Over the last few years, deficit hawks determined to slash government spending needed to look no further for justification than Growth in the Time of Debt, a 2010 study by star Harvard professors Ken Rogoff and Carmen Reinhart. In Congress, Paul Ryan cited the paper — which maintained that economies shrink once debt crosses a certain percentage of gross domestic product — in his plan to gut federal support for food stamps and other social programs, while European Union officials harnessed it in defense of draconian austerity policies. The paper’s core finding became a new economic commandment: Thou Shalt Not Let Debt Surpass 90 Percent of GDP.
Problem was, as UMass Amherst doctoral student Thomas Herndon discovered in April, the commandment was flat wrong. Because the argument in the paper “seemed so implausible,” says the 28-year-old Northampton resident, he set out to replicate its results for his Econ 753 class. After cajoling data from the Harvard professors, Herndon quickly realized they’d made a rookie mistake: They had failed to select several rows in their Excel spreadsheet, throwing off a key calculation. When Herndon fixed that issue and others, he found that economies in debt beyond that supposed 90 percent red line did not in fact fall 0.1 percent a year. They grew 2.2 percent.
News of Herndon’s corrections rocketed around the world, getting him interviewed everywhere from Der Spiegel to The Colbert Report, but not all the feedback was positive. Some academics accused him and his coauthor professors of issuing a liberal hit piece, even though it was all politically neutral math. “My father said he could only read 10 percent of our paper,” Herndon says. “It was all charts and numbers.” And numbers don’t lie — assuming, that is, you don’t mess them up in Excel.