Famous Study Supporting Austerity Discredited

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Famous Study Supporting Austerity Discredited

Postby Learned Nand » Tue Apr 30, 2013 4:03 am

There are a lot of news articles about this, but I figured this crowd would appreciate The Colbert Report's coverage. Basically, there was a very popular study that found that, when countries exceed a public debt to GDP ratio of 90%, their economic growth becomes negative. A graduate student, Thomas Herndon, when tasked with duplicating the results of this study, found that he couldn't. The original study contained coding errors in its excel spreadsheet. In fact, the average economic growth for countries whose public debt to GDP ratio exceeds 90% is 2.2%, not -0.1%.

This is very significant. The original study was used to justify austerity measures in Europe, and Republicans like Paul Ryan have been referencing this study to justify dramatic and immediate cuts in the federal budget. After the study came out, Nobel Prize winning economist Paul Kreugman pointed out that the results of the study couldn't be replicated, but now we've found the specific reason as to why.

Ideally this would put an end to Republican deficit-hawking so that we could actually concentrate on stimulating economic growth, but of course, if conservatives cared about science there would be substantially fewer conservatives.
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Re: Famous Study Supporting Austerity Discredited

Postby Learned Nand » Tue Apr 30, 2013 10:53 am

Here's some additional Colbert coverage. It's delightful and makes some rather legitimate points.
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Terry Pratchett wrote:The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it.

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OrangeEyebrows wrote:There once was a guy, Aviel,
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He tested with Turing,
his circuits fried during,
and now we'll have peace for a spell.
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Re: Famous Study Supporting Austerity Discredited

Postby iMURDAu » Tue Apr 30, 2013 2:59 pm

The biggest red flag to everyone should have been that it wasn't a peer reviewed paper.

*Thomas Dolby voice*

SCIENCE!
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Re: Famous Study Supporting Austerity Discredited

Postby Lindvaettr » Tue Apr 30, 2013 6:43 pm

My favorite part was what they said about the study afterwards, in one of the articles I read. From memory, it was something like, "Debt surpassing 90% of the GDP still causes an economic slowdown, but the effects are not as severe as previously thought, and there are many exceptions."

To me, that says, "If you have a huge debt and don't know what you're doing, that could be bad. But not always. It's mostly just a thing and we don't know what we're talking about."

Someone should do a study of people who do studies, and find out how often researchers know what they're talking about.
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Re: Famous Study Supporting Austerity Discredited

Postby Learned Nand » Tue Apr 30, 2013 8:59 pm

Lindvaettr wrote:Someone should do a study of people who do studies, and find out how often researchers know what they're talking about.

I can see the headlines now: "Researches know what they're talking about 100% of the time, say researchers."

That was a good part though Lindvaettr, and Colbert's comment was spot on: the hypothesis must remain the same even when the data change. That's science!
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Terry Pratchett wrote:The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it.

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OrangeEyebrows wrote:There once was a guy, Aviel,
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He tested with Turing,
his circuits fried during,
and now we'll have peace for a spell.
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Re: Famous Study Supporting Austerity Discredited

Postby Learned Nand » Tue Apr 30, 2013 10:46 pm

In related news, Paul Krugman is kicking the ass of European economists arguing for austerity due to a fear of inflation. This is a line you'll often hear from Libertarians, that the feds are causing runaway inflation. In fact, inflation is, if anything, too low. It's been at astonishingly low levels by all metrics since the recession, and people are cutting spending to try and curb it.

Also, I want to make sure you all understand the importance of the concept of austerity in modern economics. Basically, every fiscal conservative you've encountered is advocating austerity. All these stupid fucking debates about the budget and the national debt, that have dominated politics for the past few years, are the result of austerity. Any time somebody says "We have to cut government spending now!" or anything along those lines, that's a result of austerity. And if you don't believe that rhetoric matters, tell that to the tens of thousands of people who are now homeless or dead as a result of austerity measures.
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Terry Pratchett wrote:The trouble with having an open mind, of course, is that people will insist on coming along and trying to put things in it.

Click for a Limerick
OrangeEyebrows wrote:There once was a guy, Aviel,
whose arguments no one could quell.
He tested with Turing,
his circuits fried during,
and now we'll have peace for a spell.
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Re: Famous Study Supporting Austerity Discredited

Postby malosaires » Fri May 03, 2013 7:00 am



This video offers a pretty good explanation of the problems of austerity in terms of economic growth.
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I've got a tumblr where I write about stuff, some of which is also on this site. I've also got a few videos you might wanna check out.
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