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In making minimal corrections and not acknowledging that he made these errors, Rajan is dealing with the symptoms but not the underlying problem, which is that he’s processing recent history via conventional wisdom.

Raghuram Rajan is an academic and policy star, University of Chicago professor, former chief economist for the International Monetary Fund, and former chief economic advisor to the government of India, and featured many times in NPR and other prestige media.

He also appears to be in the habit of telling purportedly data-backed stories that aren’t really backed by the data.

Story #1: The trend that wasn’t

Guarav Sood writes:

In late 2019 . . . while discussing the trends in growth in the Indian economy . . . Mr. Rajan notes:

We were growing really fast before the great recession, and then 2009 was a year of very poor growth. We started climbing a little bit after it, but since then, since about 2012, we have had a steady upward movement in growth going back to the pre-2000, pre-financial crisis growth rates. And then since about mid-2016 (GS: a couple of years after Mr. Modi became the PM), we have seen a steady deceleration.

The statement is supported by the red lines that connect the deepest valleys with the highest peak, eagerly eliding over the enormous variation in between (see below).

Not to be left behind, Mr. Rajan’s interlocutor Mr. Subramanian shares the following slide about investment collapse. Note the title of the slide and then look at the actual slide. The title says that the investment (tallied by the black line) collapses in 2010 (before Mr. Modi became PM).

Story #2: Following conventional wisdom

Before Gaurav pointed me to his post, the only other time I’d heard of Rajan was when I’d received his book to review a couple years ago, at which time I sent the following note to the publisher:

I took a look at Rajan’s book, “The Third Pillar: How Markets and the State Leave the Community Behind,” and found what seems to be a mistake right on the first page. Maybe you can forward this to him and there will be a chance for him to correct it before the book comes out.

On the first page of the book, Rajan writes: “Half a million more middle-aged non-Hispanic white American males died between 1999 and 2013 than if their death rates had followed the trend of other ethnic groups.” There are some mistakes here. First, the calculation is wrong because it does not account for changes in the age distribution of this group. Second, it was actually women, not men, whose death rates increased. See here for more on both points.

There is a larger problem here is that there is received wisdom that white men are having problems, hence people attribute a general trend to men, even though in this case the trend is actually much stronger for women.

I noticed another error. On page 216, Rajan writes, “In the United States, the Affordable Care Act, or Obamacare, was the spark that led to the organizing of the Tea Party movement…” This is incorrect. The Tea Party movement started with a speech on TV in February, 2009, in opposition to Obama’s mortgage relief plan. From Wikipedia: “The movement began following Barack Obama’s first presidential inauguration (in January 2009) when his administration announced plans to give financial aid to bankrupt homeowners. A major force behind it was Americans for Prosperity (AFP), a conservative political advocacy group founded by businessmen and political activist David H. Koch.” The Affordable Care Act came later, with discussion in Congress later in 2009 and the bill passing in 2010. The Tea Party opposed the Affordable Care Act, but the Affordable Care Act was not the spark that led to the organizing of the Tea Party movement. This is relevant to Rajan’s book because it calls into question his arguments about populism.

The person to whom I sent this email said she notified the author so I was hoping he fixed these small factual problems and also that he correspondingly adjusted his arguments about populism. Arguments are ultimately based on facts; shift the facts and the arguments should change to some extent.

In the meantime, Rajan came out with a second edition of his book, and so I was able to check on Amazon to see if he had fixed the errors.

The result was disappointing. It seems that he corrected both errors but in a minimal way: changing “American males” to “Americans” and changing “the spark that led to the organizing of the Tea Party movement” to “an important catalyst in the organizing of the Tea Party Movement.” That’s good that they made the changes (though not so cool that they didn’t cite me) but I’m bothered by the way the changes were so minimal. These were not typos; they reflected real misunderstanding, and it’s best to wrestle with one’s misunderstanding rather than just making superficial corrections.

At this point you might say I’m being picky. The fixed the error; isn’t that enough? But, no, I don’t think that’s enough. As I wrote two years ago, arguments are ultimately based on facts; shift the facts and the arguments should change to some extent. If the facts change but the argument stays the same, that represents a problem.

In making minimal corrections and not acknowledging that he made these errors, Rajan is dealing with the symptoms but not the underlying problem, which is that he’s processing recent history via conventional wisdom.

This should not be taken as some sort of blanket condemnation of Rajan, who might be an excellent banker and college professor. Lots of successful people operate using conventional wisdom. We just have to interpret his book not as an economic analysis or a synthesis of the literature but as an expression of conventional wisdom by a person with many interesting life experiences.

The trouble is, if all you’re doing is processing conventional wisdom, you’re not adding anything to the discourse.

19 Comments

  1. AllanC says:

    “The trouble is, if all you’re doing is processing conventional wisdom, you’re not adding anything to the discourse.”

    Processing with conventional wisdom presumably implies one’s conclusions will be conventional; and I take that to be what you mean by not adding something to the discourse. Is that really such a problem in and of itself? I’m not saying what happened with Dr. Rajan forms a particularly good illustration, but in general, dissemination of ideas has value on a scale not so different from idea creation.

    For example, this blog introduced me to Paul Meehl. I take the writings and lectures of Meehl to be perhaps the most valuable contribution to my thinking in my life thus far. I highly value the fact that you shared who he was and disseminated some of his ideas. That said, the post that introduced me to Meehl did not appreciably extend his thoughts. It should be obvious then from this simple example that dissemination of ideas and knowledge is hugely important.

    Now, Meehl was anything but conventional. But one must remember that not everyone knows of so-called conventional thinking and for any individual that learns about such important things, conventional or not, the dissemination was useful. Put another way, if Meehl had only professed conventional wisdom the introduction to him via this blog could still have been hugely valuable if a) I wasn’t aware of said convention (as sometimes happens), or b) his way of speaking / writing illuminates’ ideas that others have not nearly illuminated so well.

    I do not think you’ll disagree on this point but the particular line you ended with does not reflect that (at least to me).

    • Andrew says:

      Allan:

      A problem with Rajan’s work is not just that he repeats conventional wisdom, but that he repeats errors that have become conventional wisdom, and then he uses these errors as premises in his reasoning. He’s going nowhere because he isn’t bringing in anything new.

      Regarding your question: sure, a link to past work can be useful. Do I “add anything to the discourse” by linking to Meehl? I guess you could say so. Linking to Meehl can be “adding to the discourse” in that I’m reminding people of something important that they might not have otherwise seen.

      More generally, there’s a space for people who restate conventional wisdom in an accessible way, for example writers of popular books or magazine articles.

      It’s not all strawberries and rainbows, though. The bad side of “conventional wisdom” is that it is unquestioning. A key aspect of “conventional wisdom” is the acceptance of ideas that are false or have not been supported by data: thinking something just because other people think it.

      Another way of thinking about this is to contrast Rajan with sleep scientist Matthew Walker. Walker is an active agent of chaos, distorting data and making things up in order to support his scientific agenda. He’s injecting squid ink into the discourse, making it harder for the rest of us to see what’s really going on. In contrast, Rajan is more passive. He’s taking accepted notions that he’s heard about in the academic common room or the news media and presenting these notions as if they’re true facts. He’s not adding any new errors into the discourse, he’s just adding nothing. So that’s what I was trying to get at.

      One thing Walker and Rajan have in common is that their tolerance for errors makes them less credible to me. They’re harming their own cause my making me suspect their larger positions.

      • Andrew,

        The issues you raise align well with several themes elaborated in Richard Posner’s The Public Intellectual: one of which is that some academics who become celebrity pundits, op-ed writers, etc are rarely held accountable for their use of statistics and evidence. That book came out a long while back. Maybe less the case now with the Internet.

      • jim says:

        “Walker is…distorting data and making things up…to support his…agenda. “

        “In contrast, Rajan is more passive.”

        I’m not sure “passive” vs “active” is the relevant distinction. Both are making things up. The relevant difference is that Walker is more daring in exposing the falsehood machinery. Actually maybe it’s the other way around: Rajan is going to more work to craft sunshine and shadows in a way that makes his work appear less fictional. Walker apparently doesn’t have the patience for all that.

  2. Andrew,

    I really appreciate your penultimate paragraph.

    • Martha (Smith) says:

      I especially appreciate Andrew’s last paragraph.

      • Martha (Smith) says:

        Oops — I mean the last paragraph of the post that preceded Samara’s comment, namely,

        “One thing Walker and Rajan have in common is that their tolerance for errors makes them less credible to me. They’re harming their own cause my making me suspect their larger positions.”

  3. name withheld by request says:

    It looks to me if one is able to stomach making approximately the level of misrepresentation in the Rajan example, one can just about state any arbitrary thesis and “support” it with some stats or graphs from somewhere or another. I mean it’s not really even close to matching the supposedly supporting data. He could have chosen any number of other plausible seeming conclusions and pointed to the same “evidence”, couldn’t he?

  4. It would be interesting to identify those who have cordially accepted errors pointed out and corrected them. In my experience cognitive dissonance prevails so much.

  5. Paul Hayes says:

    Story #1: The trend that wasn’t

    Eh?!

    If you are looking to learn more about some of the common techniques people use to lie with charts,

    There are plenty of examples of people actually lying with charts rather than just looking as though they might be.

  6. Anonymous says:

    I find it humorous that you cited Wikipedia and no primary sources.

    See https://en.wikipedia.org/wiki/Wikipedia:Wikipedia_is_not_a_reliable_source

    • Andrew says:

      Anon:

      Wikipedia is just a convenient way to look things up. I cited wikipedia for the statement that the start of Tea Party movement predated the Affordable Care Act. This is not a controversial statement. If there were any dispute, we could point to a more authoritative source, but there’s no need for such care when pointing to a fact that is universally accepted.

      • John Richters says:

        Kudos to Andrew for not pointing out that Anon cited a Wikipedia article as his source for a critique of relying on Wikipedia as a source.

        • Anonymous says:

          Wikipedia is just a convenient way to look things up. I cited Wikipedia for the statement that Wikipedia is not a reliable source. This is not a controversial statement. If there were any dispute, we could point to a more authoritative source, but there’s no need for such care when pointing to a fact that is universally accepted. ;)

          (Maybe a /s should’ve been added after the link in my first post as wit is generally lost on the internet.)

  7. Anonymous says:

    If you are right, then the story is even more puzzling than you’ve made it. That’s because Rajan’s claim to fame is that he, virtually alone among mainstream economists, bucked conventional wisdom to predict the 2008 financial crisis.

    Rajan did this in 2005 at the Federal Reserve’s annual Jackson Hole Conference. The conference that year was mostly a celebration of Alan Greenspan’s 20 year tenure as Fed Chair. The consensus at the conference was that the recent wave of innovations in financial markets had rendered such crises obsolete. Rajan disagreed. He argued that along with their many benefits, changes in financial markets had also raised the risk of “financial-sector-induced turmoil.” He believed that under the right circumstances, these changes could even lead to a “catastrophic meltdown” of the financial system.

    Rajan’s argument was not well received at the conference. Larry Summers said Rajan’s “slightly Luddite premise” was “largely misguided.” Summers was not alone.

    Of course, Rajan’s message looks much better after 2008.

    (For more details, search Rajan + 2008.)

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