Abstract
I shall argue that 'measurement without theory' is a fair description of the published empirical work aimed at guestimating the size of the 'hidden' or 'black economy'.' I shall also argue that a mere guestimate of the overall size of the black economy is of limited value for the policy maker; it is also important to know who is doing what, where, how and why. Then we can see what should and/or can be done about legislating for or against the black economy. In assessing the various attempts to measure the size of the black economy, one should also be aware of a political dimension to some of this work. Perhaps a large and growing black economy is an indication that the economy is overtaxed and over-regulated and a neo-liberal adjustment is needed to free it up? If a large part of the black economy is social security fraud, then maybe unemployment is not really as bad as it looks? Clearly such political conclusions depended on having good theoretical as well as sound quantitative foundations and both these components were generally missing.
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