As a University of Massachusetts (UMASS) alum, I felt queasy as the reports came in that Dzhokhar Tsarnaev, one of the Boston Marathon bombing suspects, was a UMASS Dartmouth student. It was even more unsettling to hear him described by fellow students as a "pot head", who was partying two nights after allegedly carrying out the bombings, and that he must have been "extremely high" to commit these heinous acts.
While, Dzhokhar was partying on the Dartmouth campus fresh off his first alleged terror spree, across the state at UMASS Amherst, Economics grad student Thomas Herndon and his professors Michael Ash and Robert Pollin had just published a paper that rocked the Economics world.
The UMASS Economics team's paper titled Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff revealed flaws in Harvard economists Carmen Reinhart and Kenneth Rogoff's 2010 study, which asserts that economic growth slows sharply when government debt exceeds 90 percent of annual economic output. Why should we care about errors in some dry economic study? Because policy makers from Washington to Brussels used Reinhart-Rogoff as intellectual cover to make the case that austerity measures were absolutely essential to pull the U.S. and Europe out of their respective economic slumps. According to The Roosevelt Institute "It was one of the most cited stats in the public debate during the Great Recession."
While eyes around the globe were fixed on Watertown and dope loving Dzhokhar, in the Economics world, blogs were ablaze with the news coming out of Amherst and Cambridge. UMASS, our state's public university and Harvard, our state's (and the world's) most elite university were in an intellectual tussle as to whether the flaws that Herndon et al found in Reinhart-Rogoff make a difference.
Reinhart acknowledged the flaws but said, "We do not, however, believe this regrettable slip affects in any significant way the central message of the paper". Herndon and the UMASS professors disagreed. New York Times Columnist and professor of Economics and International Affairs at Princeton University, Paul Krugman said of the Reinhart-Rogoff study:
"First, they omitted some data; second, they used unusual and highly questionable statistical procedures; and finally, yes, they made an Excel coding error. Correct these oddities and errors, and you get what other researchers have found: some correlation between high debt and slow growth, with no indication of which is causing which, but no sign at all of that 90 percent "threshold"."
The Harvard study had three flaws, one of which (but arguably not the most important) was an Excel coding error. What makes this such a BIG DEAL is that policy makers like Paul Ryan (R-OH) Chairman of the House Budget Committee, and Olli Rehn of the European Commission, (and even The Washington Post) have used this flawed study advocate for austerity policies, when in fact - they could possibly be hurting rather than helping the U.S. and Europe's sluggish economic recoveries.
Having lived in Washington for 10 years, I know politicians only like the facts that fit their agenda, and this flies in the face of the austeritymania being hawked by some. I wonder if this critique from UMASS will penetrate the Beltway and Brussels; or will we be mired in bad policy based on flawed data due to sloppy errors and the unwillingness of two highly regarded Harvard professors to acknowledge the far reaching implications of their "slip" up?
In the past week we have had some welcome and some ghastly newsworthy actions from UMASS students. One allegedly tried to harm the U.S. by bombing our beloved Boston Marathon; while another's academic bombshell could possibly help our country and the global economy get back on track.
We might be focused on Dzhokhar Tsarnaev this week, but the TV cameras will disappear and other news stories will focus us elsewhere. UMASS grad student Thomas Herndon will quietly remain an unsung hero to all but the wonkiest among us. If Washington can put ideology aside and go with the facts, Herndon's findings from last week might have a greater impact on the trajectory of our country and the global economy than the Boston Marathon bombers ever could.
Update: The Austerity Debate continues: For more see Stephen Colbert's scathing satire on the Reinhart-Rogoff errors, and interview with Thomas Herndon. Yesterday's New York Times Editorial by Reinhart and Rogoff, and Paul Krugman's response on his New York Times blog.