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Home Publications Blogs Beat the Press Reinhart and Rogoff #61,346: Stevenson and Wolfers Edition

Reinhart and Rogoff #61,346: Stevenson and Wolfers Edition

Sunday, 28 April 2013 21:46

Betsey Stevenson and Justin Wolfers are offering their assistance as referees in the debate over the Reinhart and Rogoff (R&R) spreadsheet error. They tell us:

"It has been disappointing to watch those on the left seize on the embarrassing Excel errors but ignore this bigger picture."

Of course the real story is that people on the left have seized on the embarrassing Excel error to bring about a public debate on an incredibly important debate from which they had previously been excluded. Just to remind everyone, R&R is being used as a rationale for cutting Social Security and Medicare as well as many other policies that are slowing growth and creating unemployment across much of the world. The corrected Reinhart and Rogoff spreadsheet does not come close to supporting the grand claims about the dangers of public debt they originally made, nor does it address the serious questions of causality that have followed in the wake of the discovery of their Excel error.

So we have two Harvard professors who used their status to push through work that was central to the most important economic policy debates in decades, based on analysis that was by their own admission incomplete. They also refused to make any of the data available until long after it was being widely cited in these debates. And, they routinely encouraged political figures to infer causality from debt to growth, when they were careful to deny any such claims when challenged by other economists.

And our two referees are disappointed by the conduct of those on the left.

Comments (8)Add Comment
Another possible bad call by self-appointed referees?
written by JaaaaayCeeeee, April 29, 2013 4:04
I wouldn't have been so polite, when Stevenson/Wolfers call those who object to destructive policy implications and effects from R-R, nothing but deluded lefties, lost in the trees, missing the bigger picture, and carried away by soundbites sized Excel errors. They're a tad strenuous about whoever they want to shush (and oddly selective name-droppers; only DeLong and Summers)?

But why didn't you object to Stevenson and Wolfers using your own work to conclude that if R-R are wrong, "then the whole exercise has little relevance to public policy"? I am not an economist, and hope I am misreading them. But if not, their conclusion doesn't help public debate.

They promise to explain the broader issues of economic studies, in their next column. Hopefully it won't be a discussion on how many economic studies can dance on the head of a pin. If they relate their recommendations to actual budget proposals, already in Congress, they could really help public debate.
written by Kat, April 29, 2013 7:33
The final issue is the toughest: How should we aggregate the data into an informative bottom line? To Reinhart and Rogoff’s critics, the natural approach is to take the average for each debt level across all years in all countries. This would, for example, give a country with 10 years of very high debt 10 times the weight of a country with only one year. Instead, Reinhart and Rogoff took an average growth rate for each country experiencing very high debt, then calculated the average across countries. In their approach, all countries with any experience of very high debt get the same weight.

This is offensive if they think that R&R's approach is equally valid to HAP's. It shows their only purpose here is to obfuscate.
written by medgeek, April 29, 2013 7:57
I grew up in Detroit and most of my high school friends went to college at Michigan, and I know you got your Ph.D. there. I'm pretty disappointed and I imagine you are too.
Lysenko style Political economy: live and well
written by Paine, April 29, 2013 8:57
Woofers and Betty
Join such smelly tug boats of the mercantile fleet as ping pong Hamilton
In a game of pawn fencing

What can we expect
Rogue is one of Black's prime pieces
Still on the board

One revelation to me of this entire debate is that Excel is used as an analytical tool by "respected" economists
written by John Wright, April 29, 2013 9:56
In the Stevenson-Wolfers refereeing article, Herndon of UMass is referred to as "tenacious 28-year old graduate student".

Herndon's mildly tenacious behavior consisted of asking for R-R raw data and quickly spotting the error in the Excel data in the initial review.

Stevenson, the former Chief Economist at the Department of Labor, should be encouraging more tenacious data verification efforts like Herndon's.

Instead the Stevenson-Wolfers op-ed reads as an attempt to undercut the UMass findings and discourage independent verification.

Perhaps the more interesting question for Stevenson-Wolfers to "referee" is why so few academic economists attempted to duplicate the R-R results and why a non-peer reviewed paper had so much clout.

Dean Baker is on record for requesting, but not receiving, the R-R data.

I was surprised that Rogoff-Reinhart used Excel in their analysis as R-R MUST have access to more sophisticated mathematical analytical tools than Excel.

James Galbraith's 2010 statement "I write to you from a disgraced profession" statement seems to fit R-R and Stevenson-Wolfers as well.

Where S&W stand on causation
written by RRN, April 29, 2013 11:27
Note that Stevenson and Wolfers state "The finding remains that economic growth is lower in very-high-debt countries..." and not: The finding remains that debt is higher in countries with lower economic growth. The only way to express this neutrally is to say "there is a correlation between lower growth and high debt."
R&R, redux, ad nauseam...
written by NWsteve, April 30, 2013 5:20
let us imagine a different replay of the basic facts in this drama:
suppose that the 2010 paper is "published" by the three economists from UMass...

would prominent 'leaders' such as Paul Ryan, et al, have repeatedly "cited" the paper's 'so-called-conclusions' as the basis for foisting austerity policies onto so many?

and, following this fantasy-line, had the original Harvard economists subsequently "found" the now-UMass-paper's 'errors', how would the world have treated the UMass

and, yet, there are no apparent negative consequences for the Harvard professors?

meanwhile, millions of people have had their own personal economic lives shredded...

just curious as to how this might have played-out and what this might then say about our processes and priorities...

* * * * * * *

in addition: more recently, the Crimson Profs have asserted that they have not previously attempted at any time to assign 'causality' to their paper's "results"---hello??

this latest statement is clearly both self-serving and wholly disingenuous: as far as i can determine, neither of them spoke up prior to "now" to inform the media and policy makers anywhere of this 'newly-discovered' condition of their creation...in order, you know, to set the record more accurately and completely...

if the early reviewers originally missed the small print in their paper, it behoved them to correct any misunderstandings asap...

indeed, their prior 'silence' on this point becomes quite baffling and of little solace to the many lives that they have injured...

pandora thus escaped eludes our efforts at recapture...

Show your work!
written by R. Davis, May 05, 2013 3:24
I agree that Reinhart and Rogoff's analysis was seriously incomplete. The analysis of the data at http://usbudget.blogspot.com/2...-90_4.html shows that a minimal inspection of the data would have shown up numerous problems. Consumers of such economic studies need to demand that they be peer-reviewed and that all of the calculations (i.e. the spreadsheets) be released to the public. If we ignore studies that don't fulfill these requirements, I suspect that most economists would start to do both.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.