Editing Informal economy (section)

===Estimated size of countries' informal economy===
To estimate the size and development of any underground or shadow economy is quite a challenging task since participants in such economies attempt to hide their behaviors. One must also be very careful to distinguish whether one is attempting to measure the unreported economy, normally associated with tax evasion,<ref>{{cite web|url=https://www.irs.gov/pub/irs-soi/06rastg12methods.pdf |title=Preliminary Estimates of the Tax Year 2006 Underreporting Gap |website=Irs.gov |access-date=2016-10-20}}</ref>  or the unrecorded or non-observed economy,<ref>{{cite web|url=http://www.oecd.org/std/na/measuringthenon-observedeconomy-ahandbook.htm |title=Measuring the Non-Observed Economy – A Handbook |publisher=OECD |access-date=2016-10-20}}</ref> associated with the amount of income that is readily excluded from national income and produce accounts due to the difficulty of measurement.
There are numerous estimates of [[tax noncompliance]] as measured by tax gaps produced by [[audit]] methods or by "top down" methods.<ref name="Anon. r903">{{cite web | title=Measuring tax gaps 2015 edition | url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/469973/HMRC-Measuring-tax-gaps-2015-methodological-annex.pdf | access-date=2024-04-05 | archive-url=https://web.archive.org/web/20151117031417/https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/469973/HMRC-Measuring-tax-gaps-2015-methodological-annex.pdf | archive-date=2015-11-17 | url-status=dead }}</ref>
Friedrich Schneider and several co-authors<ref>http://www.econ.jku.at/.../Schneider_Bühn_Montenegro.pdf{{Dead link|date=May 2021 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> claim to have estimated the size and trend of what they call the "shadow economy" worldwide by a currency demand /[[MIMIC]] model approach that treats the "shadow economy" as a latent variable. [[Trevor S. Breusch]] has critiqued the work and warned the profession that the literature applying this model to the underground economy
abounds with alarming Procrustean tendencies. Various kinds of sliding and scaling of the results are carried out in the name of "benchmarking", although these operations are not always clearly
documented. The data are typically transformed in ways that are not only undeclared but have the unfortunate effect of making the results of the study sensitive to the units in which the variables are measured.

The complexity of the estimation procedure, together with its deficient documentation, leave the reader unaware of how these results have been shorted to fit the bed of prior belief. There are many
other results in circulation for various countries, for which the data cannot be identified and which are given no more documentation than "own calculations by the MIMIC method". Readers are advised to
adjust their valuation of these estimates accordingly.<ref>[http://econ.unimelb.edu.au/SITE/workshops/]{{dead link|date=October 2016}}</ref>

[[Edgar L. Feige]]<ref>{{cite journal|ssrn=2728060|title=Reflections on the Meaning and Measurement of Unobserved Economies: What Do We Really Know About the 'Shadow Economy'|first=Edgar L.|last=Feige|date=1 February 2016}}</ref> finds that Schneider's shadow economy "estimates suffer from conceptual flaws, apparent manipulation of results and insufficient documentation for replication, questioning their place in the academic, policy and popular literature".