To Rule By Spreadsheet
Carmen M. Reinhart and Kenneth Rogoff’s book,This Time Is Different: Eight Centuries of Financial Folly, is a tedious, scholarly discussion of the sources and taxonomy of financial crises. Much of the substance for this bestseller comes from two 2010 papers by Reinhard and Rogoff. In these papers, they showed that the average real economic growth slows (a 0.1% decline) when a country’s debt rises to more than 90% of its gross domestic product (GDP). A figure that was employed repeatedly in political arguments over high-profile austerity measures in many countries around the world.
All this would have been just another example of the well-oiled, north american cycle of academia-bestselling book-policy making simbiosis.
Except that the paper was wrong.
Doctoral student Thomas Herndon and professors Michael Ash and Robert Pollin, at the Political Economy Research Institute at the University of Massachusetts Amherst, analyzed in depth the work of Reinhard and Rogoff. During their analysis, Herndon, Ash and Pollin managed to obtain the actual spreadsheet that the authors used for their calculations; and after analyzing this data, they identified three errors. The most serious was that, in their spreadsheet, Reinhart and Rogoff had not selected the entire row when averaging growth figures: they omitted data from Australia, Austria, Belgium, Canada and Denmark.
In other words, they had accidentally only included 15 of the 20 countries under analysis in their key calculation. When that error was corrected, the “0.1% decline” data became a 2.2% average increase in economic growth1.
The actual numbers are now anecdotal—although not so anecdotal for those who suffered the austerity measures the papers suggested—but the story leaves a special moral. The role, and more fundamentally the rule, of spreadsheets.
Although spreadsheets might be seen as just ‘the messenger’ or simply a tool, in reality, they are much more than that; as Dr. Ursula Franklin said on her 1989 CBC Massey Lectures2: tools often redefine a problem. Spreadsheets are a mechanism of policing by numbers and figures—frequently error-ridden and manipulated—disseminated as carved in stone. Steven Levy wrote in 19843:
The spreadsheet is a tool, but it is also a worldview—reality by the numbers…. Because spreadsheets can do so many important things, those who use them tend to lose sight of the crucial fact that the imaginary businesses that they can create on their computers are just that—imaginary. You can’t really duplicate a business inside a computer, just aspects of a business. And since numbers are the strength of spreadsheets, the aspects that get emphasized are the ones easily embodied in numbers. Intangible factors aren’t so easily quantified.
As we speak, unfortunate people are working full time on spreadsheets, from 9 to 5, seven days a week, 52 weeks a year. Crafting fairy tales in tiny square cells4, coming up with intricate formulas. Decorating budgets fed from noisy sources. Garbage in-garbage out.
But just like a chainsmoker eventually realizes smoking is not good for their health, organizations eventually try to quit spreadsheets. There is something unsophisticated about them that makes us want to keep them hidden from the outside world: admitting to an investor that we keep a customer database in a spreadsheet sounds like admitting we ride a donkey to work every morning. Unless, of course, you use the glossy-looking, hipster ones Silicon Valley is telling us now to use; those seem to be fine, so it seems. The anti-spreadsheet spasm includes an unholy moment where the company’s software engineers are gathered around a table and asked to create an alternative tool to the tool, only to make the problem much worse. The results tend to be laughable. Spreadsheets eventually make a glorious comeback.
Mind you, software engineers do not tend to take this as a defeat, they are too busy building other crappy tools for someone else to care, really.
Next October 17th, just like it happens every year, spreadsheet day will be celebrated. Make sure you don’t party too hard.
Franklin Ursula. Real World of Technology. Toronto, Ontario: House of Anansi Press, 1989.
An updated version of Levy’s 1984 article can be found here: https://medium.com/backchannel/a-spreadsheet-way-of-knowledge-8de60af7146e
The most miserable forgot their mouse at home