Classification Granularity Encodes Economic Assumptions

The level of detail in a classification hierarchy reveals what the designers considered important enough to distinguish.

SIC’s manufacturing divisions have extensive granularity, dozens of specific codes for types of metal processing, textile production, and food manufacturing. Services and technology receive far less differentiation. This wasn’t arbitrary; it reflected a 1930s economy where manufacturing generated most GDP and employment.

The imbalance creates practical problems when the economy shifts. Technology companies end up in catch-all categories like SIC 7370 “Computer Programming, Data Processing, etc.” while there are separate codes for different types of textile mills that represent a tiny fraction of modern economic activity.

Classification granularity is a design decision that ages. What deserves specificity in one era becomes over-specified in another, while underspecified areas reveal emerging importance.

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