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  1. #1
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    Meet the 28-Year-Old Grad Student Who Just Shook the Global Austerity Movement

    Most Ph.D. students spend their days reading esoteric books and stressing out about the tenure-track job market. Thomas Herndon, a 28-year-old economics grad student at UMass Amherst, just used part of his spring semester to shake the intellectual foundation of the global austerity movement.

    Herndon became instantly famous in nerdy economics circles this week as the lead author of a recent paper, "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff," that took aim at a massively influential study by two Harvard professors named Carmen Reinhart and Kenneth Rogoff. Herndon found some hidden errors in Reinhart and Rogoff's data set, then calmly took the entire study out back and slaughtered it. Herndon's takedown — which first appeared in a Mike Konczal post that crashed its host site with traffic — was an immediate sensation. It was cited by prominent anti-austerians like Paul Krugman, spoken about by incoming Bank of England governor Mark Carney, and mentioned on CNBC and several other news outlets as proof that the pro-austerity movement is based, at least in part, on bogus math.

    We spoke to Herndon about his crazy week, and how he's planning to celebrate his epic wonk takedown.

    "This week has been quite the week," Herndon told us in a phone call from UMass Amherst's campus. "Honestly, I was not expecting at all the kind of attention it has received."

    Herndon, who did his undergraduate study at Evergreen State College, first started looking into Reinhart and Rogoff's work as part of an assignment for an econometrics course that involved replicating the data work behind a well-known study. Herndon chose Reinhart and Rogoff's 2010 paper, "Growth in a Time of Debt," in part, because it has been one of the most politically influential economic papers of the last decade. It claims, among other things, that countries whose debt exceeds 90 percent of their annual GDP experience slower growth than countries with lower debt loads — a figure that has been cited by people like Paul Ryan and Tim Geithner to justify slashing government spending and implementing other austerity measures on struggling economies.

    Before he turned in his report, Herndon repeatedly e-mailed Reinhart and Rogoff to get their data set, so he could compare it to his own work. But because he was a lowly graduate student asking favors of some of the most respected economists in the world, he got no reply, until one afternoon, when he was sitting on his girlfriend's couch.

    "I checked my e-mail, and saw that I had received a reply from Carmen Reinhart," he says. "She said she didn't have time to look into my query, but that here was the data, and I should feel free to publish whatever results I found."

    Herndon pulled up an Excel spreadsheet containing Reinhart's data and quickly spotted something that looked odd.

    "I clicked on cell L51, and saw that they had only averaged rows 30 through 44, instead of rows 30 through 49."

    What Herndon had discovered was that by making a sloppy computing error, Reinhart and Rogoff had forgotten to include a critical piece of data about countries with high debt-to-GDP ratios that would have affected their overall calculations. They had also excluded data from Canada, New Zealand, and Australia — all countries that experienced solid growth during periods of high debt and would thus undercut their thesis that high debt forestalls growth.

    Herndon was stunned. As a graduate student, he'd just found serious problems in a famous economic study — the academic equivalent of a D-league basketball player dunking on LeBron James. "They say seeing is believing, but I almost didn’t believe my eyes," he says. "I had to ask my girlfriend — who's a Ph.D. student in sociology — to double-check it. And she said, 'I don't think you're seeing things, Thomas.'"

    The mistakes Herndon found were so big, in fact, that even Herndon's professors didn't believe him at first. As Reuters reported earlier:

    "At first, I didn't believe him. I thought, 'OK he's a student, he's got to be wrong. These are eminent economists and he's a graduate student,'" [UMass Amherst professor Robert] Pollin said. "So we pushed him and pushed him and pushed him, and after about a month of pushing him I said, 'Goddamn it, he's right.'"

    After consulting his professors, Herndon signed two of them — Pollin and department chair Michael Ash — on as co-authors, and the three of them quickly put together a paper outlining their findings. The paper cut to the core of a debate that has been dividing economists and politicians for decades. Fans of austerity believe that governments should cut spending in order to grow their economies, while anti-austerians believe that government spending in times of economic duress can create growth and reduce unemployment, even if it increases debt in the short term. What Herndon et al. were claiming, in essence, was that the pro-austerity movement was relying on bogus information.

    When Herndon and his professors published their study, the reaction was nearly immediate. After Konczal's blog post went viral, Reinhart and Rogoff — who got a fawning New York Times profile when their book was released — were forced to admit their embarrassing error (although they still defended the basic findings of their survey). And today, another UMass Amherst professor, Arindrajit Dube, followed up on Herndon's paper with additional proof that there were serious theoretical and causal problems (as opposed to just sloppy Excel work) in the Reinhart-Rogoff study. Observers have been raising serious questions about what Herndon's work means for the future of austerity politics, and Reinhart and Rogoff's respectability as scholars.

    Herndon says he isn't implying that Reinhart and Rogoff intentionally skewed their data to support a pro-austerity finding, and simply reported the errors.

    "I don’t want to sound the alarm and call for anyone’s jobs," he says. "I didn’t do this to be punitive or malicious."

    With Reinhart and Rogoff's once-authoritative work now under serious question, there's no question that the austerity movement has been dealt a major blow. But Herndon's finding won't likely stop politicians from trying to reduce the deficit. The global march for austerity began before Reinhart and Rogoff's work was published, and will continue as long as there are people who believe that governments can shrink their way to prosperity.

    Still, Herndon holds out hope. He calls austerity policies in the United Kingdom and elsewhere "counterproductive," and implies that part of why he took up the study of Reinhart and Rogoff's study was to question the benefits of current economic policy. "I have social motivations," he says. "I care deeply about how policy affects people."

    Now that he's left his mark, Herndon says he's coping with the effects of academic celebrity — getting a new publicity head shot taken, receiving kudos from his professors and colleagues, handling interview requests. He says he's gotten extensions on some of his papers in order to handle his quasi-fame, but that he hasn't been popping Champagne yet in celebration.

    "I’m going to celebrate this weekend," he says. "But for now, I have a really gnarly problem set."

    Grad Student Who Shook Global Austerity Movement -- Daily Intelligencer

  2. #2
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    Was reading this earlier. My conclusion is that Reinhart and Rogoff were 100% twisting their data and thought no one would question it.

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    Quote Originally Posted by pseudolus
    My conclusion is that Reinhart and Rogoff were 100% twisting their data and thought no one would question it.
    Exactly. They were fudging the numbers and got caught. Shows how far those clowns will take this flawed concept of austerity just to oppress the poor.

  4. #4
    euston has flown

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    Modern rightwing economics, particularly that backing 'free trade' is based upon a highly revisionist view of both history and historical analysis of data. Its as delusional as if holocaust denial had become mainstream academic study and established fact; except few see it that way... and as one would expect not delving into the quality of work that backs up that point of view is a necessity for maintaining it.

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    Quote Originally Posted by hazz View Post
    Modern rightwing economics, particularly that backing 'free trade' is based upon a highly revisionist view of both history and historical analysis of data. Its as delusional as if holocaust denial had become mainstream academic study and established fact; except few see it that way... and as one would expect not delving into the quality of work that backs up that point of view is a necessity for maintaining it.
    I could not agree more with this post. Greenz..

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    The more I know, the angrier I get.
    We need revolution. Or society is doomed.

  7. #7
    Pronce. PH said so AGAIN!
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    a figure that has been cited by people like Paul Ryan and Tim Geithner to justify slashing government spending and implementing other austerity measures on struggling economies.
    So basically conservative economic policy is just as faith-based as conservative social policy? Shocker.

    Herndon says he isn't implying that Reinhart and Rogoff intentionally skewed their data to support a pro-austerity finding, and simply reported the errors.
    Sure, the exclusion of the data points that just happen to reverse your conclusions can happen to anyone..

    On the Surface this means our financial Outlook needn't be so grim anymore, some in PowerPoint to failed austerity measures in Europe as proof that the argument doesn't work but Word on this needs to spread. It doesn't Paint a very prettty picture here, but I'm glad some intrepid Explorer found this.

    Unfortunately, convincing those who have already integrated this poorly based financial policy into their worldview will be a significant Project requiring Access to all the data to Pinpoint and Exchange everything, it really needs a graphic to Visio-lize everything..

    Lotus be happy this has come to light.

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    Quote Originally Posted by Warrior View Post
    The more I know, the angrier I get.
    We need revolution. Or society is doomed.
    Another awakening? Read on matey - it is scary how much we have given up whilst snoozing under the blanket of credit and consumerism.

  9. #9
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    Bsnub - you are too stupid for this subject matter ..... or any subject matter!
    Last edited by Lorenzo; 21-04-2013 at 04:51 PM.

  10. #10
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    Quote Originally Posted by Lorenzo View Post
    Bsnub - you are too stupid for this subject matter
    Sad sack lowlife, foxnews buffoon. You and your like minded retards get clowned over and over again. You are a dimwitted hypocrite. Go worship the Koch brothers and get raped again.

  11. #11
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    I don't worship anyone or any union scum! Try to earn your own keep instead of sponging off the working man. And I am not talking about overpaid union scum I am talking about tax paying working men.

  12. #12
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    Quote Originally Posted by Lorenzo
    Try to earn your own keep instead of sponging off the working man.
    You are a clueless lowlife. Your idea of a working man is making minimum wage at walmart with no health insurance. Ignorant buffoons like yourself have allowed the largest transfer of wealth from the working class to the rich in history.

    I would bet dimes to dollars that I have worked harder than you could ever imagine. Union strong.

    Read the article it is a fact. Your policies are broken and failed. Unions built America and have made most European nations strong and healthy..

    Austerity is a fraud designed to redistribute wealth from the middle to the top.

  13. #13
    euston has flown

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    Quote Originally Posted by Lorenzo View Post
    I don't worship anyone or any union scum! Try to earn your own keep instead of sponging off the working man. And I am not talking about overpaid union scum I am talking about tax paying working men.
    you see here's the point. In the 30 years or so since maggie and ronni neutered the unions in the early 80's the richest 1% have managed to take their cut of national income from 10% to 40%.

    or to put it another way,

    The cute of national income that the 99% get, thats you, me, bsub BTW, went from 90% down to 60% a 33% reduction in your income since 1980. Tell me what have the unions, government taxation or anything else thats happened in the last 30 years thats cost you anything like that much?

    And the sad thing is that the people who organised this robbery are the same people that are large financial supporters of the tea party and lintarian movement; who's membership whilst suffering this loss of income, scream for more of it. who says you cannot fool most of the people most of the time.

  14. #14
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    As I said, we need a revolution.
    And we need a strong leader; read what Slavoj Zizek says on this subject:

    "The simple courage of decision: a leftist tribute to Thatcher"

  15. #15
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    Quote Originally Posted by hazz View Post
    Quote Originally Posted by Lorenzo View Post
    I don't worship anyone or any union scum! Try to earn your own keep instead of sponging off the working man. And I am not talking about overpaid union scum I am talking about tax paying working men.
    you see here's the point. In the 30 years or so since maggie and ronni neutered the unions in the early 80's the richest 1% have managed to take their cut of national income from 10% to 40%.

    or to put it another way,

    The cute of national income that the 99% get, thats you, me, bsub BTW, went from 90% down to 60% a 33% reduction in your income since 1980. Tell me what have the unions, government taxation or anything else thats happened in the last 30 years thats cost you anything like that much?

    And the sad thing is that the people who organised this robbery are the same people that are large financial supporters of the tea party and lintarian movement; who's membership whilst suffering this loss of income, scream for more of it. who says you cannot fool most of the people most of the time.
    Bit of an over-simplification.

    If the the economy performs more efficiently without unions then there is greater wealth to share round. I would rather have 60% of something healthy and substantial than 90% of something weak and insubstantial.

  16. #16
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    ^Given that economics is quite a complex subject, any post is going to be an simplification. Your stance is dependent on the rich 1% spending their greater wealth in a more efficient way that of the 99%, keeping the economy moving and everyone working. And there is some truth to that, in that it is necessary to have a number of wealthy companies and individuals who are rich enough to make the massive long term investments that are necessary to creak and maintain technologically advanced nation. However we managed all of this when they had 10% of the ntional income, I have yet to see any evidence that they have managed to invest that extra income efficiently. from what I have seen they have used this money to create, share and asset bubbles and cause economic disruption. the nice thing about 99% is that they tend to spend most of hat they earn on activities that create immediate demand for work.... without creating these bubbles.

    To be honest, what you are saying is going along with the fairy tail economics of the free market. Its exceptionally high grade propaganda... but its propaganda put out by people who are doing very nicely obliterating the middle classes and impoverishing the working classes; its a silly as the chap that says thankyou to the chap thats just mugged him.

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    If Franklin D. Roosevelt had practiced austerity during the Great Depression of the 1930's, the USA would have ended up like Bangladesh. Ken Rogoff was a brilliant chess Grandmaster in his youth (he drew a blitz chess game with current world #1 Magnus Carlson in 2012), so I also wonder how he could have missed simple spreadsheet calculations that had such important implications for the world economy. Maybe Noam Chomsky was correct when he said that the USA has the most servile intellectual class in the Western world.

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    Quote Originally Posted by Warrior View Post
    As I said, we need a revolution.
    And we need a strong leader; read what Slavoj Zizek says on this subject:

    "The simple courage of decision: a leftist tribute to Thatcher"
    I think they tried that in Russia under Lenin and China under Mao ,if I remember rightly Capitalism was a crime which often resulted in a death sentence and well over a 100 million perished, in the West we have a vote if we do not like the system we have a choice ,or could it be the normal man in the street cannot be trusted with it?,which seems quite similar to what those in Bangkok say about Khun Issan up here ,that they should not be allowed to vote cos they are too Stupid and cannot be trusted to vote"the right way" and of course the difference is Thatcher won 3 general elections,when you have a revolution its more often than not an armed insurrection and in no way democratic ,so IMHO those who espouse to revolution do not believe in democracy ,and I just wonder if members out there approve of the the many Coups we have had here in Thailand .

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    Its not that the voters are too stupid, the fact is that most elected politicians are liars, or are stupid themselves, or are at best only interested in a short term solution - as their timespan is only the few years to the next elections.

    I am not suggesting at all - nor is Zizek - that communism is the answer. I am saying that our current system is past its due date.

    Over-population, over-consumption, pollution, they will wipe us out if we will not change our behaviour. Non of the elected politicians are going to support that change for us. We are running out of time.

    Is it not democratic? So be it. Democracy as we know it now is no longer the answer to the problems society is facing.

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    Quote Originally Posted by hazz View Post
    Modern rightwing economics, particularly that backing 'free trade' is based upon a highly revisionist view of both history and historical analysis of data. Its as delusional as if holocaust denial had become mainstream academic study and established fact; except few see it that way... and as one would expect not delving into the quality of work that backs up that point of view is a necessity for maintaining it.
    Your analogy doesn't fit, the student didn't say economy doesn't exist.

    My old history 9th grade school book says that in Auschwitz, 4.5 million Jews died. I'm sure you heared or read similar figures in years past if you are 50 or older. Today the accepted figure is 1.1 million. That's a greater difference in % than found by that young student.

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    Those famous economics professors are all whoring themselves out to politicians and corporations and are always happy to bill research studies with an agenda

    was it done intentionally or by mistake ? hard to tell,

    I have read hundreds of those financial and economics studies and they all begin with certain assumptions and all have data bias. The whole industry is based on revising those studies and attacking them with alternative biased views.

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    euston has flown

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    ^^try rereading what i said carefully, unlike others you seem to have missed the point i was making.. whilst others have not

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    Quote Originally Posted by pseudolus View Post
    Was reading this earlier. My conclusion is that Reinhart and Rogoff were 100% twisting their data and thought no one would question it.
    If they were intentionally twisting data why would the have freely given out the spreadsheets containing the errors?

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    Quote Originally Posted by bsnub View Post
    Quote Originally Posted by Lorenzo
    Try to earn your own keep instead of sponging off the working man.
    You are a clueless lowlife. Your idea of a working man is making minimum wage at walmart with no health insurance. Ignorant buffoons like yourself have allowed the largest transfer of wealth from the working class to the rich in history.

    I would bet dimes to dollars that I have worked harder than you could ever imagine. Union strong.

    Read the article it is a fact. Your policies are broken and failed. Unions built America and have made most European nations strong and healthy..

    Austerity is a fraud designed to redistribute wealth from the middle to the top.
    One of the greatest transfers of wealth in history, from the bottom to the top is indeed currently taking place via money printing and associated zero interest rate policy.
    Don’t argue with idiots because they will drag you down to their level and then beat you with experience.

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    Bureaucrats do not invest for a profitable return, usually just for some political benefit with their cronies benefiting. There is no thought given to the opportunity cost of the use of the funds at all. Does one really believe bureaucrats know how to invest better than private owners of capital.

    If anyone really believes some errors on a spreadsheet make deficit spending the route to go down they are economically illiterate. The results will be higher taxation, higher borrowing and inflation in various mixes.

    Quote Originally Posted by bsnub View Post
    Most Ph.D. students spend their days reading esoteric books and stressing out about the tenure-track job market. Thomas Herndon, a 28-year-old economics grad student at UMass Amherst, just used part of his spring semester to shake the intellectual foundation of the global austerity movement.

    Herndon became instantly famous in nerdy economics circles this week as the lead author of a recent paper, "Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff," that took aim at a massively influential study by two Harvard professors named Carmen Reinhart and Kenneth Rogoff. Herndon found some hidden errors in Reinhart and Rogoff's data set, then calmly took the entire study out back and slaughtered it. Herndon's takedown — which first appeared in a Mike Konczal post that crashed its host site with traffic — was an immediate sensation. It was cited by prominent anti-austerians like Paul Krugman, spoken about by incoming Bank of England governor Mark Carney, and mentioned on CNBC and several other news outlets as proof that the pro-austerity movement is based, at least in part, on bogus math.

    We spoke to Herndon about his crazy week, and how he's planning to celebrate his epic wonk takedown.

    "This week has been quite the week," Herndon told us in a phone call from UMass Amherst's campus. "Honestly, I was not expecting at all the kind of attention it has received."

    Herndon, who did his undergraduate study at Evergreen State College, first started looking into Reinhart and Rogoff's work as part of an assignment for an econometrics course that involved replicating the data work behind a well-known study. Herndon chose Reinhart and Rogoff's 2010 paper, "Growth in a Time of Debt," in part, because it has been one of the most politically influential economic papers of the last decade. It claims, among other things, that countries whose debt exceeds 90 percent of their annual GDP experience slower growth than countries with lower debt loads — a figure that has been cited by people like Paul Ryan and Tim Geithner to justify slashing government spending and implementing other austerity measures on struggling economies.

    Before he turned in his report, Herndon repeatedly e-mailed Reinhart and Rogoff to get their data set, so he could compare it to his own work. But because he was a lowly graduate student asking favors of some of the most respected economists in the world, he got no reply, until one afternoon, when he was sitting on his girlfriend's couch.

    "I checked my e-mail, and saw that I had received a reply from Carmen Reinhart," he says. "She said she didn't have time to look into my query, but that here was the data, and I should feel free to publish whatever results I found."

    Herndon pulled up an Excel spreadsheet containing Reinhart's data and quickly spotted something that looked odd.

    "I clicked on cell L51, and saw that they had only averaged rows 30 through 44, instead of rows 30 through 49."

    What Herndon had discovered was that by making a sloppy computing error, Reinhart and Rogoff had forgotten to include a critical piece of data about countries with high debt-to-GDP ratios that would have affected their overall calculations. They had also excluded data from Canada, New Zealand, and Australia — all countries that experienced solid growth during periods of high debt and would thus undercut their thesis that high debt forestalls growth.

    Herndon was stunned. As a graduate student, he'd just found serious problems in a famous economic study — the academic equivalent of a D-league basketball player dunking on LeBron James. "They say seeing is believing, but I almost didn’t believe my eyes," he says. "I had to ask my girlfriend — who's a Ph.D. student in sociology — to double-check it. And she said, 'I don't think you're seeing things, Thomas.'"

    The mistakes Herndon found were so big, in fact, that even Herndon's professors didn't believe him at first. As Reuters reported earlier:

    "At first, I didn't believe him. I thought, 'OK he's a student, he's got to be wrong. These are eminent economists and he's a graduate student,'" [UMass Amherst professor Robert] Pollin said. "So we pushed him and pushed him and pushed him, and after about a month of pushing him I said, 'Goddamn it, he's right.'"

    After consulting his professors, Herndon signed two of them — Pollin and department chair Michael Ash — on as co-authors, and the three of them quickly put together a paper outlining their findings. The paper cut to the core of a debate that has been dividing economists and politicians for decades. Fans of austerity believe that governments should cut spending in order to grow their economies, while anti-austerians believe that government spending in times of economic duress can create growth and reduce unemployment, even if it increases debt in the short term. What Herndon et al. were claiming, in essence, was that the pro-austerity movement was relying on bogus information.

    When Herndon and his professors published their study, the reaction was nearly immediate. After Konczal's blog post went viral, Reinhart and Rogoff — who got a fawning New York Times profile when their book was released — were forced to admit their embarrassing error (although they still defended the basic findings of their survey). And today, another UMass Amherst professor, Arindrajit Dube, followed up on Herndon's paper with additional proof that there were serious theoretical and causal problems (as opposed to just sloppy Excel work) in the Reinhart-Rogoff study. Observers have been raising serious questions about what Herndon's work means for the future of austerity politics, and Reinhart and Rogoff's respectability as scholars.

    Herndon says he isn't implying that Reinhart and Rogoff intentionally skewed their data to support a pro-austerity finding, and simply reported the errors.

    "I don’t want to sound the alarm and call for anyone’s jobs," he says. "I didn’t do this to be punitive or malicious."

    With Reinhart and Rogoff's once-authoritative work now under serious question, there's no question that the austerity movement has been dealt a major blow. But Herndon's finding won't likely stop politicians from trying to reduce the deficit. The global march for austerity began before Reinhart and Rogoff's work was published, and will continue as long as there are people who believe that governments can shrink their way to prosperity.

    Still, Herndon holds out hope. He calls austerity policies in the United Kingdom and elsewhere "counterproductive," and implies that part of why he took up the study of Reinhart and Rogoff's study was to question the benefits of current economic policy. "I have social motivations," he says. "I care deeply about how policy affects people."

    Now that he's left his mark, Herndon says he's coping with the effects of academic celebrity — getting a new publicity head shot taken, receiving kudos from his professors and colleagues, handling interview requests. He says he's gotten extensions on some of his papers in order to handle his quasi-fame, but that he hasn't been popping Champagne yet in celebration.

    "I’m going to celebrate this weekend," he says. "But for now, I have a really gnarly problem set."

    Grad Student Who Shook Global Austerity Movement -- Daily Intelligencer

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