The Bureau of Labor Statistics’ Problem with Super Users and Disclosure

Today, for the last time, I think, I am returning the first episode of the Money Stuff Podcast, featuring  Matt Levine and Katie Greifeld. The one segment of that first episode about which I have not yet written was dedicated to a bit of a scandal at the Bureau of Labor Statistics (BLS), an agency that does not regularly make for splashy news stories.

Ben Casselman and Jeanna Smialek reported on the story in The New York Times in April 2024. Yes, I’m a bit behind on my BLS news, but who isn’t? Stick with me, I have a pedagogical point to make here. 

It appears that a long-term, not particularly high-ranking economist at the BLS was getting a lot of follow-up questions when the BLS issued reports on inflation rates. A public servant, the economist was happy to field the questions, and because the questions often came from the same individuals and entities, sophisticated Wall Street traders for whom granular information about inflation data could be very valuable, he set up an e-mail list, dubbed “Superusers.” When word of the Superusers list leaked out, Wall Street was overcome with FOMO, with a dash of suspicion of insider trading. 

The BLS economist seems to have been pretty scrupulous. He did not favor his Superusers with early disclosures. He would refuse to answer queries that would force him to reveal non-public information. At times, he may have crossed the line, unintentionally revealing non-public information about BLS methodology. But there is balance in the universe. Sometimes the BLS economist made mistakes and shared explanatory theories that he later had to retract. 

The BLS faced another scandal later in August 2024, which The Money Stuff podcast covered in their “Pick Up the Phone” episode. Having learned its lesson from the Superusers affair, the BLS planned to release jobs data to the entire world by posting it on its website. Ben Casselman and Jeanna Smialek, The New York Times’ Senior BLS reporters, were once again on the case. They reported that the release of the information through the website was delayed. Perhaps the server crashed because so many nerds tried to access it at the same time. Superuser-types, very eager for the information, called the BLS, and true to the ethos of public servants, people at the BLS shared the information with the callers, thinking it was public. 

Okay. This is all sub-optimal, and the folks at BLS should have known it. They need to find a way to collect all of the questions from the Superusers and then answer them in a document released to the public. And soon after the second incident, the BLS instituted changes to ensure that backups functioned so that new information went up on the website more seasonably. 

I’m devoting time to this non-contracts subject matter to make a point about the duty to make disclosures in the contractual context and the difference between a mistake of judgment and a mistake of fact. The line can be difficult to draw between the two, but I think there is an economic principle that should help us sort out them out. Sometimes it comes down to the Money Stuff insight: pick up the phone! As a general matter, if you can get the information by picking up the phone (or some similarly simple action), it doesn’t need to be disclosed. It is the kind of information on which people can and should legally trade. The law rewards economic actors for ordinary, as well as extraordinary, diligence. More on the latter below.

My rule of thumb in the mistake context is that the party in possession of the res (subject matter) of the contract is generally the party best positioned to avoid the risk of mistake. The exception is when the buyer has expertise that the seller lacks (e.g., Wood v. Boynton) and is thus better positioned to discover the mistake. But what if that person is in possession of non-public information that can have a dramatic impact on the value of the res. E.g., I am interested in your pasture land because I have done a geological survey and discovered that there are likely valuable minerals beneath the surface.

In that case, seller is in possession of the property but could not easily acquire the relevant information. A phone call won’t do it. It seems unfair, but seller is likely going to sell the property for les than its true or potential value if the property is put to its best use. But this is how the economy grows. We need to incentivize people to maximize the value of chattels, property, and intangibles. If they had to disclose everything they had discovered about the res, the res would not flow to the people or entities that can maximize its value. Even if we know for a fact that there are valuable minerals beneath the property, it is better to treat the owner’s mistake as a mistake of judgment, as the buyer is still speculating on their ability to extract and market the minerals. 

And so, I am inclined to treat the disappointment of people who did not make it onto the Superusers list as FOMO and not insider trading. All they had to do was ask. The people who did so were rewarded, and they deserved to be. Mind you, that doesn’t mean that the BLS should be in the business of creating winners and losers in the marketplace, but I do find it charming that BLS employees were so willing to answer the questions from anyone who would bother to pick up the phone and call.