Late one night, a drunken adult is stooped low on the side of a street. Their eyes scan a small area of pavement illuminated by a nearby street light. “Is everything okay?” asks a passing police officer. “I’ve lost my wallet”, replies the drunk. The police officer looks at the ground. “Are you sure this is where you dropped it?”, the officer asks. “No”, replies the drunk, “it’s more likely I dropped it across the road, but this is where the light is”.
The ‘streetlight effect’ illustrates the problem of observational bias, where researchers search for their ‘answers’ in the places that are easiest to look. They follow the availability of data, funding or theoretical frameworks. And it pervades even the most prestigious areas of natural science, whether in physics or medical research.
The problem is particularly prevalent in economics. And the Institute for Fiscal Studies (IFS) – the tax and spending watchdog treated with reverence by much of the UK’s mainstream media – is no exception. Indeed, the ‘IFS view’ of the economy is narrowed by the spotlight problem in three important ways.
