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Excel Error Contributes To Problems With Austerity Study
quarterbuck writes "Many politicians, especially in Europe, have used the idea that economic growth is impeded by debt levels above 90% of GDP to justify austerity measures. The academic justification came from a paper and a book by Kenneth Rogoff and Carmen Reinhart. Now researchers at U Mass at Amherst have refuted the study — they find that not only was the data tainted by bad statistics, it also had an Excel error. Apparently when averaging a few GDP numbers in an excel sheet, they did not drag down the cell ranges down properly, excluding Belgium. The supporting website for the book, 'This time it is different,' has lots of financial information if a reader might want to replicate some of the results."
The Excel error is making the rounds as the cause of the problems with the study, but it's actually a minor component. The study also ignores some post-WWII data for countries that had a high debt load and high growth, and there's some fishy weighting going on: "The U.K. has 19 years (1946-1964) above 90 percent debt-to-GDP with an average 2.4 percent growth rate. New Zealand has one year in their sample above 90 percent debt-to-GDP with a growth rate of -7.6. These two numbers, 2.4 and -7.6 percent, are given equal weight in the final calculation, as they average the countries equally. Even though there are 19 times as many data points for the U.K."
But then again, most economies (other than that of North Korea) are dynamic, and the amount of resource fluctuates
That depends on what you mean by "resources." An MBA Romney-style corporate raider considers "resources" to mean "cash and credit" while someone who isn't a rent-seeking parasite considers things like timber, ore, fuel, and available labor to be resources. The only real resources that fluctuate are labor and renewables.
Free Martian Whores!
I'm not quite sure how one could make it even more obvious without punching the user in the face.
How about by not conflating data, formulae, and layout in the UI? This is an error made by all VisiCalc clones, but not by Improv clones. If you use something like Improv, FlexiSheet or Quantrix then this kind of error is almost impossible to make. If you use something like VisiCalc, 1-2-3, Excel or OpenOffice.org Calc, it is trivial.
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http://en.wikipedia.org/wiki/Confirmation_bias
The researchers got the result they wanted, so they didn't bother to check if they were actually correct.
And actually, that's being kind.
As a historical note, christianity used to have nearly identical rules concerning usury; and the deep suspicion of interest-bearing loans is a least as old as Aristotle(who was Not A Fan).
As time went on, though, a number of... increasingly creative... legalisms were hacked together to allow contractual arrangements that were loans at interest in everything but name. In the case of christianity, the charade was so transparent, and the amount of obviously-loan-backed economic activity so significant, by the early modern period, if not earlier, that almost everyone bowed to the inevitable and "usury" stopped meaning 'charging interest' and started meaning 'charging lots and lots of interest'(and even 'lots and lots' has proven to be pretty flexible).
Islam has not (yet) reached the 'eh, fuck it, sure we charge interest' stage; but let's just say that they are doing some downright jesuitical work at the 'So, what sophistry can we spin to make interest not look like interest?' stage. The range of products dubbed 'islamic finance' won't say 'interest'; but it will look like a duck and quack like one.
There's an arguement that this wasn't ignorance on the part of the person asking the question, rather it was a polite way of asking whether the machine was rigged to give only the answer to the single question it was given.
The creation of the USA also had it's problems, because the states were so different. e.g. A civil war due to differences in economies in the south and the north, one symptom of which was the positive and negative views of slavery.
But would you be better off now if you'd remained independent states?
And what of the people who thought the collapse of the US was inevitable?