2018-12-07

Data Is No Substitute For Real-World Knowledge


Here’s an interesting post at the FRED blog, highlighting the fact that Canadian manufacturers work fewer hours per week than their American counterparts. To the people at FRED, this is a mystery:
Sadly, we don’t have an answer, but we can list some potential answers. First, economic integration across countries doesn’t necessarily make countries more similar. Indeed, integration provides opportunities for specialization, thanks to comparative advantage. It could be that Canada has specialized in manufacturing sectors where the standards for work hours are lower. Second, labor market legislation may have changed. Indeed, current laws may give workers more bargaining power in Canada than in the U.S. In particular, unions currently have more say in Canada, and their goal is typically to improve the situation of their members (for example, by reducing work hours). Third, the labor practices of these countries that relate to the use of overtime or undertime may have become more different over the years. If employers prefer to use overtime instead of hiring new people, then average hours increase. The opposite happens when workers are given fewer hours instead of being laid off.
It’s always interesting to me to see researchers attempt to explain phenomena with data when they have no essential familiarity with the situation they’re trying to explain. In this case, researchers at FRED have no insight into what it’s like working at a manufacturing plant, neither in the United States, nor in Canada. They’re simply speculating about what might be.

Having spent a little time in Canada, though, the real answer comes very easy to me. You’ll notice that the Canadian value of average work hours per week ends up at about 37.5 hours per week. It just so happens that 37.5 hours is the standard full-time work week for Canadian public service employees. If you have a government job, you work 37.5 hours per week. Since the public service is the largest employer in the country of Canada, and particularly in the province of Ontario, and since the vast majority of Canadian manufacturing occurs in Ontario, it stands to reason that the standard work week there is 37.5 hours. Indeed, I can confirm this firsthand: I lived in Ontario and worked 37.5-hour work weeks. There really is no mystery at all.

Keep this in mind if you’re someone who analyzes data. It’s interesting to pull artifacts out of data sets and speculate about possible explanations, but that is simply no substitute for just asking people what the heck is going on. In fact, if you’re not familiar with the situation you’re analyzing, you’re better off asking first, and analyzing data second, rather than the other way around.

This is one of those big weaknesses demonstrated by today’s world of “big data.” Quite often, large data analysis companies like Amazon and Google are speculating based on zero familiarity with on-the-ground situations. AI and deep learning can teach us a lot, but it’s no substitute for real-world knowledge.