there's some debate over whether these figures really represent the unemployed. The ILO say that some of these people are simply hiding out in education or lounging around living off their parents. But are these people really unemployed or not? I mean, in the end, it's quite hard to say, but it's clear, I think, that as the number outside the labour force grows, the unemployment figures start to tell us less and less about the true picture of those out of work.

[A]

Thanks, Wes. Wesley Stevenson, who's made a career out of hiding away from any real work here on More or Less. If there's a statistic you'd like us to investigate or even just explain, email more or lessbc.co.uk and you can download our podcast via our website, bbcworldservice.com more or less Tim Harford will be back next week. More or Less was presented by me, Ruth Alexander. The editor was Richard Varden.