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There was the Reinhart-Rogoff error, which claimed economic growth declines (0.1%) when a nation's debt passes 90% of GDP. For years this was used to set econom
by Mountain_Skies 7y ago
There was the Reinhart-Rogoff error, which claimed economic growth declines (0.1%) when a nation's debt passes 90% of GDP. For years this was used to set economic policy, especially austerity measures, in western governments. When someone (a grad student IIRC) actually bothered to check the Excel formulas, an error was found and the actual number should have been a 2.2% increase instead of a 0.1% decrease.
That the error occurred isn't amazing but it is mind blowing that so much government fiscal policy was set based in part on this one spreadsheet that no one bothered to double check. Blame extends both to those who used the model to justify the policies and to those who opposed the policy but never checked the assumptions it was based upon.
- OnlineGladiator 7y agoI feel like you're missing the most interesting point of this story - how many other policies are decided based upon nonexistent or erroneous data that nobody bothered to verify? You assume it's an anomaly, but what if this were the norm?
- tbezman 7y agothey mentioned that
- OnlineGladiator 7y agoOP mentioned one error and the resulting policies because of it, I didn't see any others he mentioned. I don't think it's reasonable to know how many policies are determined based on sound data and processes, and how many are so politically motivated that nobody ever checks the numbers. You really only find out by happenstance when someone checks on a lark. We could make a concerted effort to verify everything, but where would you even begin for policies that have already existed for decades?
- Mountain_Skies 7y agoMy post was in no way meant to be exhaustive but it's good to know that since you failed to list any of my other shortcomings in life that you believe me to be otherwise perfect. Afterall, you failed to list all of my failures so you must be assuming they don't exist.
- OnlineGladiator 7y agoMy reasoning was that if you thought it were the norm, it wouldn't be worth mentioning. And you talk about it as a 'most interesting' example so it seems unlikely you didn't consider it an anomaly.
- arugulum 7y agoIf I remember correctly, this wasn't really a "mathematics" mistake. The formula simply wasn't applied to the right number of cells (they didn't apply the cell-selection far enough). Although that's beside the point. This was a tragedy of the academic economist profession, and should be covered day-one in any Econ research class.
- QuesnayJr 7y agoIt is a very famous example in economics, but it was very unusual for them to do their analysis in Excel rather than a stats package like Stata.
- QuesnayJr 7y agoIt's not that no one bothered. They didn't share their data with anyone for some time. As soon as they did, the mistake was immediately discovered.