What Fraction of Richard Posner's Arguments Are Off by a Factor of Sixteen?
Paul Krugman:
Sour sixteen - Paul Krugman Blog - NYTimes.com: While I was traveling, there was a brouhaha in the econoblogosphere about recent writing by Richard Posner. Prof. Posner has gone on the warpath against Christina Romer, the head of the Council of Economic Advisers, claiming that her estimates of the effect of the stimulus were wildly implausible.
But it turns out that Posner made a couple of mistakes:
He compared quarterly stimulus spending with annual GDP, causing him to understate by a factor of four the size of the stimulus as a share of GDP;
He stated Romer’s claims about one-quarter growth at an annual rate, overstating what she was claiming by another factor of four.
Overall, then, he was off by a factor of sixteen. As Menzie Chinn has shown, Romer’s claims for the stimulus were actually quite modest.
I suspect that Posner’s factor-of-sixteen error sets some kind of record.
Nah. In physics people routinely make errors of 1020 or so--you drop a minus sign in an exponent.
That said, Posner's mistake is one that is genuinely hard to do. You have to not know that GDP is an annual flow rather than a stock quantity, and not know what a growth rate is, in order to make it.
Yet Posner seems not abashed at all...
