Reinhart-Rogoff study, widely used to justify austerity, badly flawed

The excel error excluded five countries which would have disproven their hypothesis. Credit:
The Excel error excluded five countries which would have disproved their conclusion. Credit:

Well, lookie here, the widely-cited Reinhart-Rogoff study which says countries with high debt have lower growth rates has a serious Excel coding error, used selective exclusions, and unconventional weighings, says a new and devastating critique. Its flawed and erroneous conclusions have been hugely used by many to justify balanced budgets and austerity. I’m sure you’re just as gobsmacked as I by faulty data being used as a justification to force bankrupt countries to pay for the sins of the bankster class.

The Excel coding error excluded five countries. Oopsie. I’m sure it was just some silly mistake.

This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.

How very convenient for the austerity ideologues that a “coding error” buttressed their predetermined conclusions.

Doug Henwood, in a Facebook post, zeros in on the damage Reinhart-Rogoff has done. In addition to being a well-known leftie, Henwood co-publishes an independent investment report and is a “widely recognized economic analyst” who often gets quoted in Barron’s. In other, he knows what he’s talking about when he says that Reinhart-Rogoff has done massive destruction.

Consumer warning: no one vets NBER working papers before they are released, except to check that they make no policy recommendations. So the sloppiness of the Reinhart-Rogoff paper went unnoticed – yet it’s had more political impact than any academic work I can think of in recent years, by providing scholarly cover to austerians around the world. Journalists and politicians see “NBER” and translate that into “a study by the National Bureau of Economic Research shows…” with no idea how casual the things are. If you say something the bourgeoisie wants to hear, you can get away with murder.