Economists should take sides in discussions on the basis of their research conclusions, and not do research in line with their political stance.

The global economic crisis of 2008 is dragging on. It burst forth in the US, at the heart of our civilization. The US economy is still in intensive care. Europe has not even made it to the post-op phase yet. It has been years, but the world is not yet sure how to respond to the crisis. There is a deep-rooted dissidence. It was first between economists, now it is between politicians. On the one hand are those who think austerity measures can lift the US from the crisis (the Republican Party). On the other hand are those who believe increased public spending is the way out (the Democratic Party). Both camps have their economists. The debate has not subsided. Neither has the global economic crisis. A recent study has unveiled that the major scientific reference of the first camp was not completely correct. The authors of the mentioned study have acknowledged that they made a mistake resulting from a Microsoft Excel error. All the fuss and the austerity measures were a computer coding error? Many countries, Cyprus the latest, were tortured just because Kenneth Rogoff and Carmen Reinhart did not have a good research assistant? Let me tell you what the breaking news made me think of.

First a summary and then my assessments: prominent American economists Kenneth Rogoff and Carmen Reinhart published a paper in the American Economic Review, an important journal in the field of economics. The paper, with a dataset from 1800 to the date, reached a blazing conclusion: when a country’s public debt exceeds 90 percent of its GDP, the course of economic behavior changes and the growth rate decreases dramatically. This finding was used intensively by the Republican Party against Obama during the latest budget debate. A new study by Herdon, Ash, and Pollin, however, revealed that the Rogoff and Reinhart study selectively excluded some countries that would have affected the results. According to the results of the Herdon, Ash, and Pollin study with the correct dataset, debt stock in excess of a certain level does not affect growth as dramatically as the Rogoff and Reinhart study suggested. Public debt stock alone is not sufficient to explain weak growth, contrary to the common argument. Rogoff and Reinhart, in their initial response, tried to demonstrate how strong the causality was by quoting other results of their study. In a second statement, they admitted to have made a coding error in Excel when analyzing the dataset. This debate wouldn’t have mattered that much if it did not have a political dimension. But it has, as the fundamental data source of a political camp. So, Microsoft Excel is to blame for the world’s misery.

There are numerous answers to the question “Who is an economist?” My favorite is this one: an economist is someone who can best explain why the estimations he or she made yesterday are proven wrong today. Like all subtle words, this one too contains much truth. An economist seeks to interpret datasets, identify empirical replications. After identifying a pattern, he or she seeks a story to explain it. That story is based on a series of assumptions shaped by the way he or she sees the world. The legitimacy of the assumptions is about time and context specificity. It is not ideological. Unlike the positive sciences, it is impossible to develop an absolute theory that explains each and every economic matter in all conditions. Therefore, the trick is to make assumptions with the most objective criteria possible independently of your world view. An economist is someone who can best explain why the estimations he or she made yesterday are proven wrong, as long as he or she is as objective as possible. I always say that science abhors politics; science has no ideology. Economists should take sides in discussions on the basis of their research conclusions, and not do research in line with their political stance. If you choose the second option and then put the blame on Excel, you may ruin your own reputation.

This commentary was published in Radikal daily on 19.04.2013