90% of Statistics Are Wrong

It's rare you get quite as tidy an explanation of where a fake statistic came from as this, which comes from a bit of sleuthing by Prof. Michael Geist:

The RCMP has been the single most prominent source for claims about the impact of counterfeiting in Canada since its 2005 Economic Crime Report pegged the counterfeiting cost at between $10 to 30 billion dollars annually. The $30 billion figure has assumed a life of its own with groups lobbying for tougher anti-counterfeiting measures regularly raising it as evidence of the dire need for Canadian action. U.S. Ambassador to Canada David Wilkins cited the figure in a March 2007 speech critical of Canadian law, while the Canadian Anti-Counterfeiting Network, Canada's leading anti-counterfeiting lobby, reported in April that the “RCMP estimates that the cost to the Canadian economy from counterfeiting and piracy is in the billions.”

Yet despite the reliance on this figure – the Industry Committee referenced it in its final report – a closer examination reveals that the RCMP data is fatally flawed. Responding to an Access to Information Act request for the sources behind the $30 billion claim, Canada's national police force last week admitted that the figures were based on “open source documents found on the Internet.” In other words, the RCMP did not conduct any independent research on the scope or impact of counterfeiting in Canada, but rather merely searched for news stories on the Internet and then stood silent while lobby groups trumpeted the figure before Parliament.

A careful examination of the documents relied upon by the RCMP reveal two sources in particular that appear responsible for the $30 billion claim.

First, a March 2005 CTV news story reported unsubstantiated claims by the International Anti-Counterfeiting Coalition, a global anti-counterfeiting lobby group made up predominantly of brand owners and law firms, that some of its members believe that 20 percent of the Canadian market is “pirate product.” That 20 percent figure – raised without the support of any evidence whatsoever – appears to have been used by IACC to peg the cost of counterfeiting in Canada at $20 billion per year.

Second, a 2005 powerpoint presentation by Jayson Myers, then the Chief Economist for the Canadian Manufacturing and Exporters, included a single bullet point that “estimated direct losses in Canada between $20 billion and $30 billion annually.” The source for this claim? According to Mr. Myers, it is simply 3 to 4 percent of the value of Canada's two-way trade.

And, as Prof. Geist explains, other oft-cited measures of the loss due to 'piracy' are equally suspect.

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