Full Cred and Props to Reinhart & Rogoff and the BEA: They Collected the Data

The other day I dissed the analysis in Reinhart and Rogoff’s Growth in a Time of Debt as being on the level of a blog post from an amateur internet econocrank. I still hold that opinion.

But I want to walk back on that, or at least clarify, and give lots of credit where due. Because they did make a huge contribution, of a quality that you will not find in econoblog posts from even the best bloggers: they assembled a great data set. As I can attest — having spent hundreds of hours assembling data sets that were far less challenging than theirs — this is not a trivial task. And the value of that data set is high, assuming you throw high-quality analysis at it.

Now of course, they didn’t release the goddam data set for years. That seems unforgivable, especially given the paper’s political and policy impact. This paper wasn’t in a peer-reviewed journal (it was a “discussion paper,” which makes its impact even more eyebrow-raising), but I really wonder why those journals (in any field) would publish such papers without requiring that the data sets accompany them, for vetting by other researchers. (Yeah I know: not a new idea.)

I totally understand why this is problematic. This is the researchers’ crown jewels, upon which they can build future papers, at least. Not just the data, but the analysis methods and the coding of those methods (intellectual property?), is often included in the files. At most, you’re looking at corporate/university/personal assets, trade secrets, generally some (at least potentially) damned valuable stuff. (Throw in the issue of partial or complete government funding for the research, and it’s even more complicated.) But providing the data should be the default requirement, with some clear guidelines justifying and explaining why the data is not provided, when it isn’t.

The “damn valuable stuff” double-points to the other topic I want to mention here: the BEA’s move change the NIPAs, to count spending on R&D and the development of creative works as investment spending rather than consumption spending — as real-capital building.

“Double” because 1. the new accounting highlights the real value of this kind of data-gathering and knowledge-creation, and 2. the change itself required (and will continue to require) a huge amount of data gathering.

I was kind of wowed by this line in the Financial Times writeup on the change:

The Internet Movie Database may not seem like a natural source of data for the national accounts, but it was one of many combed by BEA researcher Rachel Soloveichik, who went through film studio records as far back as the 1920s to build a series on investment in movies.

(Another good FT post on this here.)

So when you hear me kibbitz about the structures and methods used in the national accounts, please know that I have wide-eyed respect for the diligence and skill of hundreds of accountants and economists involved in building those structures, and populating them with data from hundreds of diverse sources. (This actually sounds like one of those Google interview/hiring questions: how would you go about estimating the value of every movie made in America since the 1920s? Books? TV programs?)

That information is hugely valuable. It’s a great example of Your Tax Dollars at Work, delivering value far above the government’s cost.

Or at least, I think it is. Somebody should gather some data on that.

Cross-posted at Angry Bear.