London Falling?

A survey of financial services executives received much coverage.

News organisations reported New York had replaced London as the top financial hub. These reports based their headlines on surveys of financial services executives.

This article looks into whether the survey series supports that conclusion.

New York, New York

The headline in The Guardian booms:

New York surges ahead of London as financial centre, survey finds

Reuters states:

New York surges ahead of Brexit-shadowed London in finance: survey

Other outlets, including The Independent, had similar headlines.

In statistics, we must recognise data sources and limitations in methods.

The advisory firm Duff & Phelps publishes an annual survey of financial services executives. As Survation founder Damian Lyons Lowe highlights, this survey is self-selecting.

It requires a senior executive to visit the Duff & Phelps website. The link goes to SurveyMonkey, “managed by an independent research firm”.

Already, there are major potential errors due to self-selection bias. Those who choose to take part may be very different to those who did not.

The target population is “key stakeholders” in “global financial institutions”. Their 2020 report does not state when the self-selecting responses arrived. Based on the inviting article’s date, it is presumably some period after 27th November 2019.

The report contains false precision, showing shares to two decimal places. A survey of 240 people cannot be that accurate.

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In their sample, 34% said London was “the world’s preeminent financial centre today”. (Source: Duff & Phelps)

The question was:

Which city do you consider to be the world’s preeminent financial centre today?

In the 2020 report, 56% responded New York, and 34% chose London.

Is there an echo in here?

These figures are rather similar to their 2019 report, based on 183 responses in March to April 2019.

In that sample, 36% chose London, with 52% saying New York. This is then compared to their 2018 wave. That time, the figures were 42% for New York, and 53% for London.

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“Which city is the world’s preeminent financial centre?” is the left one. (Image: Duff & Phelps)

The response is highly associated with the respondent’s country:

96 percent of US respondents consider New York to be the world’s current financial hub; 76 percent of UK respondents consider London the hub.

In 2018, the report gives no clue to the sample’s composition by country.

Still, news organisations already reported this purported change back in May 2019. That includes Reuters and The Independent. Both of these outlets repeated the same story again in January 2020.

Perceptions, not reality

Trade volumes or financial activity could be measures of financial services hubs. As The Guardian article states:

London has shown resilience since the UK voted in 2016 to leave the EU by leapfrogging New York to become the top centre for trading interest rate swaps and remaining leader in currency trading.

This survey question asks about current beliefs. Perceptions matter: perceptions, not reality, guide decisions.

These headlines reflect small self-selecting samples of senior executives in financial services institutions. The response shares were similar earlier in 2019.

Duff & Phelps omit important information about these samples. Treat the findings with heavy caution, avoiding strong conclusions.

This blog looks at the use of statistics in Britain and beyond. It is written by RSS Statistical Ambassador and Chartered Statistician @anthonybmasters.

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