Counterparties: R-squared regression analysis
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The fallout over the Reinhart and Rogoff errors continues. Yesterday’s debate circled around what this all means for austerity. Today, the debate widened, taking a few steps backwards in search of perspective. The economic profession as a whole – along with that of the bloggers who popularize it – ended up coming in for criticism and soul-searching.
The authors at the heart of the controversy did continue to argue about the substance of the criticisms. RR published their second response, conceding that the UMass paper has indeed found a “significant mistake” in their data on international debt-to-GDP ratios. They said that their overall argument, however, remains valid. Meanwhile, Robert Pollin and Michael Ash, two of the UMass researchers, kept pushing in an FT op-ed this morning, saying that the time has come to “rethink austerity economics”.
Both Josh Barro and Matt Yglesias took issue with one of the most common interpretations of RR’s work – the existence of a sort of economic tipping point for countries with debt-to-GDP ratios above 90% – and argued that new evidence makes that thesis extremely weak. Other bloggers, however, moved on from the argument over minutiae in the data to ask what this mistake means for the field of economics.
Chris Dillow questions whether today’s economists value the right skills. He says that RR’s errors “reflect a culture which prizes” the ability to produce brilliant, explanatory theories over the “dull pedantry” of meticulously examining data. Justin Fox likens the debate to “watching the sausage of macroeconomics being made.” Data is relatively scarce in the field, he says. As a result, we should “acknowledge that our knowledge is limited and proceed anyway on a mix of data, theory, and intuition.”
Peter Frase uses the controversy to rail against non-academic econobloggers, or “wonks”, who parrot the findings of academics:
When Wonkblog presents the findings of Reinhart and Rogoff without comment, they are implicitly telling us, “trust these people—they’re famous academic economists”. This is because they don’t have the ability to do what people like Paul Krugman did, and actually assess the correctness of the famous economists’ claims.
Zach Beauchamp echoes Frase’s sentiment, wondering if “the new spate of academic-study blogging might, far from informing the public, actually be lulling it into a false sense of intellectual security”.
Paul Krugman, writing no less than three posts on the issue, just wishes policy-makers would stop using research which hasn’t gone through peer review to validate their political views. After pointing out RR’s clear errors, he concludes that “the larger story is the evident urge of Very Serious People to find excuses for inflicting pain.” – Shane Ferro
On to today’s links:
Stuff We’re Not Linking To
The meatpacking district is “in the infancy stages of being gentrified” – NYT
And, of course, there are many more links at Counterparties.