Distrusted Aggregators Department...
One of the major problems for those of you playing for Team Republican (a problem but not so big a problem for those of you playing for Team Democrat, and not a problem at all for those of us who really want to be playing on Team Technocratic Sanity) is that there are a lot of people on your team who will eagerly burn your reputation for trustworthy analysis in order to advance their objectives.
That is why you should only blog about stuff that you know, and have read, and can evaluate, and have evaluated.
They don't call it The Net of a Million Lies for no reason, after all...
Noahpinion:
Noahpinion: Did the stimulus really destroy a million private-sector jobs?: This week, Greg Mankiw links us to a paper by Timothy Conley of Western Ontario and Bill Dupor of Ohio State University.
Indeed he does. Mankiw:
Greg Mankiw's Blog: Evaluating ARRA: im Conley and Bill Dupor have a new paper on the American Recovery and Reinvestment Act (that is, the Obama stimulus bill). Their empirical findings:
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
That's all he says.
Noahpinion continues:
The paper's eye-popping finding is that the American Recovery and Reinvestment Act (ARRA), also known as the Stimulus, was responsible for a net loss in jobs. No, really! From the paper's abstract:
Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs...The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.
Wow! Seriously? The stimulus directly resulted in a net loss of six hundred and fifty thousand jobs?... But wait. A still small voice is nagging me from the back of my mind, urging me to read beyond the abstract. And so my dissertation will have to wait 40 minutes.... Because I do have some doubts about this result. Stimulus spending destroys jobs? How the heck is that supposed to work?... What Conley and Dupor do is to run a state-by-state regression. Different states received different amounts of ARRA spending, so looking at the differences in employment growth rate between those states after the passage of ARRA should tell us how many jobs ARRA created or destroyed.... Now, you may say: "Wait, but states where employment goes down should be expected to get more stimulus money, since those are just the states that were hardest-hit by the recession!" And you'd be right: there is a big endogeneity problem here.... Messrs. Conley & Dupor deal with this problem by finding some "instruments."... Usually, critics of an empirical paper like this will try to say that the instruments used are bad ones.... I am not going to do that. I am going to give Conley & Dupor a free pass on their instrumental variables, because... Conley and Dupor's results are statistically insignificant. Bluntly, what they have found is nothing....
Conley and Dupor's abstract should read "We find no evidence for a significant effect of the ARRA on job creation." That would be scientifically honest, but would not turn a lot of heads. Instead, the abstract makes the more politically incendiary claim that the ARRA destroyed jobs, which the authors actually did not find....
Mankiw linked to this paper without comment, evaluation, or qualification. But he could have just as easily linked to this paper by Daniel J. Wilson, which uses a methodology similar to that of Conley and Dupor, but finds strongly positive (and often strongly significant) effects of the stimulus.... Why did Mankiw pick the Conley-Dupor paper for a shout-out, and ignore the Wilson paper?...
I was just noting how these things propagate through the blogosphere, and errors don't get caught, especially when the initiator of the meme is someone as respected as Greg Mankiw. I think that trusting Mankiw is a very second-order mistake, compared to the mistake of being Mankiw and of posting stuff that you don't vet carefully, even knowing that you are Mankiw and that people are going to trust you.
