Friday, April 19, 2013

Hiatus week of April 22

I will be on a break from blogging next week with a last-minute large project and then some travel. In the meantime, if you haven't already seen it, make sure you read Paul Krugman's New York Times column about the "Excel depression." It's his take on the economic paper that concluded that once national debt exceeds 90 percent of gross domestic product economic growth drops off sharply. The claim gave some theoretical weight to the politicians who argued for economic austerity. Turns out the paper may have been, um, incorrect.

Yes, there was a coding error and, according to Krugman, they omitted some data and used 'questionable statistical procedures.' They've now released their data and original spreadsheet, which is how these errors came to light. You can see sections of the original spreadsheet here, if you're interested. But as is often the case, the issue was as much about how the original study was used and reported. As Krugman puts it:
[The] tipping-point claim was treated not as a disputed hypothesis but as unquestioned fact. For example, a Washington Post editorial earlier this year warned against any relaxation on the deficit front, because we are “dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth.” Notice the phrasing: “economists,” not “some economists,” let alone “some economists, vigorously disputed by other economists with equally good credentials,” which was the reality.
Read the full column. See you in a week.

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