Consider the following simple exercise. Suppose the economy reveals the following numbers: unemployment rate of 5.5%, consumer inflation over previous year of 3%, new unemployment claims (4-week average) of about 330,000, consumer confidence index of 106, and a housing affordability index of 1.24. Would you say the economy is doing well or poorly? Do you think the administration is doing a good job or a bad job? Please answer these questions before you read any further.

Facts and figures such as these constitute the data that measure, however imperfectly, the performance of the economy. They stand as objective measures to inform us, as long as we listen to the messages. But, do we pay attention and are we consistent in our judgments?

While I typically enjoy political debates and sharing ideas, I have found this year frustrating. Nobody really communicated with others, unless they both agreed. The paradigms that voters have acquired during their lifetimes are now serving as armor and shields to protect them from any evidence that dares to disagree with them.

The numbers listed above come from a Business Week article (Michael Mandel, "The Economy: Advantage Bush?" September 6, 2004, pp.48, 50), and they reflect the economic conditions in both July 1996 and in July 2004. They indicate that the Clinton economy in 1996 was nearly the same as the Bush economy in 2004. Mandel goes on to say that Clinton's economy was better in some respects: jobs added over previous year, unemployment rate for college graduates, real wage growth, 12-month stock market gain, trade deficit as a share of second-quarter GDP, budget deficit as share of GDP for fiscal year, and the price of gasoline. On the other hand, Mandel demonstrates that the Bush economy was better than Clinton's on certain other dimensions: real GDP growth, 10-year Treasury interest rate, increase in info-tech spending, productivity, and real disposable income per person.

The bottom line: for all practical purposes, the July 1996 economy was about the same as the July 2004 economy. So how did Americans digest these data? How many of us evaluated Clinton's 1996 economy with the same grade that we evaluated Bush's economy?

Democrats rallied around Bill Clinton in 1996 but lambasted President Bush in 2004. Republicans, on the other hand, censured the former president in 1996 and then defended the current administration's economy. Human behavior displays that we Americans are bringing our own beliefs and opinions to the political table first. We then introduce various facts and figures, and interpret them in terms of our personal belief systems, and when necessary we discard those facts and figures. Our way of life thus serves as a lens for interpreting the data from the external world. Information no longer informs us. Sadly, few seem aware of these contradictions or care.

Accounting facts and figures suffer the same fate. So often managers and directors and investors and creditors make up their minds about some decision and then employ accounting numbers to defend the choice. Thus, accounting information serves as ammunition for those who possess these facts and figures.

Maybe this broader analysis helps to explain how the accounting scandals took place over the last decade. While it is well known that managers had perverse incentives to lie about the firm's economic activities, we also have to understand that investors and creditors ignored facts and figures, for example in the cash flow statement. Even Enron's doctored numbers were not so hot, yet the stock market rewarded it with hefty premiums.

Maybe it helps us understand the lunacy of today's investors who still have not figured out the stock option racket at eBay and Cisco, among others in the high-tech industry. It is easy to grasp why managers at these companies do not want to report the truth, but harder to understand why investors do not realize that these firms have made very little real profit over the years.

We indeed are true believers.

J. EDWARD KETZ is accounting professor at The Pennsylvania State University. Dr. Ketz's teaching and research interests focus on financial accounting, accounting information systems, and accounting ethics. He is the author of Hidden Financial Risk, which explores the causes of recent accounting scandals, and columnist of The Accounting Cycle for SmartPros.com.