Full Cred and Props to Reinhart & Rogoff and the BEA: They Collected the Data
The other day I dissed the analysis in Reinhart and Rogoff’s Growth in a Time of Debt as being on the level of a blog post from an amateur internet econocrank. I still hold that opinion.
But I want to walk back on that, or at least clarify, and give lots of credit where due. Because they did make a huge contribution, of a quality that you will not find in econoblog posts from even the best bloggers: they assembled a great data set. As I can attest — having spent hundreds of hours assembling data sets that were far less challenging than theirs — this is not a trivial task. And the value of that data set is high, assuming you throw high-quality analysis at it.
Now of course, they didn’t release the goddam data set for years. That seems unforgivable, especially given the paper’s political and policy impact. This paper wasn’t in a peer-reviewed journal (it was a “discussion paper,” which makes its impact even more eyebrow-raising), but I really wonder why those journals (in any field) would publish such papers without requiring that the data sets accompany them, for vetting by other researchers. (Yeah I know: not a new idea.)
I totally understand why this is problematic. This is the researchers’ crown jewels, upon which they can build future papers, at least. Not just the data, but the analysis methods and the coding of those methods (intellectual property?), is often included in the files. At most, you’re looking at corporate/university/personal assets, trade secrets, generally some (at least potentially) damned valuable stuff. (Throw in the issue of partial or complete government funding for the research, and it’s even more complicated.) But providing the data should be the default requirement, with some clear guidelines justifying and explaining why the data is not provided, when it isn’t.
The “damn valuable stuff” double-points to the other topic I want to mention here: the BEA’s move change the NIPAs, to count spending on R&D and the development of creative works as investment spending rather than consumption spending — as real-capital building.
“Double” because 1. the new accounting highlights the real value of this kind of data-gathering and knowledge-creation, and 2. the change itself required (and will continue to require) a huge amount of data gathering.
I was kind of wowed by this line in the Financial Times writeup on the change:
The Internet Movie Database may not seem like a natural source of data for the national accounts, but it was one of many combed by BEA researcher Rachel Soloveichik, who went through film studio records as far back as the 1920s to build a series on investment in movies.
(Another good FT post on this here.)
So when you hear me kibbitz about the structures and methods used in the national accounts, please know that I have wide-eyed respect for the diligence and skill of hundreds of accountants and economists involved in building those structures, and populating them with data from hundreds of diverse sources. (This actually sounds like one of those Google interview/hiring questions: how would you go about estimating the value of every movie made in America since the 1920s? Books? TV programs?)
That information is hugely valuable. It’s a great example of Your Tax Dollars at Work, delivering value far above the government’s cost.
Or at least, I think it is. Somebody should gather some data on that.
Cross-posted at Asymptosis.
Just want to pile on R & R. Crooks and Liars has a piece on the connection of these 2 people via PRWatch: http://crooksandliars.com/karoli/pete-petersons-fingerprints-all-over-bogus-
Reinhart, described glowingly by the New York Times as “the most influential female economist in the world,” was a Senior Fellow at the Peterson Institute for International Economics founded, chaired, and funded by Peterson. Reinhart is listed as participating in many Peterson Institute events, such as their 2012 fiscal summit along with Paul Ryan, Alan Simpson, and Tim Geithner, and numerous other Peterson lectures and events available on YouTube.
Kenneth Rogoff is listed on the Advisory Board of the Peterson Institute. The Peterson Institute bankrolled and published a 2011 Rogoff-Reinhart book-length collaboration, “A Decade of Debt,” where the authors apparently used the same flawed data to reach many of the same conclusions…
I have a strong recollection that the Rogoff/Reinhart connection to Peter Peterson and his various “stink” tanks has been explored right here on Angry Bear in the not too distant past. I can’t find the post or comment that did so. If you have a way to search AB for such a reference I’d be curious to know just how long ago these two highly paid economists for hire had been exposed as sycophants to wealth and power.
Yes, the piling on is well deserved.
Another problem with R%R that I read somewhere (?) is they draw their conclusions based on data aggregated over different times and countries. Does it make sense to look at, say, the U.S and Greece and infer that what is going on in one of these suggests meaningful policy solutions for the other, ignoring every other possible variable in favor of debt load?
Isn’t this type of reasoning absurd on its face?
“reasoning absurd on its face”
yes . bur reasoning is almost always backwards from the conclusion you want to reach. even in science. the difference is that in science or math you then have to check the reasoning to see if it works from a more “objective” perspective. these people do not. neither do we.
the crooks and liars post might be an example. certainly they are right about the criminal conspiracy that is the PPeterson enterprise. But their arguments go no further than “rabble rousing” (i speak as a member of that rabble).
there is never any attempt on our side to offer a sustained, “rational” enough for both sides, argument that, for example, provides a credible “solution” to the problem seen by the other side.
they see SS and other social programs as costing them money. the “answer” provided by our side: “tax the rich.”
FDR was smarter than that.
@Jzb: “they draw their conclusions based on data aggregated over different times and countries. Does it make sense to look at, say, the U.S and Greece and infer that what is going on in one of these suggests meaningful policy solutions for the other, ignoring every other possible variable in favor of debt load?”
It’s a tradeoff: how big’s the sample (sample size matters!), and how representative/comparable are the instances? It’s nice to have both but you often don’t.
Krugman long ago went into the instances in R&R and found that many of them aren’t usefully comparable. Both the big view and the microscope are necessary, more so when you have a small sample where a few non-comparables can really skew things.
It’s even worse if you pare down the sample to truly comparable instances — countries that aren’t on any gold standard (so only instances post-71), issue their own currency, and borrow in their own currency.
It sure will be great when we have two or three hundreds years of samples of those types of countries…
i hate to say this, but when you have a small sample… because you are sampling from a small universe… why bother with statistics at all. unless you are trying to obscure cause and effect.
there are lies and damned lies and statistics.
the PPeterson gang are damned liars.
I guess it depends how small the sample is.
There was this posting: http://angrybearblog.strategydemo.com/2010/05/two-other-views-on-greece-and-us.html
And this one: http://angrybearblog.strategydemo.com/2010/03/it-takes-two-to-tango-look-at-numerator.html
Both are 2010.
Nothing really recently other than the discussion of how their work was flawed.
“I guess it depends how small the sample is.”
Well, yes. I guess it would.