Prerelease access to official statistics is not consistent with professional ethics

4.1First principles of statistical ethics

We first turn to arguments against prerelease access that hark back to first principles of statistical ethics. Prelease access to official statistics is assessed and found wanting on the basis of the principles of impartiality and objectivity, as well as on the basis of the principle of independence.

Impartiality means being not partial or biased: treating or affecting all equally [9]. Thus, if official statistics are to be released/made available to the public with impartiality, then all users must be treated equally. This means equal access to all users at the same time and no prerelease access by any users. Thus, Principle 1 of the UN Fundamental Principles of Official Statistics (UNFP) [10] “official statistics …are to be compiled and made available on an impartial basis by official statistical agencies” cannot but mean that for all users to be treated equally, official statistics are to be made available on an equal basis to all users.

Objectivity is defined as the quality or character of being objective, lack of favoritism toward one side or another and freedom from bias [11]. This reinforces the idea that the statistics cannot be characterized by favoritism toward one side or another; thus no side can be favored and have prerelease access.

Furthermore, impartiality and objectivity in official statistics is indicated, according, for example, to the European Statistics Code of Practice, Indicator 6.1, by statistics being compiled on an objective basis determined by statistical considerations [12]. Of course, compilation here cannot possibly denote just the production phase but all stages of the statistical process, including the release phase.1717 Impartiality and objectivity can also be expressed as in Principle 2 of the UNFP: the statistical agencies need to “decide according to strictly professional considerations, including scientific principles and professional ethics, on …the presentation of statistical data” [10].

The statements in the paragraph above mean that if there is no statistical reason/consideration or no strictly professional consideration to differentiate by user the access to statistics, then there should not be such differentiation. And in deed there is no such statistical/professional reason and there cannot be such reason to differentiate access to official statistics by user.

Moreover, the principle of pursuing objectivity means that “statisticians should pursue objectivity without fear or favor” according to the ISI Declaration of Professional Ethics [13]. Pursuing objectivity in the dissemination of statistics means, therefore, showing no favor to any user, including the government (as well as the central bank, the press, or anyone else) by providing to it prerelease access to the statistics.

The principle of professional independence means inter alia “independence [of the producers of official statistics] from political and other external interference in developing, producing and disseminating statistics” according to the European Statistics Code of Practice [12]. What independence from government in the dissemination/release of statistics can there be when official statistics have to be disseminated first to the government?

Moreover, according to the same Code of Practice [12], “the heads of the National Statistical Institutes …have the sole responsibility for deciding on statistical methods, standards and procedures, and on the content and timing of statistical releases.” What independence can there be when the decision on prerelease access is taken by somebody other than the head of the NSO?

To demonstrate independence from government or any other actor in the process of dissemination of official statistics, there cannot be privileged prerelease access to the statistics by the government or any other actor. Stating that official statistics producers are independent but they have to release the statistics first to the government or that the government can decide itself to have prerelease access is self-contradictory and paradoxical, and in our view points to a fundamental incongruence.

In conclusion, first principles of statistical ethics tell us that prerelease access to official statistics by the government or anyone else is not consistent with professional statistical ethics.

We now turn to more specific arguments against prerelease access.

4.2Integrity and credibility of statistics

Prerelease access opens the door for last minute influence on statistical information, whether in the form of changing the statistical figures themselves or their presentation (language, graphs, ‘what’s in and what’s out’), or in the form of a temporary or permanent suppression of the statistical results. The influence on the statistics can be exerted directly by having the government politicians/policy makers intervening directly to alter the content of the statistical releases.1818

Alternatively, prerelease access can give rise to the preemption of the statistical results by politicians/policy makers. The latter may in some cases use the information they get through prerelease access to influence the finalization of figures by preannouncing a ‘desirable’ statistical result, which signals to the statisticians what they have to do to meet the expectations of the political/policy side. Thus, prerelease access creates possibilities of giving guidance to the NSO and the statisticians on what statistical result (figure) is acceptable to finally produce.

Prerelease access to statistical results leading to preemption of the results through preannouncing of the figures by politicians/policy makers create significant credibility problems for the statistical office when it happens (or is thought by observers to happen), even if statistical results are not actually modified as a result.1919

Very importantly, in the context of prerelease access, the influence of politicians/policy makers can also be more indirect, yet powerful. This can take place through the self-censorship of the statisticians, who may feel pressure to show, in what is effectively a ‘private’ setting, to individuals they consider their ‘superiors’ statistical results and presentations of these results that they feel would please their ‘superiors’.2020

It should be noted here that arguments that “prerelease access by government allows for tighter control of official statistics that are potentially damaging to the national interest” (see Section 3 above) should be seen as a ‘red flag’ that political interests are likely intent on censoring, suppressing or manipulating the official statistics. If there are any issues with the integrity and broader quality of official statistics, the solution cannot and should not be to have a government minister check them before release. Involving international processes and institutions in carrying out an assessment of the quality of statistics, including the implementation of statistical principles in their production, would be the appropriate way to proceed. In this context, it could be mentioned that in order to carry out such assessments effectively and efficiently there is a need to set up an independent international institution with the mandate and resources to carry out regular as well as ad hoc evaluation, verification, follow-up and publish reports in the form of audits [16].

Thus, prerelease access is one potential gateway – enabling condition – to suppressing or manipulating official statistics in direct and indirect ways. It should be highlighted that the mechanism may not be used for a long time, but a time can come sooner or later when, under the right circumstances and with the right personalities in place, the weakness entailed by prerelease access will be exploited against the integrity of official statistics. This issue is very clear to politicians/policy makers around the world.2121

Prerelease access, even if not abused, gives rise to significant credibility problems for official statistics on account of the public perception of the practice. Truly, this is a pretty high price to pay for any benefits of prerelease access – if there are any. The fact that prerelease access enables simultaneous commentary by the government on the statistical results when they are officially announced to the public by the official statistics producer – touted as one of the benefits of prerelease access (see Section 3 above) – is actually damaging because of the perceptions it is feeding. As the Royal Statistical Society succinctly points out [4], it “perpetuates the impression that ministers control the data.” The implications of this can be very damaging for the credibility of and confidence in official statistics regarding two things: whether they are accurate/reliable and whether they are properly used and not used for political and economic gain.

The points just above explain why the argument for prelease (made in Section 3) that such “access by government helps protect the interest and reputation of the persons in the government and of the political party in power” is false and unprincipled, with adverse consequences over time.2222 Actually, if some minister gives the impression that he can order the statistics producers to hand him the data early, and that he prepares thoroughly regarding every detail of the statistics under his control, then his reputation as well as that of his government and political party can be thoroughly tainted. It is better for the minister to advertise the independence of the statistics office and the arms-length relationship he has with it and to reserve his right to study the statistics at the same time as everybody else does it before commenting in detail on the statistical results.

Regarding the argument (made in Section 4) that prerelease access allows the government to have privileged access to information it can use when interacting with international partners, it is also false and unprincipled with adverse consequences over time. The use of official statistics as a tool of the government that can be taken out of the ‘tool box’ or hidden out of sight surely will negatively impress any international partners (whether foreign governments, international organizations or foreign investors). The credibility and image of the government will suffer from such behavior. The international perception of the integrity of the country’s official statistics will also suffer on account of the perception that the government controls the statistics.

The general point is that administrative information available to policy makers is in the big majority of cases adequate to make all the necessary policy decisions and to prepare any informed responses for the ministers when the actual statistics come out. Anyway, often policy makers go ahead and inform the public of their own estimates of what the outcome will be.2424 Thus, either the information that the government needs actually exists within the policy structures controlled by the government and is already available to it or it can be made available with a relatively small investment in human resources and processes within policy structures.

Let us consider in more detail the argument for prerelease access that having the statistics as soon as possible, and specifically earlier than market participants get to see them, provides an opportunity that would not exist otherwise to take measures (do and say things) that preempt market instability. This argument is based on the assumption that the markets can be irrational as a whole in their reaction to news, especially when they are left to interpret the news by themselves with no guidance from the government, leading to excessive financial/economic instability. Thus, the role of the government is to help the markets react in ways that do not lead to instability, by offering at the time of statistical release interpretations of developments and plans of actions, as well as tangible actions, that can help avert extreme market reactions.

First, we note that there may be an issue here regarding whether the markets really are waiting for the government to interpret the statistics for them. We would argue that this is probably an exaggerated view of the ‘gullibility’ of markets. Second, regarding taking action earlier rather than later, there is, in our view, in principle, a point there. In some cases, it is sensible to think that quick preemptive policy actions/measures can lead to reducing real welfare losses. However, the critical issue here is why the government or the central bank have to wait and rely on the official statistics producers to become aware that they need to take measures. Policy makers do have access to rich administrative data sources all along the way. If the ministries and the central bank are run with any level of effectiveness, their decision makers should have advance warning on problems well before official statisticians get to produce their statistics, many of which are sourced from these administrative data. On the basis of such early administrative information, necessary actions can be contemplated and decided upon soon enough so as to minimize market instability. Admittedly, in most cases, the figures produced by statisticians will be more accurate and complete than those of the policy analysts who are relying on administrative data, but these differences would not be the kind of differences that would require super urgent measures to be taken by fiscal and monetary authorities. Thus, while the argument in the previous paragraph appears to be a sensible one in favor of prerelease access, it is not very convincing as it does not take into account the reality of information gathering and use by modern policy making institutions entrusted with preserving market stability.

4.3Unfair political, economic and career gains from prerelease of statistics

An important broad argument against prerelease access to official statistics by government, the press or anyone else is the following:

An important point that is often not in the discourse on prerelease access is that, as one would readily consider unacceptable that a trader makes money out of getting hold of the statistics early, one should also consider it equally unacceptable if a politician gains politically because he got hold of the statistics earlier than his opponents. Similarly, a journalist that has prelease access gets to gain in terms of his career (and whatever that brings to him), while his colleagues and competitors that do not have prerelease access loose in this respect. And this is not fundamentally different from (‘insider’ style) trading on the basis of statistics accessed early.

Below, we look into some of the more specific arguments against prerelease access under this broad argument.

Prerelease access by government infringes on the statistical principle of impartiality when it gives a head start to the party in power relative to its political opposition and the electorate.

The presumption that those in power have to have an opportunity to study the statistical results before anyone else is false. Moreover, the argument presented in favor of prerelease access by government officials – that such prerelease access allows the government to be ready to make a comment or put out a press release exactly at the time of (to coincide with) the statistical press release– actually points to a fundamental argument against prerelease access. It is not desirable to have such simultaneous commentary and policy pronouncements, and it is not desirable for a number of reasons.

Prerelease access by the government does not give an equal opportunity to others in the opposition or the press to study the data and reduces their ability to ask meaningful questions or make informed comments and criticisms of the relevant policies in a timely manner. Instead, the government is the one prepared with sophisticated interpretations and analyses. It should be noted that the government in power gets a leg up on the opposition by taking advantage of access to statistics that do not really belong to it but to the public as a whole, including of course the political opposition.2525 In this context, it could be noted that arguments of the sort that “government should be able to see the statistics early because it pays for them” are wrong as it is not the government in power that pays for the statistics but the people of the country.

Government politicians/policy makers also get a leg up on the public/electorate, which may be manipulated more readily by politicians/policy makers who have prerelease access. Prelease access enables the government in power to ‘spin’ the news and also to ‘run ahead of’ or preempt potential sceptics and critics by preparing and taking actions. Moreover, the government may potentially choose to offer to the public ‘alternative news and headlines’ and take diversionary actions, all with a view to divert the attention of the public from the news that the released statistics bring.

In other words, the government is making ‘political money’ unfairly out of this arrangement in a similar way as traders that may have the statistical information before others make money unfairly out of ‘out-positioning’ traders that do not. Government ministers do not have to look smart and good handling the news in the statistics, while the opposition looks inept and weak. If this happens, then this is an argument against prerelease access, not for it.

The issue here is what kind of actions the government will take if it has access to official statistics before everyone else does. The government could, for example, in advance of bad economic news from an impending statistical release take action to move the timing of an international bond issue to avoid paying more for government borrowing. Alternatively, the government may decide to engage in diversionary foreign policy or in preemptive attacks on the previous government branding it responsible for the unfavorable figures that will come out soon. These do not appear to be legitimate actions that should be taken on the basis of the privileged knowledge gained by prerelease access. In addition, it is not clear where the line of legitimate actions resulting from prerelease action is. However, it is clear that some politically and economically unfair actions towards some people and groups will at some point arise from the prerelease access official statisticians provide to the government in power. There will be actions that are politically unfair to the political parties not in power. There will also be actions that are economically unfair to market participants (investors or workers) that are ‘blindsided’ by the government acting on the basis of privileged early access to official statistics, although these statistics truly belong to everyone. And the ‘blindsiding’ will not always be for the ‘public good’, at least from the point of view of some of these market participants. So the question is: knowing that prerelease access can and does lead to redistribution of political and economic power between political and economic groupings and populations, should one consider prerelease access consistent with statistical ethics?

People with prerelease access, either in the government or in the press, and/or their associates could potentially (act illegally and) take positions in markets informed by the news in the statistics. Research has provided evidence that something like this is going on in some cases and the press has highlighted it in reporting on prerelease access issues.2626,2727 We are definitely not saying that all those receiving prerelease access use the information to reap economic benefits. However, there is a positive probability that some individuals (and their associates) will reap economic benefits when prerelease access is allowed. And this probability becomes larger, the larger the number of individuals having prerelease access, ceteris paribus. It should be noted that there are big incentives to abuse information from prerelease access and some individuals may succumb. And these incentives have become increasingly bigger in recent years with the spread of algorithmic trading. As testimony to the US House of Representatives has highlighted [19]: “A few years ago, a few seconds here or there would not have had much of an impact. Today, fractions of a second can equate to millions or even billions of dollars in market movements”. The magnitude of the stakes given the risks of prelease access is clear to market participants.2828

Of course, technologies and processes can be used in some cases, such as those employed in the context of access offered to journalists in lock down facilities, to reduce the probability of information reaching some market participants before the rest of them. However, processes and technologies can fail or they can be circumvented by other (ever evolving) technologies. In the end, prerelease access by the press is not and cannot be fully consistent with protecting the level-playing field for market participants and can lead to profiteering by some, again undermining the principle of impartiality.

Having said that, the problem of leaks to some market participants may actually be an equal or greater problem when politicians/policy makers and their staff have an early peek at the statistics than when journalists get prerelease access. And this is because members of the press receiving prerelease access are usually monitored more closely and are more constrained than those persons that have prerelease access on the political/policy side. There is evidence, for example, from the case of the UK that when the government had significant prerelease access, markets also behaved as if some participants were getting the figures early also; but when prerelease access by the government was significantly curtailed in the UK in 2017, the indications that market participants were getting the statistics early also decreased [21]. To avoid the problem, there should be no prerelease access either by the press or the government.

If prerelease access increases the probability that some will profit at the expense of others in the market, and there is evidence that this does happen even in sophisticated advanced economy settings, then this implies that less advanced economies may find it even more difficult to contain the problem of profiteering from prerelease access. It argues for eliminating prerelease access anywhere in the world.

The perception of the markets that prerelease access is leading, or may lead, to leaks to some market participants is something that affects the behavior of markets. Such changes in behavior are real2929 and affect resource allocation in the economy, leading over time to lower welfare than could otherwise be achieved.3030 Thus, over the long run market participants would tend to favor restriction instead of permissiveness in prerelease access. As noted above, in order to avoid the problem of market perception, a policy of ‘no prerelease access’ should apply both to the press and the government.

Prerelease access is a ‘slippery slope’ in that some initially restricted number of individuals having such access increases over time, and as that number increases so does the probability of leaks to market participants.3131 Prelease access is also a ‘slippery slope’ when it comes to giving access to different groups of users: if you give access to the government then the press wants it and is more likely to get it and, of course, vice versa. Moreover, prerelease access is a ‘slippery slope’ when it comes to various producers within a national statistical system. If one producer provides such access, then this serves as an argument made to – and as leverage on – other statistical producers to also provide prerelease access. Eventually, prerelease access allowed in foreign national statistical systems (in the region or beyond) is used as an argument to adopt or expand prerelease access in the national statistical system, usually with pressure to adopt the most ‘permissive’ model.

The issues with prerelease access by journalists – whether via lock-up rooms or embargo arrangements – are whether such access is truly secure, whether it is fair, and whether it can be contained so that it does not lead to more journalists as well as the government politicians/policy makers demanding and receiving equal treatment. The answers to these questions in our view should be in the negative on the basis of actual experience.3232 Moreover, we would argue that prerelease access is not the appropriate way to earn goodwill with members of the press. Admittedly, without prerelease access by journalists there may be a greater need for ex post clarifications and interventions by the official statistics producer when the statistics are being wrongly presented by some in the press. However, if members of the press are well prepared over time with briefings/workshops by the official statistics producer on the methodologies used in the production of statistics and if they are offered a technical briefing immediately after a release of statistics, then the above issues would be minimized, at least for those commentators that do not misrepresent the statistics intentionally.