Economists vs. The Facts (and Microsoft Excel)

One of my favorite go-to podcasts is NPR's Planet Money.  If my memory serves, Planet Money got its start in the immediate aftermath of the 2008 financial collapse as a means to explore both the ongoing economic narrative as well as the causal narrative leading up to the crash.  What made Planet Money instantly appealing to me was the conversational approach used to convey information about possibly complex ideas.  Their listening audience is better off for tuning in to these efforts.

Having said that, let me go back one more step to my heady days as a college first year atop the hill at Hamilton College.  I sat there in one of my first courses, Intro to Macroeconomics, knowing full well that I had officially taken the first step in my major and therefore the most likely path my adult life would follow.  Granted, a few years later I would mic-drop that plan and decide on a different path for graduate school but that's a story for another time.  I still find economics fascinating - thus why I love listening to the aforementioned Planet Money - and sitting there in that macroeconomics class, I couldn't have been more excited.

So we start doing some of those basic supply and demand graphs and I remember going over the list of assumptions that needed to be in place in order for the basic graphs to work.  Assumptions like buyers and sellers have perfect information, or that supply and demand are independent.  At its most basic level, a supply and demand curve can't comprehend nuanced information, advanced economic mathematical procedures take care of that.  At the time, as I read down the list of assumptions that just didn't hold up in the real world, I smiled and thought to myself "this is a little bit of bullshit."  And I dove in.

Economics is not a precise science, or a hard science, but it doesn't do itself any favors when you hear stories like the one Planet Money recently covered in their 452nd episode released on April 19, 2013:

Episode 452: How Much Should We Trust Economics?

The story covers a very influential economic study released a few years ago.  From the article that accompanied the podcast:

Three years ago, Carmen Reinhart and Ken Rogoff published a study that quickly became one of the most famous, most talked about economics papers since the financial crisis. It got so much attention because it answered a basic question everybody was asking: How much debt is too much? 

Reinhart and Rogoff looked at what had happened in many different countries over many years. And they found a what looked like a clear debt threshold: 90 percent. Average growth was much, much slower in countries with debt-to-gdp ratios over 90 percent. 

The paper got a lot of coverage in the press. Politicians cited it in the U.S. and Europe. 

Then, this week, a 28-year-old grad student and his professors published a startling finding: Reinhart and Rogoff had made a simple Excel error in one part of their study. The authors of the new critique also questioned other elements of the study and argued that, in fact, there is no debt threshold.

A lot of that European austerity going on preventing our neighbors across the pond from getting out of this global recession?  Reinhart and Rogoff's study frequently came up in policy discussions as support for the path Europe eventually chose.  Our own Rep. Paul Ryan, who keeps trying to give himself a nickname about being a numbers guy even though his numbers never add up, cited this same study as evidence that the rich and corporations need more back rubs while the poor need to be sat on harder.  Here's an article from PolicyMic that goes a little deeper into the flaws of the Reinhart/Rogoff study that Ryan loves so much:

Paul Ryan Budget: The Austerity Paper He Cites Is Full Of Holes

A number of oddities occurred in the Reinhart/Rogoff study.  First is the Excel error that I make all the time in my own adventures in spreadsheeting mentioned in the NPR quote above.  Granted, when I blow my spreadsheet, the only thing affected is my catalogue of my Marvel Comics and Magic The Gathering collections.  This study may have erroneously led governments down paths that have actually prevented economic recovery.  But as the PolicyMic article explains, there also seems to be some selective exclusion of data, and at the end of the day, the 90% hard conclusion the study arrived at doesn't to be such a hard conclusion at all.  From the PolicyMic article:

The first error of Reinhard and Rogoff is that they excluded data from their dataset with no explanation given. The years excluded were times in three countries: Australia (1946-1950), New Zealand (1946-1949), and Canada (1946-1950), which were the countries with high debt and solid growth. For example, the data for New Zealand in the paper's high debt data set changes dramatically, from a dreadful -7.6% to a respectable 2.6%. This is a 10-point error.

So there have been countries with high debt that still managed economic growth that the Reinhart/Rogoff study just left out.  Which kind of begs the question initially posed by the Planet Money podcast... how much should we trust economics?  After listening to the podcast and reading up on what happened, my thoughts on economics remain unchanged.  It's not a hard science, it may be better suited to exploring the past like a detective might than for creating predictive models, and like any research, it needs to be handled honestly.

In this case, there's the simple Excel error - fine, things like that are going to happen.  That's one of many reasons why most journals in academia require a peer review for potential articles.  The Reinhart/Rogoff study was never submitted to peer review before publication.  There is a process in place to help people receive the best in current research, it just wasn't followed in this case.  It wouldn't surprise me if Reinhart and Rogoff felt like they were on to something pretty significant and topically relevant, then got a little sloppy and rushed in their enthusiasm to get their insights out to the world.  In that rush, Reinhart and Rogoff ignored the process that keeps our information honest.  The Excel error is just forehead-slapping incompetence, the omitted data feels like something different.

To answer Planet Money's question, I don't think economics needs to be trusted any more or less, we just need to be more vigilant concerning the human element in research we base policy decisions on.  Policy decisions cannot be taken lightly at any step in the process.

I'll let Stephen Colbert take us out.  Both he and Planet Money present all of this in a much more entertaining fashion than I ever could:

CNN vs. The Facts

As everyone already knows, Boston suffered a cowardly attack during its annual marathon held on Patriot's Day in that fair city.  Three people lost their lives, two young women with bright futures, and an eight year old boy with his whole life ahead of him.  Grievous injuries, such as amputated limbs and shrapnel wounds, affected scores of other spectators.

In the immediate aftermath, we saw heroes.  People right there on the scene immediately running to help, tearing down the barriers as fast as possible, to start getting immediate medical attention to those affected.  There is Carlos Arredondo, known as the guy in the cowboy hat immortalized helping a man who had just lost both legs.  It takes a ninth grade level of cleverness and some time on the internet to plant the bombs that devastated the Boston Marathon.  I'm not sure that ninth grade level of cleverness lets you fully realize what it means to have the full weight of a nation brought to bear against you, inspired by the victims and heroes created by those blasts.

In the days following, many people turned to CNN to keep tabs on the investigation, and here's what they got for their efforts:

I think the word that best describes this is "Shitstorm."  "Clusterfuck" also comes to mind, as does "completely unprofessional and embarrassing, insulting journalists everywhere."  I can't put it any better than Jon Stewart already did is this clip so I'll just leave CNN to wallow in its own waste.  I wasn't watching the television coverage, but I did follow it through their website.  Here's what I saw... first up:

Not really a headline, but they ran with it.  It was later followed up by this gem:

I'm starting to wonder if CNN actually understands the words in their headlines because the bulletpoint completely refutes what's above it.  It seems like people in the know are all on the same page about the details, the only reporting that differs is CNN's own.  And here's me watching all of this happen (I've used it before, but it perfectly captures so much):

I even wanted to give CNN that poke at the end just to see if it was aware on any level how crazy it seemed.

In other news, the Senate voted down a bill to expand background checks, 54-46.  Now if you look at that vote and ask how come the higher number lost... then you'll understand that the Senate is as fucked up as this bill not getting past.  To go along with the issue, perpetually tone deaf Sen. Rand Paul dropped some of this wisdom:

Rand Paul: Obama Using Newtown Victims As 'Props'

It's always nice to see Sen. Paul thinking he has his finger on the pulse.  I'm sure a parent who lost a child to gun violence suddenly making it his or her mission in life to fight back against the forces that had a part in that child's death seems less likely than a President using grieving dupes, but that's Rand Paul for you.

Obama called this defeat "round one."  I hope that's true... I hope this fight pushes on somehow without turning into a castrated embarrassment of legislation, but Congress has trained us to expect castrated embarrassments so thoroughly that I'm not sure I can see the alternative.

Bravo, Senate.

Make Sure To Leave Room For the Canned Food

When it comes to gun-related tragedies such as what happened in Newtown, the NRA and gun manufacturers count on people having extremely short attention spans in order to maintain the status quo.  And luckily for the NRA and gun manufacturers, politicians really are the perfect blend of forgetfulness and cowardice as we hear that gun measures proposed in the wake of the Connecticut massacre are slowly dying because of the noblest of reasons... career politicians are fearful of losing that "Career" status.

Truth of the matter is that not all parts of the country see gun issues the same way.  Connecticut gets hit with an unspeakable gun crime and they go all in on reform, but I'm curious what would happen if these kinds of things happened in a much more 2nd Amendment hardcore red state?  Would Texas really consider the kinds of reforms passed in Connecticut if a suburb of Dallas experienced what Newtown did?  Would those hypothetical Texas parents lament the lack of armed teachers in the school or would they go after the gun ownership process as well?

It's pure navel-gazing (as is, I guess, 99% of the internet), but I wonder because guns illicit weird responses from people.  I stumbled across this article during my daily internet-ing:

Ammo Manufacturers Producing "24 Hours A Day" To Match Demand

This isn't the first time I heard about recent ammo shortages.  And with all the downer talk about the effects the embarrassingly stupid sequester has on our fragile economy, it's refreshing to read this:

Hornady ammunition, makers of some of the most popular self-defense ammo for concealed carry applications, explained it this way: "We are producing as much as we can, much more than last year, which was a lot more than the year before, etc. No one wants to ship more during this time than we do." 

The demand for Hornady's ammo is so great that they've "added presses, lathes, CNC equipment, [and] people and space." They are producing many popular items "24 hours a day" and "several hundred employees work overtime every week" to make as much ammo as possible.

Or this:

Supplies of 9mm, 45 acp, 40 S&W, and .223 are scarce in the marketplace, and where they can be found, they are being snatched up by desperate consumers as they are unloaded off trucks at stores like Wal-Mart & Gander Mountain. 

We've all seen movies where there is some outbreak and society crumbles and there's the scene where someone unloads relief supplies off the back of the truck while desperate hoards try to remain civil despite their desperation.  That scene is actually happening right now with gun ammunition, but here's the part that's batshit nuts:

During panics in the past, gun owners bought up all the ammo they could; during the current panic, even people who don't own guns have been buying ammo for the gun they might buy in the future. At the same time, first-time gun buyers have not only been buying guns but also every bullet for it they can find. 

Just what do these people think will happen?  Not sure what paid ad you'll get in the upper right portion of your webpage should you click on the article link above, but here's a screenshot of what I saw:

Nation-wide Gun Grab Soon?  No, not at all, but a most bizarre Venn Diagram overlap seems to be occurring in the world of guns.  Here are the overlapping subheadings of these circles:

Gun Owner
Possesses Some Disposable Money
Paranoid
Has Some Storage Space To Spare
Gullible To Claims Made By People Trying To Sell You Shit

It's kind of odd, if you really think there is going to be a nationwide gun grab soon (assuming that means the Liberals are coming to take away your guns), why would you dump a lot of money into something that you are about to lose?  Seriously - this is the only time I'm probably ever going to say this - listen to Glenn Beck.  Stockpile gold.  The government isn't going to take it away like they apparently will guns in your paranoid fantasy, and it's really worth something.

We all know that more and more guns are being sold in this country to a smaller and smaller group of people, which means there are people out there stockpiling weapons to some degree.  Which is ironic because the government doesn't really pay that much attention to gun ownership until you stockpile them... so you're apparently super-arming yourself in case the government comes, which they would only do because you are super-arming yourself.

There are some Quixotic parallels to be made here with these hoarding gun owners here in the U.S., except that in Don Quixote, he armed himself so he could go attack the windmill.  Gun owners here arm themselves so they can look through drawn blinds suspiciously at the windmill, and should the windmill come, they are prepared to hold out indefinitely against the windmill siege.  Now don't misread my intentions here, I'm not calling for you weapon hoarders to Nut Up™ and take the fight to the windmill.  Like most reasonable people, I sincerely want you to realize you're trying to stare down a windmill like a crazy person and come back to rational society.

Sadly, for some in this group, I feel that's never going to happen because I think they secretly hope the Government does come for their guns so that they get their chance at the armed standoff.  I feel like some of these people glorify in their heads the image of them in a firefight defending their second amendment rights.  Or if not that, they secretly hope someone breaks into their home and gives them the opportunity to kill a fellow human being...

I think I'm starting to see why these folks are so against background checks that so many others are for. These folks are fucking crazy and might not pass some of these checks.