The estimated £50million daily cost of London's Tube strikes turns out to be based on a 2007 survey of just 315 businesses.
Since Tuesday night, London's Tube workers have been on strike and the media has repeated big claims regarding impact of the industrial action on the capital's economy. The BBC, Financial Times and the Telegraph quote £50m per day. London's Evening Standard repeats a claim by "business leaders" that the action will cost £200million over the planned four days.
But where do these numbers come from? Alf Crossman, an industrial relations expert at the University of Surrey, said, "In such cases, more often than not, people pluck figures out of thin air."
He found that the source of the £50million figure is a survey conducted in 2007 by the London Chamber of Commerce and Industry (LCCI), a business lobby group. For the survey, conducted in partnership with pollsters ComRes, the LCCI asked 315 of its members in "all sectors from across the capital" about the likely impact of the strikes on their business. (Although the total number of members from 2007 was not shared by LCCI, they now have more than 2,500 members.)
As Crossman points out, unions always overstate the level of support for their strikes, whereas employers' organisations like the Confederation of British Industries and the LCCI tend to overstate the economic damage. He writes on The Conversation, "Research based on a small sample of biased respondents speaking seven years ago is not the most rigorous way to assess costs."
The true economic impact of such strikes is hard to calculate accurately, but that doesn't stop lobby groups from throwing big numbers around. For instance, the 2010 national rail strike was claimed to have cost the economy £600million per day. The source of that figure was a quote from a spokesperson of the Federation of Small Businesses, who said, "A 10% absence from work will cost the UK around £600million." No support could be found for the claim that a rail strike would lead to 10% work absence.
However, once such a number is picked up in the popular press, it is widely quoted without examination, as the press coverage of the recent strike reveals. Yet others use it as evidence of support for their own cause. For instance, in 2013 Conservative members of the Greater London Authority used LCCI's figures to claim that, between 2005 and 2011, 20 total days of Tube strikes cost the economy £1billion.
We asked the LCCI to explain the methodology used to calculate the economic damage caused by a tube strike, but they declined. According to James Laird of the Institute for Transport Studies at the University of Leeds, "Unless you get hold of the methods at a detailed level and pore over them you will never know the answer."
If we must use unreliable data, perhaps the LCCI ought to be more ambitious. In 2005, when New York City's subway and bus workers went on strike for the first time in decades, the economic damage was judged to be about US$400m per day.