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What Are Twin Deficits?

• First Twin: Fiscal Deficit
• Second Twin: Current Account Deficit
• Current Account Deficit

Twin Deficit Hypothesis

The bottom line.

• Government Spending & Debt
• Government Debt

The Twin Deficits of the U.S.

Economies that have both a fiscal deficit and a current account deficit are often referred to as having "twin deficits." This means that government revenues are lower than the government's expenses and that the price of the country's imports is greater than the income from its exports.

The United States has had twin deficits since the early 2000s. The opposite scenario—a fiscal surplus and a current account surplus—is generally viewed as preferable, but much depends on the circumstances. China is often cited as an example of a nation that has enjoyed long-term fiscal and current account surpluses.

Key Takeaways

• The U.S.'s twin deficits usually refer to its fiscal and current account deficits.
• A fiscal deficit is a budget shortfall. A current account deficit, roughly speaking, means a country is sending more money overseas for goods and services than it is receiving.
• Many economists argue that the twin deficits are correlated, but there is no clear consensus on the issue.

The First Twin: Fiscal Deficit

A fiscal deficit , or budget deficit, occurs when a nation's spending exceeds its revenues. The U.S. has run fiscal deficits almost every year for decades.

Intuitively, a fiscal deficit doesn't sound like a good thing. But Keynesian economists argue that deficits aren't necessarily harmful, and  deficit spending can be a useful tool for jump-starting a stalled economy. When a nation is experiencing a recession , deficit spending on infrastructure and other big projects can contribute to aggregate demand. Workers hired for the projects spend their money, fueling the economy and boosting corporate profits.

Governments often fund fiscal deficits by issuing bonds . Investors buy the bonds, in effect loaning money to the government and earning interest on the loan. When the government repays its debts, investors' principal is returned. Making a loan to a stable government is often viewed as a safe investment. Governments can generally be counted on to repay their debts because their ability to levy taxes gives them a reliable way to generate revenue.

The combined current accounts deficit and budget deficit as a percentage of U.S. GDP, as of July 2023.

The Second Twin: Current Account Deficit

A current account is a measure of a country’s trade and financial transactions with the rest of the world. This includes the difference between the value of its exports of goods and services and its imports, as well as net payments on foreign investments and other transfers from abroad.

In short, a country with a current account deficit is spending more overseas than it is taking in. Again, intuition suggests this isn't good. Those countries must continually borrow money to make up the shortfall, and interest must be paid to service that debt. For smaller, developing countries, especially, this can leave them exposed to international investors and markets.

A sustained deficit of exports versus imports may indicate a country has lost its competitiveness, or reflect an unsustainably low savings rate among the deficit-running country's people.

Current Account Deficit: It's Complicated

But like budget deficits, the truth about current accounts isn't that simple. In practice, a current account deficit can reflect that a country is an attractive destination for investment , as is the case with the U.S. Consider that advanced economies such as the U.S. often run current account deficits while developing economies typically run surpluses.

Some economists believe a large budget deficit is correlated to a large current account deficit. This macroeconomic theory is known as the twin deficit hypothesis. The logic behind the theory is that government tax cuts, which reduce revenue and increase the deficit, result in increased consumption as taxpayers spend their new-found money. The increased spending reduces the national savings rate , causing the nation to increase the amount it borrows from abroad.

When a nation runs out of money to fund its fiscal spending, it often turns to foreign investors as a source of borrowing. At the same time, the nation is borrowing from abroad, its citizens are often using borrowed money to purchase imported goods. At times, economic data supports the twin deficit hypothesis. Other times, the data does not.

Which Country Has the Highest Budget Deficit?

According to World Bank data, Croatia has the highest level of public debt, with a total deficit of 688% of the country's GDP as of 2021. Note that for many countries, the most recent data was unavailable or out of date.

Which Country Has the Highest Trade Deficit?

According to World Bank data, Mozambique has the highest trade deficit as of 2022. The country's current account balance shows a deficit of 35% of the country's GDP. Note that many countries did not have recent figures to report.

Why Is a Trade Deficit Bad?

A trade deficit means that a country is importing more goods than it exports, resulting in high demand for foreign currency and low demand for domestic currency. A consistent trade deficit can be harmful to the domestic economy because local producers do not have enough demand for their goods.

Twin deficits refer to a combined shortfall between a country's government revenues and its export income. Some economists believe that these deficits are related, because low tax revenues can result in increased borrowing from abroad. The United States consistently runs both budget deficits and trade deficits, which some economists predict may lead to unexpected disruptions.

Reuters. " US Twin Deficits Matter for the Dollar, Just Not that Much ."

Cornell Law School. " Taxing Power ."

World Bank. " Central Government Debt, Total (% of GDP) ."

World Bank. " Current Account Balance (% of GDP). "

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IResearchNet

Deficit Hypothesis

Social science and medical literature, including research on mental health and counseling, has frequently been based on presuppositions that all individuals who differ from members of the sociopolitically dominant cultural group in the United States (i.e., male, heterosexual, Caucasian, Western European Americans of middle-class socioeconomic status and Christian religious affiliation) are deficient by comparison. This deficit hypothesis is particularly apparent in scientific literature presumptions that attribute psychological differences from Caucasians to deviance and pathology.

Deficit Hypothesis and Inferiority Premise

Regarding members of U.S. racial and ethnic minority groups (or people of color)—African American, Hispanic/Latino/a American, Asian American, and American Indian people—the inferiority model is one example of a deficit hypothesis. The inferiority model assumes that the dominant Caucasian group represents the standard for normal or ideal behavior and that cultural groups who differ from these norms are biologically limited and genetically inferior by comparison. In contrast, psychology literature includes critiques that cite how data have been distorted or fabricated to support the inferiority model.

For example, based on the belief that smaller skull size and underdeveloped brains were biologically determined measures of the inferior intelligence of people of color, Samuel George Morton, in the 19th century, published research findings that supported the prevailing inferiority view. Subsequent scholars (e.g., Stephen Jay Gould) disputed these findings by examining Morton’s data and reporting errors of calculation and omission. Nevertheless, the inferiority deficit hypothesis persisted in the mental health and social science literature and practices of the 20th century. Eminent leaders in early American and British psychology perpetuated the inferiority belief of their times.

In 1904 G. Stanley Hall, the first president of the American Psychological Association, published his belief that Africans, American Indians, and Chinese people were in an adolescent or immature stage of biological evolution compared with the more advanced and civilized development of Caucasian people. Cyril Burt, an influential British psychologist whom many consider the father of educational psychology, published fabricated data to support his contention that Negros inherit inferior brains and lower intelligence compared with Caucasians. In 1976, Robert Guthrie presented a critique of the flawed scientific evidence offered by several researchers who had claimed to verify the inferior intelligence of American Indians and Mexican Americans. In part due to the conclusions drawn from an inferiority deficit hypothesis, people of color who exhibited symptoms of psychological distress were considered unworthy or incapable of benefiting from most psychological or educational interventions. Thus, they were ignored, jailed, or confined to segregated mental hospitals.

The inferiority premise has resurfaced in current times, for example, in the 1994 publication of Richard Herrnstein and Charles Murray’s The Bell Curve: Intelligence and Class Structure in American Life.

Similar to previous investigations based on an inferiority hypothesis, the research of these authors concluded that intelligence is largely inherited and correlated with race; that those who have inferior intelligence (i.e., people of color) should serve those who have superior intelligence (i.e., Caucasians); and that programs purported to promote the intellectual functioning of people of color (e.g., Head Start) are useless, and thus their resources and funding should be reallocated to serve people who are capable of benefiting (i.e., Caucasians of superior intelligence). Subsequently, scholars (e.g., Ronald Samuda, Franz Samelson, Alan Reifman) have refuted these findings and presented empirical evidence that challenges and rejects these conclusions.

Deficit Hypothesis and Cultural Deprivation Premise

In the context of the social activism of the 1950s and 1960s in the United States, the genetic inferiority premise of the deficit hypothesis shifted to a cultural deprivation premise. Similar to the inferiority model, the cultural deprivation model assumes that the dominant Caucasian group represents the standard for normal or ideal behavior. However, this model attributes psychological differences from Caucasians to the various ways in which people of color are socially oppressed, deprived, underprivileged, or deficient in comparison.

The term cultural deprivation emerged from scholars’ writing about poverty in the United States during the 1950s and 1960s (e.g., Frank Riessman’s 1962 book, The Culturally Deprived Child). The deficit hypothesis of cultural deprivation posits that poverty-stricken racial/ethnic minority groups perform poorly in psychological and educational testing and exhibit psychologically unhealthy characteristics because they lack the advantages of Caucasian middle-class culture (e.g., in presumably superior education, books, toys, and formal language). Not only does this premise mistakenly imply that people of color have no valuable cultures of their own, but it also infers that the destructive influences of poverty and racial/ethnic discrimination cause irreparable negative psychosocial differences in their personality characteristics, behavior, and achievement compared with more favorable middle-class Caucasian standards.

In rebuttal, scholars have criticized the scientific merit of the research design and interpretations of findings from studies claiming to support the cultural deprivation model. For example, Abram Kardiner and Lionel Ovesey published a book in 1951, titled The Mark of Oppression, in which they concluded that the basic Negro personality, compared with the general Caucasian personality, is a manifestation of permanent damage, in response to the stigma and obstacles of the social conditions faced by Negroes in U.S. society, which prevents them from developing healthy self-esteem and promotes self-hatred. Scholarly critiques have noted that the authors made these generalizations on the basis of 25 psychoanalytic interviews with African American participants, all of whom but one had identified psychological disturbances, in comparison to a so-called control group of one Caucasian man. Furthermore, Kardiner and Ovesey’s conclusions were disputed for failing to recognize that individuals may respond in a variety of ways (including healthy and unhealthy responses) to stress, hardships, and oppression.

One useful purpose served by studies based on the cultural deprivation premise was the attention paid to the psychosocial and environmental barriers facing people of color and their families. On the other hand, most studies focused only on abnormal and negative aspects in the lives of people of color (e.g., crime and juvenile delinquency). One detrimental implication for cross-cultural counseling is that counselors may similarly attend to and focus on only negative aspects in their assessment and interventions with clients of color. Thus (as noted by scholars such as Elaine Pinderhughes), counselors may misattribute as pathological these clients’ responses to oppression instead of recognizing aspects that may be positive, healthy, and resilient.

Deficit Hypothesis Applications to Other Nondominant Groups

In addition to applications with people of color, the deficit hypothesis may form the basis for some counseling research and practice with other nondominant groups (e.g., by gender, sexual orientation, or religious affiliation). In other words, the deficit hypothesis may be apparent in presumptions that attribute psychological differences from the dominant group in U.S. society (e.g., male, heterosexual, or Christian) to deficiency or pathology. For example, Carol Gilligan’s research findings have disputed an underlying deficit hypothesis regarding gender differences in moral development (i.e., that female participants are deficient in moral reasoning compared with males).

Her research has demonstrated that the moral reasoning of girls and women is different from, instead of inferior to, that of boys and men.

Alternative Premises

Two alternative premises to those that use only one standard of comparison (e.g., Caucasians) are models of counseling and psychotherapy based on cultural differences or diversity. Another alternative perspective to the deficit hypothesis is that of optimal human functioning. In contrast to presuming mental health deficiency in cultural group members who differ from the dominant group, the basic premise of optimal human functioning is that there are many ways to be human and promote healthy development in response to different cultural contexts and human conditions. One implication for cross-cultural counseling research and practice is that this model for conceptualizing healthy development includes both emic (culturally specific) and etic (universal) considerations. These alternative models of personality and human development offer propositions to explore beyond the ethnocentric limitations of the deficit hypothesis.

References:

• Gilligan, C. (1982). In a different voice: Psychological theory and women’s development. Cambridge, MA: Harvard University Press.
• Guthrie, R. V. (2004). Even the rat was White: A historical view of psychology (2nd ed.). Upper Saddle River, NJ: Pearson.
• Walsh, W. B. (Ed.). (2003). Counseling psychology and optimal human functioning. Mahwah, NJ: Lawrence Erlbaum.
• Counseling Theories

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• Published: 20 August 2019

Twin deficit hypothesis and reverse causality: a case study of China

• Umer Jeelanie Banday 1 &
• Ranjan Aneja 1  

Palgrave Communications volume  5 , Article number:  93 ( 2019 ) Cite this article

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A Correction to this article was published on 01 October 2019

This article has been updated

This paper analyses the causal relationship between budget deficit and current account deficit for the Chinese economy using time series data over the period of 1985–2016. We initially analyzed the theoretical framework obtained from the Keynesian spending equation and empirically test the hypothesis using autoregressive distributed lag (ARDL) bounds testing and the Zivot and Andrew (ZA) structural break for testing the twin deficits hypothesis. The results of ARDL bound testing approach gives evidence in support of long-run relationship among the variables, validating the Keynesian hypothesis for the Chinese economy. The result of Granger causality test accepts the twin deficit hypothesis. Our results suggest that the negative shock to the budget deficit reduces current account balance and positive shock to the budget deficit increases current account balance. However, higher effect growth shocks and extensive fluctuation in interest rate and exchange rate lead to divergence of the deficits. The interest rate and inflation stability should, therefore, be the target variable for policy makers.

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Introduction.

Fiscal and monetary strategies, when executed lucidly, assume a conclusive part in general macroeconomic stability. The macroeconomic theory which assumes an ideal connection between budget (or fiscal) deficit and trade balance is known as twin deficit hypothesis. The growing literature on twin deficit hypothesis (TDH) has been theoretically and empirically researched by researchers like Kim and Roubini ( 2008 ), Darrat ( 1998 ), Miller and Russek ( 1989 ), Lau and Tang ( 2009 ), Abbas et al. ( 2011 ), Bernheim and Bagwell ( 1988 ), Lee et al. ( 2008 ), Corestti and Muller ( 2006 ), Altintas and Taban ( 2011 ), and Banday and Aneja ( 2016 ).

A study by Tang and Lau ( 2011 ) found that a 1% increase in budget deficit causes 0.43% increase in current account deficit in the US from 1973 to 2008. After the currency crises and Asian financial crises, various countries simultaneously experienced budget deficit and current account deficit. Lau and Tang ( 2009 ) confirmed the twin deficits hypothesis for Cambodia based on cointegration and Granger causality testing. Banday and Aneja ( 2016 ) and Basu and Datta ( 2005 ) confirmed the twin deficits hypothesis for India by applying cointegration and Granger causality testing. Kulkarni and Erickson ( 2011 ) found that, in India and Pakistan trade deficit was driven by the budget deficit. Thomas Laubach ( 2003 ) found that for every one percentage increase in the deficit to GDP ratio, long-term interest rates increase by roughly 25 basis points. The recent study by Engen and Hubbard ( 2004 ) found that when debt increased by 1% of GDP, interest rate would go up by two basis points. China needs to take care of lower interest rate rather than higher interest rate especially on home loans which is very low in real estate market and has created a serious trouble in the economy.

The literature identifies that the FDI “crowding in effect” as an important source of China’s current account surpluses. In fact, the World Developmental Report (1985) demonstrated that a country can promote growth using FDI and technology transfers. China employed such strategies to a remarkable effect on foreign exchange reserves which increased from US$ 155 billion in 1999 to US$ 3.8 trillion by the end of 2013. Since then, there has been a sharp decline in the capital account surplus. The data from the State Administration of Foreign Exchange (SAFE) showed that in 2015, China recorded a deficit of US$142.4 billion on the capital and financial account. However, it posted a current account surplus of US$ 330.6 billion.

However, majority of the countries are facing both budget deficit and current account deficit. The increasing budget deficit alongside with current account deficit has been an imperative issue for policy makers in China. Besides, given the importance on free trade, decentralization and development there is a need to understand the association between budget deficit and trade imbalance in Chinese economy. Few researchers like Burney et al. ( 1992 ), Banday and Aneja ( 2015 ), Lau and Tang ( 2009 ), Corsetti and Müller ( 2006 ) and Ghatak and Ghatak ( 1996 ) have emphasized the issue emerged because of growing budget deficit and its relationship with macroeconomic factors likes interest rate, exchange rate, inflation, and consumption.

In the economic literature there are two distinct theories that show the linkage between budget deficit and current account deficit. The first theory is based on the traditional Keynesian approach, which postulates that current account deficit has a positive relationship with budget deficit. This means that an increase in budget deficit will lead to a current account deficit and a budget surplus will have a positive impact on the current account deficit. The increase in budget deficit will lead to domestic absorption and, thus, increase domestic income, which will lead to an increase in imports and widen the current account deficit. The twin deficits hypothesis is based on the Mundell-Fleming model (Fleming, 1962 ; Mundell, 1963 ), which asserts that an increase in budget deficit will cause an upward shift in interest rate and exchange rate. The increase in interest rates makes it attractive for foreign investors to invest in the domestic market. This increases the domestic demand and leads to an appreciation of the currency, which in turn causes imports to be cheaper and exports costlier. However, the appreciation of domestic currency will increase imports and lead to a current account deficit (Leachman and Francis, 2002 ; Salvatore, 2006 ). Conversely, the Ricardian Equivalence Hypothesis (REH) disagrees with the Keynesian approach. It states that, in a setting of an open economy, there is no correlation between the budget and current account deficits and hence the former would not cause the latter. In other words, a change in governmental tax structure will not have any impact on real interest rate, investments or consumption (Barro, 1989 ; and Neaime, 2008 ). The assumption here is that consumption patterns of consumers will be based on the life cycle model, formulated by Modigliani and Ando in 1957 , which suggests that current consumption depends on the expected lifetime income, rather than on the current income as proposed by the Keynesian model. Furthermore, the permanent income hypothesis developed by Milton Friedman in 1957, states that private consumption will increase only with a permanent increase in income. This means that a temporary rise in income fueled by tax cuts or deficit-financed public spending will increase private savings rather than spending (Barro, 1989 , p. 39; Hashemzadeh and Wilson, 2006 ). As private savings rise, the need for a foreign capital inflow declines. In this situation a current account deficit will not occur (Khalid and Guan, 1999 , p. 390).

This paper attempts to find out how strong is the relationship between budget and current account deficits in China? Addressing this question is relevant for both policy and academic perspectives. Policymakers would like to know to what extent fiscal adjustment contributes to addressing external disequilibria, especially in the case of increasing external and fiscal imbalances. Secondly, we examined the effects of budget deficit on the current account in the multivariate framework, and also have derived the general relationship among those variables. The study is based on ARDL model to investigate twin deficit hypothesis for china both in short-run and long-run. Further, we analyze the direction of causality if such a relationship exists. We utilize econometric methods for example, ARDL bound testing approach and Granger causality test to achieve these goals. In section “Theoretical Background and Literature Review” we explore the theoretical foundation of the twin deficits hypothesis. Section “Macroeconomics Aspects of the Chinese Economy” will give Macroeconomics Aspects of the Chinese Economy. Section “Data and Empirical results” describes data and empirical results. Section “Results and Discussion” provides empirical results and section “Conclusions”, provides conclusion to the study.

Theoretical background and literature review

The theoretical relationship between budget deficit and current account deficit can be represented by the national income accounting identity:

where IM stand for imports, EX for exports, S p for private savings, I for real investments, G for government expenditure, T for taxes, and TR for transfer payments. When IM is greater than EX, the country has current account deficit. From the right-hand side of the equation, when (G + TR − T) is greater than 0, the country is running a budget deficit. The difference between budget deficit and current account deficit must equal the private savings and investments which are shown below.

In the literature, various studies attempt to find the relationship between budget deficit and current account deficit for different countries or groups of countries using various methods depending upon the sample size and pre-testing of the data. The researchers have generally focused on the U.S economy because of its simultaneous budget and current account deficit since 1980s (Miller and Russek, 1989 ; Darrat, 1998 ; Tallman and Rosensweig, 1991 ; Bahmani-Oskooee, 1992 ). However, researchers from different countries have studied twin deficit hypothesis and obtained different results for different countries (Like India, U.S and Brazil) ((Bernheim, 1988 ; Holmes, 2011 ; Salvatore, 2006 ; Mukhtar et al. 2007 ; Kulkarni and Erickson, 2011 ; Banday and Aneja, 2016 ; Ganchev, 2010 ; Lau and Tang, 2009 ; Rosensweig and Tallman, 1993 ; Fidrmuc, 2002 ; Khalid and Guan, 1999 )). These studies do not support the REH but rather accept the Keynesian traditional theory, finding that budget deficit does have an impact on current account deficit in the long run. There are studies that support the Ricardian equivalence theorem which denies any correlation between budget deficit and current account deficit (Feldstein, 1992 ; Abell, 1990 ; Kaufmann et al. 2002 ; Enders and Lee, 1990 ; Kim, 1995 ; Boucher, 1991 ; Nazier and Essam, 2012 ; Khalid, 1996 ; Modigliani and Sterling, 1986 ; Ratha, 2012 ; Kim and Roubini, 2008 ; Algieri, 2013 ; Rafiq, 2010 ). These contradictory results may be due to differences in the sample period and the methods of measuring variables, which use different econometric techniques.

Khalid ( 1996 ) researched 21 developing countries from the period of 1960–1988, taking three variables into consideration: real private consumption, real per capita gross domestic product (GDP) as a proxy of real disposable income and real per capita government consumption expenditure as a proxy of real public consumption. This was done using Johansen cointegration (1988) and full information maximum likelihood (FIML) for parameter estimates. The model gives us restricted and unrestricted parameter estimations when restricted parameters are used, meaning that parameter estimation is non-linear when testing the REH for the sample countries. The results did not reject the REH for twelve of the countries, but the remaining five countries do diverge from the REH. The rejection of Ricardian equivalence in the latter group of countries demonstrates lack of substitutability between government spending and private consumption. Ghatak and Ghatak ( 1996 ) studied variables such as private consumption, government expenditure, income, taxes, private wealth, government bonds, government deficits, investments, government spending and interest on bonds to test the Ricardian Equivalence hypothesis for India for the period from 1950 to 1986. The study employed multi-cointegration analysis and rational expectation estimation, and both the tests rejected the REH, finding evidence that tax cuts induce consumption. Thus, the results invalidate the REH for India.

Ganchev ( 2010 ) rejected the Ricardian equivalence theorem for the Bulgarian economy using monthly time series data for the period 2000–2010. The long-run results of the vector error correlation model (VECM) showed evidence of the structural gap theory, which states that fiscal deficit influences current account deficit. However, vector autoregression (VAR) results did not show any evidence of a short-run relationship between budget deficit and current account deficit. The study, therefore, found that fiscal policy should not be used, in the Bulgarian economy, as a substitute for monetary policies in maintaining the internal equilibrium.

Nazier and Essam ( 2012 ) studied the Egyptian economic data from 1992 to 2010. The data included five variables: GDP, government budget deficit (as primary deficit), current account deficit, real lending interest rate (RIR) and real exchange rate (RER). The study used structural vector autoregression (SVAR) analysis, which also gave an impulse response function (IRF) to capture the impact of budget deficit on current account deficit and real exchange rate. The findings support the twin divergence hypothesis. This contradicts the theoretical framework, which finds that a shock given to a budget deficit leads to an improvement in the current account deficit and exchange rate. Sobrino ( 2013 ) investigated the causality between budget deficit and current account deficit for the small open economy of Peru for the period 1980–2012 using the Granger causality and Wald tests, generalized variance decomposition and the generalized impulse-response function. The study found no evidence of a causal relationship between budget deficit and current account in the short run.

Goyal and Kumar ( 2018 ) investigates the connection between the current account and budget deficit, and the exchange rate, in a structural vector autoregression for India over the period 1996Q2 to 2015 Q4. The impact of oil stuns and the differential effect of consumption and venture propose compositional impacts and supply stuns rule the conduct of India's CAD, directing the total request channel. Ricardian hypothesis is not supported.

Afonso et al. ( 2018 ) studied 193 countries over the period of 1980–2016 using fixed effect model and system GMM model. The results find the existence of fiscal policy reduces the effect of budget deficit on current account deficit. When there is an absence of fiscal policy rule twin deficit hypothesis exists.

Bhat and Sharma ( 2018 ) examines the association between current account deficit and budget deficit for India over the period of 1970–1971 to 2015–2016 using ARDL model. The results accepts Keynesian proposition and rejects Ricardian equivalence theorem. The results find long-run relationship between current account deficit and budget deficit. Rajasekar and Deo ( 2016 ) find the long-run relationship and bidirectional causality between the two deficits in India. Garg and Prabheesh ( 2017 ) investigate the twin deficit for India by using ARDL model and confirm the twin deficit hypothesis. Badinger et al. ( 2017 ) investigated the role of fiscal rules in the relationship between fiscal and external balances for 73 countries over the period of 1985–2012. Their results confirm the twin deficits hypothesis. Litsios and Pilbeam ( 2017 ) investigates Greece, Portugal and Spain using ARDL model. The empirical results suggest negative relationship between saving and current account deficit in all three countries.

It is clear that the research so far has not yielded any concrete evidence regarding the causal relationship between budget deficit and current account deficit. As such there is a disagreement on the causality between the two deficits. In this paper we test the theory with the support of autoregressive distributed lag (ARDL) bounds testing approach using data for the emerging country China.

Macroeconomics aspects of the Chinese economy

The Chinese economy has experienced an unparalleled growth rate over the past few decades, with increases in exports, investments and free market reforms from 1979 and an annual GDP growth rate of 10%. The Chinese economy has emerged as the world’s largest economy in terms of purchasing power parity, manufacturing and foreign exchange reserves.

In 2008, the global economic crisis badly affected the Chinese economy, resulting in a decline in exports, imports and foreign direct investments (FDI) inflow and millions of workers losing their jobs. It is visible from the Fig. 1 that China’s current account surplus has dropped significantly from its boom during 2007–2008 financial crises. After the financial crisis, China’s exports fell by 25.7% in February 2009. Further, the exclusive demand for Chinese goods in the international market pushed up current account surplus to 11% of the GDP in 2007, in a global economy (Schmidt and Heilmann, 2010 ). It is said that China responded to the 2008 crisis with a greater fiscal stimulus in terms of tax reduction, infrastructure and subsidies when compared to the Organization for Economic Co-operation and Development (OECD) countries (Herd et al., 2011 ; Morrison, 2011 ).

Behavior of Macroeconomic variables. Overview of Budget Deficit (BD), Current Account Balance (CAB), Interest Rate (INT), Inflation (INF), Money Supply (MS) and Real effective Exchange Rate (REER) from 1985 to 2017. Source: Compiled based on data taken from the World Bank. BD and CAB are expressed as percentage of GDP

However, we draw an important inference from the Fig. 1 , when the budget deficit was lowest (−0.41% of GDP in 2008), the current account surplus increased to 9.23% of the GDP. The negative shock to the budget deficit reduces current account surplus and positive shock to the budget deficit increases current account surplus.

The deprecation of the exchange rate is directly related to the elasticity of demand which improves the exports of the country and finally enhances current account surplus. However, the negative shift in the current account is due to structural and cyclical forces. The cyclic forces can be seen from the trade prospective: the increasing prices of Chinese imports like oil and semiconductors, pulls the current account balance downwards. However, the structural shift can be seen from the financial side, which affects Chinese saving and investments. The investments got reduced to 40% and household savings has reduced from 50% to 40% of GDP.

Data and empirical results

For undertaking the empirical analysis, we use the World Bank data for the following variables. The study covers the period from 1985–2016 and is based secondary data.

Current account deficit (CAD) indicates the value of goods, services and investments imported in comparison with exports on the basis of percentage of the GDP

Budget deficit (BD) indicates the financial health in which expenditure exceeds revenue as a percentage of the GDP

Deposit interest rate (DIR) as a proxy of interest rate (INT) the amount charged by lender to a borrower on the basis of percentage of principals

Inflation (INF) is measured on the basis of consumer price index which reflects annual percentage change in the cost of goods and services

Broad money (MS) a measure of the money supply that indicates the amount of liquidity in the economy. It includes currency, coins, institutional money market funds and other liquid assets based on annual growth rate and real effective exchange rate (REER)

The basic model to find out the relationship among BD, CAD, INF, INT, REER, and MS is as follows:

where INF is inflation and DIR is direct interest rate.

Based on Fig. 2 we will estimate the two models in which CAD and BD is dependent variables and others are independent variables which is as below:

Relationship of the dependent variables (CAD and BD) with other macroeconomic variables

To estimate the above models we have employed various econometric techniques to achieve the objective of the study are as below:

Unit root test to check stationarity of the variables.

ARDL bound testing for long-run and short-run relationship among the variables.

Granger causality to check the causal relationship among the variables.

Empirical results

Unit root test.

As we are using time series data, it is important to check the properties of the data; otherwise, the results of non-stationary variables may be spurious (Granger and Newbold, 1974 ). To assess the integration and unit root among the variables, numerous unit root tests were performed. Apart from applying the unit root test with one structural break (Zivot and Andrews, 1992 ), we also employed a traditional Augmented Dickey-Fuller (ADF) unit root test ( 1981 ) and Phillips-Perron test (PP 1988 ).

To ascertain the order of integration, we first applied the ADF and PP unit root tests. The results of the unit root test suggest that the RER and INF series is integrated of order zero I(0), and other variables are integrated of order I(1). The Zivot and Andrews (ZA) unit root test begins with three models based on Perron ( 1989 ). The ZA model is as follows:

From the above equations, DU t ( λ ) = 1, if t  >  Tλ , 0 otherwise: DT t ( λ ) =  t  − T λ if t  > T λ , 0 otherwise. The null hypothesis for Eqs. 4 – 6 is α  = 0, which implies that ( Yt ) contains a unit root with drift and excludes any structural breakpoints. When α  < 0 it simply means that the series having trend-stationary process with a structural break that happens at an unknown point of time. DT t is a dummy variable which implies that shift appears at time TB, where DT t  = 1 and DT t  =  t  − TB if t  > TB; 0 otherwise. The ZA test (1992) suggests that small sample size distribution can deviate, eventually forming asymptotic distribution. The results of the unit root tests are given below.

The first step in ascertaining the order of integration is to perform ADF and PP unit root tests. Table 1 , above, provides the results of the ADF and PP tests, which suggest that four out of six variables are non-stationary at level and two variable is stationary at level. However, it is important to check the structural breaks and their implications, and the ADF and PP tests are unable to find the structural break in the data series. To avoid this obstacle, we applied a ZA (1992) test with one break, the results of which are given in Table 2 . The structural break test reveals four breaks in Model A. The first, in 1992, may be due to inflation caused by privatization; the second, in 1994 may be due to higher inflation which caused the consumer price index to shot up by 27.5% and imposition of a 17% value-added tax on goods; the third, in 2003, may be due to a 48% decline in state owned enterprises at the same time as a reduction on trade barriers, tariffs and regulations was put in place and the banking system was reformed; the fourth, in 2008, is probably due to the global financial crisis

The ZA test with one structural break gives different results, as all six variables are non-stationary at a 1% level.

ARDL bounds testing approach

We applied the ARDL bounds testing approach to check the cointegration long-run relationship by comparing F -statistics against the critical values for the sample size from 1985 to 2016. The bounds testing framework has an advantage over the cointegration test developed by Pesaran et al. ( 2001 ), in that the bounds testing approach can be applied to variables when that have different orders of integration. Thus, it is inappropriate to apply a Johansen test of cointegration, and we applied ARDL bounds testing to determine the long-run and short-run relationships. The F -statistics are compared with the top and bottom critical values, and if the F -statistics are greater than the top critical values, it means there is a cointegrating relationship among the variables Table 3 .

All values are calculated by using Microfit which defines bounds test critical values as “ k ” which denotes the number of non-deterministic regressors in the long-run relationship, while critical values are taken from Pesaran et al. ( 2001 ). The critical value changes as ‘ k ’ changes. The null hypothesis of the ARDL bound test is Ho: no relationship. We accept the null hypothesis when F is less than the critical value for I(0) regressors and we reject null hypothesis when F is greater than critical value for I(1) regressors. For t-statistics we accept the null hypothesis when t is greater than the critical value and reject the null hypothesis when t is less than the critical value.

As seen in Table 4 , the calculated F -statistic F  = 9.439 is higher than the upper bound critical value 3.99 at the 5% level. The results over the period of 1985 to 2016 suggest that there is a long run relationship among the variables and the null-hypothesis of no cointegration is rejected meaning acceptance of traditional Keynesian approach for China. The bounds test results conclude that there is strong cointegration relationship among budget deficit, current account deficit, interest rate, exchange rate, inflation and money supply. Since the F-statistic was greater than the upper bound critical value, we performed a diagnostic testing based on auto-correlation, normality and heteroskedasticity, the results of which were insignificant based on the respective P -values. The Fig. 3 gives the results of CUSUM and CUSUMSQ tests which check the stability of the coefficient of the regression model. The CUSUM test is based on the sum of recursive residuals, and the CUSUMSQ test is based on the sum of the squared recursive residual. Both the graphs are stable, and the sum does not touch the red lines. Hence there were no issue of serial corelation, Heteroscedasticity and normaility in this model see Table 5 .

CUSUM and CUSUMSQ stability tests. Plot of cumulative sum of recursive residuals and plot of cumulative sum of squares of recursive residuals

Long-run and short-run relationship

After discovering the cointegrating relationship among the variables, it is important to determine the long-run and short-run relationships using the ARDL model.

The above Eqs. 7 , 8 of the ARDL model capture the short and long-run relationship among the variables. The model is based on Schwarz Bayesian Criteria (SBC) optimized over 20,000 replications. The lagged error correction term (ECM) is estimated from the ARDL model. The coefficient ECM t −1 should be negative and significant to yield the evidence of a long run relationship and speed of equilibrium (Banerjee et al. 1993). The results of Eqs. 7 , 8 are provided in Table 6 . The results find a strong long-run relationship among the variables for the period from 1985 to 2016.

At 5% level of significance the long-term estimates of the ARDL model find evidence of the twin deficits hypothesis for China, as all the variables are found to be significant at this level. Thus, our study upholds the empirical validity of the Keynesian proposition for China, while rejecting the Ricardian equivalence hypothesis.

The short-run results are significant; the coefficients of BD, CAD, INF, and INT are significant at a 5% level. This shows that a small change in the budget deficit has a significant impact on the current account deficit; similarly most of the macroeconomic variableshave a significant impact on the current account deficit. As we found evidence of a long-run relationship, we calculated the lagged ECM from the long-run equations. The negative (−0.95348) ECM coefficient and the high speed of adjustment brought equilibrium to the economy, with the exogenous shocks and endogenous shocks restoring it after a long period.

The Chinese economy is one of the most integrated economies in the world and has emerged as a powerful actor in the global economy. The pace of growth in china’s economy has accelerated since the decades in which there was a higher export promotion due to market liquidity and flexible governmental policies. In the early 1990s, it was reported in the Chinese print media that although the Chinese economy was expanding rapidly, the deficits still existed. These were called ‘hard deficits’ primarily because they were financed by expanding money supply and hence exerted inflationary pressure on the economy (People’s Daily, March 28, 1993). Deficit financing may also increase interest rates because once the monetary accommodation of the deficit is ruled out, the government has to incentivize consumers and firms to buy more government bonds. If the purchase of government bonds does not increase in direct proportion to the rise in deficit, government must borrow more money. This, in turn, crowds out private investment. Such a reduction in the private sector's demand for capital has been summarized by Douglas Holtz–Eakin, the director of the U.S Congressional Budget Office, as a “modestly negative” effect of the tax cut or budget deficits on long - term economic growth.

This study finds that a higher interest rate significantly affects the budget deficit and current account deficit in both the short-run and long-run. Chinese banks are increasing interest rates on home loans that had previously been very low; however, because of its economic bubble, especially in the real estate market, this is creating serious trouble in the economy. This is similar to the American bubble, in which most people were unable to repay loans, creating a financial crisis. Still, China must work within the existing bubble, even though it creates a lack of investments and can cause trouble for economies worldwide. The debt bubble is due to the elimination of loan quotas for banks in an attempt to increase small business. These companies are still struggling to repay that debt, which is almost half the amount of GDP of both private and public debt (The Economist, 2015).

While empirical research shows a statistically significant relationship between higher budget deficits and long-term interest rates, there are differences on the magnitude of the impact. Chinese needs to take care of lower interest rate rather than higher interest rate especially on home loans which was very low; in real estate market which has created a serious trouble in the economy.

It is also important to note that the concept of the deficit includes both hard and soft deficits. The “hard” part of the deficit, being financed by printing money, is inflationary. The “soft” part, being financed by the government's domestic and foreign debts, is non-inflationary. However, they are not reported by the Chinese government.

Moreover, hard deficits and consequent inflation increases capital inflows (to prevent interest rates from rising) and causes current account deficit. In China, deficits occurred as a result of overestimating revenues or underestimating expenditures (Shen and Chen, 1981 ) and contributed to the development of bottle-necks in sectors such as energy, transportation, and communications sectors that are of vital importance for the long-term growth of China. However, given the reluctance of the non-government investors to venture into such low pay-back sectors, the Chinese government’s policy to balance budgets by cutting its capital expenditure can severely restrict the development of these sectors (Luo, 1990 , and Colm and Young, 1968 ).

However, the natural explanation for the external surplus is that the economy follows an export-driven growth model by increasing FDI inflows. In the rising tide of economies, China’s demographic boom has created an economic miracle, allowing them to invest in education and skilled workers that will accordingly benefit the economy.

During the global financial crisis of 2008, the Chinese government combined active fiscal policy and loose monetary policy and introduced a stimulus package of $580 billion (around 20% of China’s GDP) for 2009 and 2010. The package partially offset the drop-in exports and its effect on the economy, so that the economic growth of China remained well above international averages. During this period (2008–2009) the current account surplus, as a percentage of GDP was at its highest and the budget deficit was at its lowest point of the entire decade. Our findings suggest that a strong long-run and short-run relationship exists among the variables. The empirical findings support the Keynesian proposition for Chinese economy.

Granger causality

In this section we attempt to estimate the causality from X t to Y t and vice versa. We apply Granger causality to check the robustness of our results and to detect the nature of the causal relationship among the variables based on Eqs. 9 , 10 .

Table 7 describes the results of Granger causality test. The reverse causality holds in light of the fact that budget deficit cause Granger to the current account deficit. For all the variables, the reverse causality from budget deficit to macro variables and current account deficit to macro variables holds at 5% level of significance. Thus, the results of Granger causality gives us more evidences in support of the Keynesian proposition for China in the light of above data. The reverse causality was not apparent because Chinese economy is one of the most integrated economies with higher capital outflows, export-led growth and export promotion due to market liquidity and flexible governmental policies. While the capital inflow determines a tight fiscal policy to avoid overheating of economy (see author Castillo and Barco ( 2008 ) and Rossini et al. ( 2008 ).

Results and discussion

The ambiguous verdict on the twin deficits hypothesis based on two competing theories: the Keynesian preposition and the Ricardian Equivalence theorem. In this paper we investigated the link between budget deficit and current account deficit with an emphasis on the impact of macro-variables shock on current account balance and budget deficit in the Chinese economy over the period 1985–2016.

The conclusion of this study is based on ARDL bound testing approach. The model is based on Schwarz Bayesian Criteria (SBC) optimized over 20,000 replications. With this data and analysis, we conclude that there is a long-run and short-run relationship among the variables. We accept the Keynesian hypothesis, which means we did not find evidence in support of the Ricardian Equivalence theorem in the Chinese economy. This was surprising because higher governmental expenditure and flexible governmental policies could have pushed up the current account deficit. We further applied Granger causality test the results concluded that there is a strong inverse causal relationship between budget deficit and current account deficit meaning that Keynesian preposition is more plausible than Ricardian Equivalence theorem in the light of above data. Our results are consistent with Banday and Aneja, ( 2019 ); Banday and Aneja, ( 2016 ); Ganchev, 2010 ; Bhat and Sharma ( 2018 ); Badinger et al. ( 2017 ), and Afonso et al. ( 2018 ).

The findings of the Granger causality test revealed that there exists bidirectional causality running from budget deficit to current account balance and vice versa in China. A similar movement of the budget deficit and the current account balance is the thing that one would expect when there are cyclic shocks to output. Detailed empirical findings highlight that the interest rate bubble and higher inflated housing prices are becoming a challenge for the Chinese economy, as they are now nearing the prices of the US bubble before the financial crisis popped it. If the US increases interest rates, the money will flow out of the Chinese market, which could cause a similar crisis in China. It will be a challenge for the monetary authority to bring stability in China where inflation, interest rate bubble and exchange rate volatility are of primary concern. Expenditure reduction for low payback sectors, such as energy and communication, could also be a worry in the future. Rising inflation can significantly increase the inflow of capital due to an increase in domestic demand; this can lead to a current account deficit, as it is now more than half of the GDP. The indebtedness in the economy is at its peak, and this can crush the financial cycle and cause financial crisis.

Conclusions

The cointegration investigation confirms the presence of a long-run relationship between the variables. The results propose that there is a positive connection between the current account deficit and fiscal deficit. Our outcomes show that increase in money supply and the devaluation of the exchange rate increases current account balance. The effects of the current account deficit and the exchange rate have been taken as exogenous. A long-run stationary association between the fiscal deficit, current account deficit, interest rate, inflation, money supply, and the exchange rate has been found for China. Granger causality tests reveal bidirectional causality running from budget deficit to current account balance and macroeconomic variables to budget deficit and current account balance.

A genuine answer for the issue of budget deficit and current account deficit lies with a coherent package comprising of both fiscal and monetary approaches. It must concentrate on stable interest rate, inflation target and monetary position will supplement the budget-cut policies. The findings of the paper will be helpful for future empirical models, which attempt to further highlight the transmission mechanism.

Data availability

For undertaking the empirical analysis, we use the World Bank data for the following variables. The study covers the period from 1985 to 2016 and is based on secondary data which are available at: https://data.worldbank.org/country/china .

Change history

01 october 2019.

An amendment to this paper has been published and can be accessed via a link at the top of the paper.

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Banday, U.J., Aneja, R. Twin deficit hypothesis and reverse causality: a case study of China. Palgrave Commun 5 , 93 (2019). https://doi.org/10.1057/s41599-019-0304-z

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Beyond the Core-Deficit Hypothesis in Developmental Disorders

Duncan e. astle.

1 MRC Cognition and Brain Sciences Unit, University of Cambridge

Sue Fletcher-Watson

2 Salvesen Mindroom Research Centre, The University of Edinburgh

Developmental disorders and childhood learning difficulties encompass complex constellations of relative strengths and weaknesses across multiple aspects of learning, cognition, and behavior. Historically, debate in developmental psychology has been focused largely on the existence and nature of core deficits—the shared mechanistic origin from which all observed profiles within a diagnostic category emerge. The pitfalls of this theoretical approach have been articulated multiple times, but reductionist, core-deficit accounts remain remarkably prevalent. They persist because developmental science still follows the methodological template that accompanies core-deficit theories—highly selective samples, case-control designs, and voxel-wise neuroimaging methods. Fully moving beyond “core-deficit” thinking will require more than identifying its theoretical flaws. It will require a wholesale rethink about the way we design, collect, and analyze developmental data.

Neurodevelopmental diversity results in some children receiving a clinical diagnosis of a developmental disorder and others experiencing learning difficulties in the absence of a diagnosis. As a result, 14% to 30% of children and adolescents worldwide experience barriers to learning ( Department for Education, 2018 ; National Center for Education Statistics, 2020 ) that vary widely in scope and impact. Some children are formally diagnosed via specialist education services and placed in categories including dyslexia, dyscalculia, or developmental language disorder. Other children, such as those with attention-deficit/hyperactivity disorder (ADHD), dyspraxia, or autism spectrum disorder (hereafter, autism), are normally diagnosed in clinical services. However, many children who struggle will never receive a formal label for their learning difficulty, despite meeting the criteria for multiple different diagnoses (e.g., Bathelt, Holmes, et al., 2018 ; Holmes, Bryant, the CALM Team, & Gathercole, 2019 ; Siugzdaite, Bathelt, Holmes, & Astle, 2020 ; see also Embracing Complexity Coalition, n.d .).

This classification structure has also been used within research to integrate and guide empirical work ( Regier, Kuhl, & Kupfer, 2013 ). As a result, the literature is organized around a patchwork of different theories that provide putative explanations for different recognized disorders. In these theories, a complex array of observable characteristics are frequently categorized according to a single defining neurocognitive deficit. As understanding of a particular set of diagnostic features evolves, most such theories are gradually pruned from the field because of insufficient evidence, counterevidence, or the emergence of better-specified theories. These theoretical accounts fail, but that is their purpose. Choose any clinical categorization of developmental differences, and there is a graveyard of once-popular theoretical accounts, from the magnocellular theory of dyslexia ( Stein, 2001 ) to the mirror-neuron theory of autism ( Williams, Whiten, Suddendorf, & Perrett, 2001 ).

Over and above specific problems with any single theory, this general class of theory is problematic because of the reliance on the very notion of a “core deficit”—something that has been repeatedly debunked both within specific ( Happé, Ronald, & Plomin, 2006 ) and across multiple diagnostic categories (e.g., Pennington, 2006 ). But in practice, developmental psychologists and developmental-cognitive neuroscientists frequently return to core-deficit theories, either implicitly or explicitly, if not to motivate studies, then to interpret them. Here, we provide a working definition of a core-deficit account, describe the inherent weaknesses in the theory’s accompanying methods and methodology, and argue that building the empirical foundations for more complex (and accurate) theoretical frameworks will require a wholesale rethink in the way we design, collect, and analyze developmental data.

Identifying a Core-Deficit Hypothesis

A core-deficit hypothesis pins a multiplicity of cognitive, behavioral, and neurobiological phenomena onto a single mechanistic impairment and is assumed to have the power to explain all observed profiles within a particular diagnostic category. To provide one example, in autism, the dominant core-deficit hypothesis since the mid-1980s has been the theory-of-mind model. This model proposes that autistic people uniquely lack the ability to detect, interpret, or understand the mental states of others. Versions of this model vary in the range of behaviors and mental states they attempt to encompass. At its broadest, the theory-of-mind deficit can draw in differences in play, language development, and all types of processing of emotions, including basic emotions, as well as desires, beliefs, and higher-order complex mental states such as suspicion. On a narrower scale, theory-of-mind impairments in autism are understood to apply only to the automatic and easy processing of complex mental states. Until recently, evidence for this latter position has looked fairly robust, but now even this pillar of autism theory is under threat, as innovative research has revealed that the apparent “deficits” in mental-state understanding exhibited by autistic people may apply only to understanding the mental states of nonautistic people (e.g., Crompton et al., 2020 ). At the same time, there is a growing body of evidence showing that nonautistic people show impairments in detecting and interpreting the mental states of autistic people (e.g., Edey et al., 2016 ). This reframes the characteristic “deficit” of autism as a typical manifestation of failed communication across different sociocultural groups ( Milton, Heasman, & Sheppard, 2018 ). More importantly for our argument here, the model has never been adequately able to explain the sleep disturbances, sensory sensitivities, intense and consuming interests, or executive difficulties that are equally prevalent among autistic people.

The Origins of Core-Deficit Theories and Their Persistent Appeal

Across multiple categories, and despite well-articulated perspective articles highlighting their limitations ( Happé et al., 2006 ; Pennington, 2006 ), core-deficit accounts remain a recurring theme in developmental-disorders research (e.g., Kucian & von Aster, 2015 ; Mayes, Reilly, & Morgan, 2015 ). Part of their intuitive appeal is their relative simplicity. Publishing in higher-tier journals is easier when the story is simple, and doing so can quickly turn into a citation gold mine if the field invests in challenging your theory. If a series of findings can be woven together, this provides an ideal way of combining decades of research and cementing its contribution to the field. However, such tapestries are riddled with loose threads that, if pulled, quickly reveal the flaws in their construction.

Examples of these construction flaws are found in the design choices, participant selection, sample sizes, statistical methods, and restrictive range of measures that are hallmarks of core-deficit thinking. These flaws are still prevalent in the wider developmental literature because despite being mindful of the problems inherent in core-deficit theories, we have yet to change the methodological template inherited with them.

Highly selective samples

Studies of developmental disorders typically use strict exclusion criteria (e.g., Toplak, Jain, & Tannock, 2005 ; Willcutt et al., 2001 ), including the removal of children with co-occurring difficulties. But in reality, co-occurring difficulties are the norm rather than the exception ( Gillberg, 2010 ). For example, it is rare to have selective reading or math impairments; the majority of children with one difficulty will also have the other (e.g., Landerl & Moll, 2010 ). The same is true within clinical samples: 44% of children who receive an ADHD diagnosis would also meet the diagnostic criteria for a learning difficulty, and a similar percentage who meet the latter criteria would also meet the criteria for an ADHD diagnosis ( Pastor & Reuben, 2008 ).

Because most children with the difficulties of interest are excluded, the literature overstates the “purity” of developmental differences. In turn, basing models on highly selective samples biases theory toward simpler core-deficit accounts. Where studies do include children with different diagnoses or with co-occurring difficulties, the purpose is usually to identify what is unique to each diagnosis rather than to establish which dimensions are important for understanding individual outcomes, irrespective of the diagnostic category applied.

Study designs do not capture heterogeneity

Most studies use a case-control design, with children grouped according to strict inclusion criteria (see above) and then matched to one or more control groups. Significant differences in group-level statistics are then taken as evidence for a specific deficit in the “case” group. Variability in performance within groups is rarely studied, in part because few studies have sufficient power but also because of reliance on univariate statistics. This issue becomes more and more problematic as diagnostic criteria broaden. Regarding heterogeneity as noise to be minimized removes a crucial signal that could lead to a more complex and accurate theoretical conclusion. Although we endorse the application of Occam’s razor to interpretation of findings, we must be wary of parsimony achieved via flawed means.

Circular logic of measurement selection

Theoretical conclusions about underpinning mechanisms are constrained by our choice of measures. Tasks are often included because they are regarded as the gold standard for distinguishing a particular group from controls, even though the conceptual underpinnings of the task are poorly understood. The logic can become circular: “We always include a theory-of-mind task when studying autistic people, and autism is characterized by theory-of-mind task performance.” The task has become an implicit requirement within the field without any real mechanistic understanding of why different children find it hard. Moreover, the dominance of a specific core-deficit theory with an associated gold-standard measure eliminates consideration of other possibilities: In the case of autism, why not consider an executive-planning or sensory-profiling measure? If the same domains of measurement are selected in every study, to the exclusion of alternatives, then the supposed cardinality of this profile will inevitably be reinforced. But little has been explained, and alternative possible profiles are not documented.

Neuroimaging methods inherited from the adult literature

Finding a shared neural substrate that purportedly causes the difference is typically taken as strong evidence for a core-deficit theory. But this is largely an artifact of the analytical approach we take to neuroimaging. Most canonical neuroimaging methods assume a direct correspondence between spatially overlapping brain differences (structural or functional) and surface-level cognitive profiles. A voxel-wise approach to analysis will always produce peaks. Despite its dominance, this approach yields remarkably inconsistent results. For example, ADHD has been associated with differences in gray matter within the anterior cingulate cortex ( Amico, Stauber, Koutsouleris, & Frodl, 2011 ), caudate nucleus ( Onnink et al., 2014 ), pallidum ( Frodl & Skokauskas, 2012 ), striatum ( Greven et al., 2015 ), cerebellum ( Mackie et al., 2007 ), prefrontal cortex ( Dirlikov et al., 2015 ), premotor cortex ( Mahone et al., 2011 ), and most parts of the parietal lobe ( Shaw et al., 2006 ).

Our contention is that the assumption of spatial correspondence is not valid for understanding brain–cognition or brain–behavior links in childhood, especially in children with developmental disorders (see also Johnson, 2011 ). Difficulties that emerge over developmental time can be arrived at via multiple different underlying neural routes—a phenomenon called equifinality ( Bishop, 1997 ). There may also be multifinality: The same apparent underlying neural effects can have different consequences for behavior and cognition across children ( Siugzdaite et al., 2020 ). The canonical voxel-wise neuroimaging methods that dominate developmental cognitive neuroscience instead create the false impression that the neural underpinnings of developmental differences are akin to those resulting from acquired focal brain damage, and in turn this implicitly leads us back to “core deficits” in our theoretical interpretation.

Moving Beyond the Core-Deficit Hypothesis

There is no shortcut to a comprehensive empirical basis for more complex theory. Nonetheless, in this section, we make some nonprescriptive suggestions as a position from which to move forward.

Well-powered studies with inclusive samples

If our samples are more reflective of the children we are seeking to understand, then our theories, though necessarily more complex, will likely have greater practical value. It is necessary to include participants with different or multiple diagnoses. Emerging first in adult psychiatry ( Cuthbert & Insel, 2013 ; Morris & Cuthbert, 2012 ), transdiagnostic approaches focus on identifying underlying symptom dimensions that likely span multiple supposed categories (e.g., Astle, Bathelt, The CALM Team, & Holmes, 2019 ; Bathelt, Holmes, et al., 2018 ; Bryant, Guy, The CALM Team, & Holmes, 2020 ; Hawkins, Gathercole, Astle, The CALM Team, & Holmes, 2016 ; Holmes et al., 2019 ; Siugzdaite et al., 2020 ). Within developmental science there are good examples of researchers cutting across hitherto unquestioned diagnostic boundaries in order to identify cognitive symptoms that underpin learning, but they remain relatively rare (e.g., Astle et al., 2019 ; Casey, Oliveri, & Insel, 2014 ; Hulme & Snowling, 2009 ; Peng & Fuchs, 2016 ; Sonuga-Barke & Coghill, 2014 ; Zhao & Castellanos, 2016 ). A review of a transdiagnostic approach is well beyond the scope of the current article, but suffice it to say, contemporary developmental science needs larger and more diverse samples.

Embracing methods that capture complexity

There is now a growing array of analysis methods allowing researchers to move beyond univariate group comparisons or pairwise associations between variables. A well-developed tool is structural equation modeling (SEM; e.g., Kline, 2015 ). SEM combines the strengths of path-modeling and latent-variable approaches to allow researchers, for instance, to specify how latent factors may explain the continuous variability on a set of observed measures (e.g., task performance) and the potential causes and consequences of such factors. SEM offers the tools to identify continuous dimensions that cut across diagnostic boundaries or to directly compare competing causal accounts. More advanced variants of SEM, such as latent-growth-curve models and growth-mixture models, can address more sophisticated questions about how changes in one latent construct relate to changes in another (e.g., Hjetland et al., 2019 ; Kievit, Hofman, & Nation, 2019 ). Other variants—for example, hierarchical mimic modeling—can be used to identify multiple routes to particular outcomes (equifinality), such as the role that multiple different brain structures might play in developmental changes to a particular aspect of cognition (e.g., Kievit et al., 2016 ; Ritchie et al., 2015 ).

Whereas SEM methods are ideal for testing complex theories or pitting theories against one another, other methods are able to handle complexity in a different way. A more recent development from data science that aims to capture complex interrelationships in an exploratory way is network analysis (e.g., Bathelt, Holmes, et al., 2018 ; Epskamp, Borsboom, & Fried, 2018 ; Mareva, the CALM team, & Holmes, 2019 ). The resulting network can open the door to a new toolbox of analytical techniques, such as graph theory. Rather than inferring the presence of singular latent factors, these approaches capture various different ways in which individual measures can be related over developmental time. For example, does phonological processing act like a hub for verbal short-term memory and literacy development, or is there a dynamic relationship between these constructs over time? Network analysis can also capture heterogeneity within a sample and provide a relatively theory-free means of exploring the underlying structure and composition of a data set. With a network analysis, it is possible to identify subgroups of individuals within which the task interrelationships are different, and a strong advantage of this approach is that a network analysis incorporates metrics for identifying these clusters (e.g., Bathelt, Holmes, et al., 2018 ).

Unsupervised machine-learning techniques are also capable of capturing the multidimensional space in which children may differ (e.g., Siugzdaite et al., 2020 ). But relative to SEM-based approaches and network analysis, machine-learning applications remain underdeveloped. Although popular in other areas of science with similar challenges, these methods have yet to gain much traction within the study of developmental differences (but see Astle et al., 2019 ). These algorithms are highly flexible, and the resulting models can easily accommodate nonlinear relationships, make predictions about unseen data, be combined with simulations, incorporate different data types, and open the way to tools for testing generalization, such as cross-validation. For the data shown in Figure 1 , a simple artificial neural network was used to map different profiles across multiple measures of short-term memory, working memory, fluid reasoning, vocabulary, and phonological awareness in a large group of struggling learners. Once the individual nodes of the network were trained to represent the different profiles within the data set, the locations of children with different diagnoses could be identified. If common diagnoses are predictive of the cognitive profiles learned by the network, then those children’s performance profiles should group together—but they did not. This highlights the potential utility of this approach to mapping the heterogeneity of a data set and exploring its composition. This is something largely untapped within the field to date.

Distributions of children within a simple artificial neural network trained on data from 530 children taken from the Centre for Attention, Learning and Memory (CALM) sample ( Holmes, Bryant, the CALM Team, & Gathercole, 2019 ). Each node represents a profile learned by the algorithm, with spatially nearby nodes having more similar profiles. Therefore, the maps represent the multidimensional spaces that reflect the performance differences across the children. The left-most panel shows the best-matching unit for all children, and the subsequent panels show those for children with different diagnoses. The training data set included measures of fluid reasoning, vocabulary, verbal and spatial short-term and working memory, and phonological awareness (see also Astle, Bathelt, The CALM Team, & Holmes, 2019 ). ADHD = attention-deficit/hyperactivity disorder; ASD = autism spectrum disorder.

Beyond voxel-wise measures of brain structure and function

Just as methods that capture complexity in cognitive and behavioral data are needed, the same is true for neuroimaging. In theory, the methods outlined above can be used alongside neuroimaging, although in practice there are very few examples. SEM techniques could allow researchers to identify many-to-one mappings (e.g., Kievit et al., 2016 ; Kievit et al., 2014 ), allowing the possibility that a particular set of symptoms could be associated with multiple different neurobiological effects. And network science has enabled the subfield of brain “connectomics,” enabling researchers to demonstrate that apparently disparate neural effects could have very similar effects on brain organization, providing a meaningful endophenotype to bridge complex causal interrelations and shared surface-level profiles (e.g., Bathelt, Gathercole, Butterfield, the CALM Team, & Astle, 2018 ; Bathelt, Scerif, Nobre, & Astle, 2019 ).

Conclusions

Core-deficit models long held promise as optimistic researchers aimed to interpret behavioral complexity via cognitive or neurological simplicity. However, as more and more of these attempts fall by the wayside, many researchers have come to question the validity of the principle of the core deficit. At the same time, increased pooling and sharing of data, as well as better diagnostic ascertainment, has improved our capacity to gather substantial samples for well-powered complex analyses. New technologies provide opportunities for creative, data-driven analysis of such samples, which can provide us with an empirical basis for the development of new theories.

We must embrace complexity within and between diagnostic boundaries in such theoretical models. In doing so, we will unlock our potential to understand the cross-cutting issues that frequently have the biggest impact on people’s lives rather than dwell on the narrow selection of domains that seem to be unique to a specific population. Importantly, a move away from the concept of “core” should also entail a movement away from the concept of “deficit”—there is no objective reason why a condition should be defined by its disadvantageous elements instead of its advantageous elements. Although the former may be needful of intervention, the latter may be essential to delivering that intervention. Examples of successful application of this principle come from formal evaluations—for example, technological supports for autistic children ( Grynszpan, Weiss, Perez-Diaz, & Gal, 2014 ; Kasari et al., 2014 )—but are also evident in practitioner-focused guides—for example, image-based rather than text-based learning materials for children with dyslexia ( Mortimore & Dupree, 2008 ). In this way, the current direction of research in neurodevelopmental diversity is at a potential tipping point. The issues we outline above, and the recent developments we highlight, could have a beneficial impact not only on research innovation and knowledge generation but also on policy, practice, and societal understanding.

Recommended Reading

Bathelt, J., Holmes, J., & Astle, D. E., on behalf of the Centre for Attention Learning and Memory (CALM) Team. (2018) . (See References). A data-driven approach to exploring profiles of executive-functional difficulty and then testing whether they overlap with diagnostic status.

Bishop, D. V. (1997) . (See References). A classic article that sowed the seeds for many of the questions we raise about developmental theory—required reading for anyone interested in developmental disorders.

Kievit, R. A., Hofman, A. D., & Nation, K. (2019) . (See References). Excellent use of latent-change modeling to explore the relationship between different constructs over developmental time.

Mareva, S., the CALM Team, & Holmes, J. (2019) . (See References). An excellent example of using a network analysis with a transdiagnostic sample to explore the interplay among different cognitive, communication, and behavioral characteristics.

Siugzdaite, R., Bathelt, J., Holmes, J., & Astle, D. E. (2020) . (See References). Uses an artificial neural network to map between cognition and brain structure.

Transparency

Action Editor: Randall W. Engle

Editor: Randall W. Engle

Declaration of Conflicting Interests: The author(s) declared that there were no conflicts of interest with respect to the authorship or the publication of this article.

Funding: D. E. Astle’s contribution to this work was supported by funding from the UK Medical Research Council (MC-A0606- 5PQ40). S. Fletcher-Watson’s contribution was supported by funding to the Salvesen Mindroom Research Centre from the A E H Salvesen Charitable Trust.

Children of the Code

The "Code" and the "Challenge" of learning to read.

An Interview...

Dr. maryanne wolf – rapid naming, double-deficits and dyslexia.

O ur interview with Dr. Wolf is a rich wide ranging dialogue that explores, among other things, rapid naming, the double-deficit hypothesis, processing speed, and dyslexia. Dr. Wolf is brilliant, passionate, and full of positive energy which she focuses toward helping struggling children.  She was a delight to talk with.

"...that began us thinking that there are so many issues beyond the phoneme, which includes the visual system and  the retrieval system. It includes the speed with which the brain puts its systems together." -  Dr. Maryanne Wolf

Personal Background:

David Boulton: Thank you for taking the time to talk with us.

Dr. Maryanne Wolf: Of course.

David Boulton: How is it that you’ve come to the focus you have? Tell me about the passion that’s driving your research and your work to help kids?

Dr. Maryanne Wolf: I’ll give a brief version of a very long story. It began many years ago when I was in a Peace Corps-like mission, if you can call it that. I was to go to a Native American reservation and everything fell through, and suddenly I landed in a Filipino mission school in Hawaii. First I think I’m going to North Dakota and next I’m ending up in tropical Hawaii. It was not respectable in terms of political cache, but it was beautiful. On the other hand the poverty, the needs were just extraordinary.

When I began teaching I was assigned to a third grade class with ten different languages in it, and kids with every possible need: fetal alcohol syndrome, certainly bi-lingualism was a big factor, one child was retarded. Many kids had various kinds of literacy special needs and they were all mine . I just had a year that transformed my life. I became so aware of the consequences, the sequela of what not learning how to read would mean for these kids in terms of the rest of their lives.

The little village that we had had these single rocking chairs and I said, ‘Why are there all these single rocking chairs?’ They were for the Filipino men who could never earn enough money to bring their families over, as promised, from the Filipine Islands. They were like the living testimony to all the failed hopes and exploitation, absolute exploitation of these people. And they couldn’t read.

Their children were having all kinds of struggles and I knew if I couldn’t do it, their lives were not going to be changed . I also knew if I could help them, I wasn’t going to prevent everything else from going wrong, but that I would have eliminated a very key factor in their not meeting their potential.

I was an English major and I had a Master’s degree. I had my Ph.D. set up to become a  Rilke  scholar in poetry. And it just snapped every decision I had made before.

I came back to the mainland and almost immediately went into a program that prepared me to switch completely. The following year I went to Harvard to the reading laboratory and I just was determined  from that moment on that I was going to use my life to help kids through learning how to read . That was my vehicle to ensure that they’re going to at least have a shot at their potential. That that [reading failure] was not going to hold them back.

That experience at Harvard’s reading lab introduced me to all kinds of different approaches to the problem. I had been thinking about it, more or less, from almost a sociological viewpoint. When I got to Harvard it was a surprise to me.  Here I am an English major and I became a scientist. I became totally involved in neuroscience because it really seemed to me that we were going to get answers the likes of which we had never had before in education from understanding what is going on in the reading brain.  So, that became my quest, if you will, to understand what it is the brain does when we read and how we can translate that knowledge, that fundamental, theoretical knowledge into very practical applications in terms of diagnosis, assessment, and most important to me, intervention.

So, twenty-plus years later I now have become very involved in the design and creation and testing through the  National Institute of Child Health and Human Development  (NICHD)of the best forms of intervention for different kinds of children with their different kinds of reading issues. It’s been a long journey and it’s been a theoretically exciting one. I have to say, intellectually, I have never ever had one day of boredom.  It’s made my life very satisfied, if you will, in terms of feeling like everything I do and learn has something that makes the lives of some kids better. It feels like a great way to live a life. So, that’s my story.

David Boulton: That’s a great story. Thank you for sharing it. I like how you connected the dots. Maybe it’s not surprising to you, but a lot of the people I talk with have had some experience in their life that brought home the incredible importance of this in a way that highlights the social lack of understanding at the core of it.

Dr. Maryanne Wolf: Yeah. Well, mine began actually in the social political realm and then it just didn’t let go of me. At that moment I so wanted to study poetry. Instead, I became a scholar who knows what happens when a poet retrieves a word. It’s still intellectually a lot of fun but it is very different from where I began.

History of Reading Disabilities and Dyslexia:

David Boulton: So, what would you say are the most important findings or the most important things that have come out of your research into the neuroscience of reading that are not generally well understood?

Dr. Maryanne Wolf: The history of reading disabilities, (I’ll use the word dyslexia – some people use it, some people don’t), is such a fascinating one because it’s like a case study in science patterns, the desire for  parsimony  among scientists and the refusal of the human brain to be typed in one way. What you see in this history is one researcher after another seizing on what is in front of them and saying, “Ah, that’s what dyslexia is. That’s what causes it.” And it’s really the most over-worked and even  platitudinous  analogy in the world. But the  blind men and the elephant  describe the history of dyslexia research.

David Boulton: And the  Sufi key Story .

Dr. Maryanne Wolf: Exactly. If you look and put together even only the names of dyslexia, you’ll see one hypothesis is visual, one is memory, one is verbal, one is auditory. You just go down the list. Well, if you put them all together, or if, as I’m doing this in a book now, I just put those names on the brain and you see a crude cartography of reading. In other words, if it can go wrong it does.   And at one point in the history of dyslexia each has been called the major explanation for dyslexia. Now, the modern history has been punctuated by really different, very technologically sophisticated approaches including neurosciences and also including a lot of wonderful work done in an area called  psycholinguistics .

In the 1970’s there was a great set of  researchers  at  Haskins Lab  at Yale and they were really beginning a whole new approach to understanding dyslexia by looking at the linguistic foundations of reading breakdown. That began one of the single best hypotheses we’ve ever had which is that  the phonological system in language, that is, our ability to hear, to discriminate the smallest sounds called phonemes in words is a fundamental necessity in learning to read and a fundamental source of why some children can’t learn to read.  That began what is called the  phonological deficit hypothesis , which has really been the most successful of explanations to date.

Dr. Maryanne Wolf: Exactly. If you look and put together even only the names of dyslexia, you’ll see one hypothesis is visual, one is memory, one is verbal, one is auditory. You just go down the list. Well, if you put them all together, or if, as I’m doing this in a book now, I just put those names on the brain and you see a crude cartography of reading. In other words, if it can go wrong it does. A nd at one point in the history of dyslexia each has been called the major explanation for dyslexia. Now, the modern history has been punctuated by really different, very technologically sophisticated approaches including neurosciences and also including a lot of wonderful work done in an area called  psycholinguistics .

Rapid Naming, Phonemic Awareness and Speed of Processing:

Dr. Maryanne Wolf: My research began while that hypothesis was in its zenith. At the same time I was equally influenced by neurosciences, which was then called neurological or neuropsychological studies.  We were beginning to see that there was this one very odd phenomenon that children who were going to become dyslexic were always exhibiting, whether they were five or six or seven, and that was a failure to be able to name, it’s so simple, to name things they saw at the same speed that other children could.

Well, naming seems very simple but it’s actually a very difficult set of underlying processes. So, my mentor,  Martha Denckla  and her mentor, a neurologist,  Norman Geschwind , were responsible for really getting the field to think differently, if you will. In the beginning, people said, “Well, naming speed is just another kind of phonology. You need to be able to retrieve a phonological label.” And, for a while that satisfied me. Then, I began to see kids who had no phoneme issues in other areas and yet they had this….

David Boulton: You mean in terms of their ability to articulate themselves on the fly they would demonstrate that they had good phoneme processing but they couldn’t name, which has an association component?

Dr. Maryanne Wolf: Well, that’s really close. I’ll just give you a slightly more technical explanation by saying that when we did all our tests we had explicit measures of these phoneme awareness skills that everybody says were the most important ones and we were seeing that some kids didn’t have that but they had naming speed issues. Well, if they’re both the same, they should have both. And they weren’t exhibiting that and  that began us thinking that there are so many issues beyond the phoneme, which includes the visual system and the retrieval system.  It includes the speed with which the brain puts its systems together.

That was what we got fixated on. That’s not the same as phoneme awareness.  So, we then began to really get in-depth understandings of naming speed and the speed with which not only that you name but the speed with which you read and how that fluency in reading is really important not for speed as speed, but for the brain’s ability to do those easy processes fast enough to allocate time to comprehension.

David Boulton: Right. So, those lower levels are operating efficiently and there’s sufficient bandwidth to be reflective and comprehensive.

Dr. Maryanne Wolf: Perfect. That’s what we were beginning to understand.  So, this tiny little innocuous naming speed test opened up a world of understanding about how important all of these individual processes are that go beyond the phoneme and how important reading fluency is for comprehension.  So, that puts you into, literally, a different ball park from the implication of the phonological deficit, which is that you work on words and phonemes and you get the kids to be able to recognize words and read, decode them and everything else is going to happen naturally. Well, it isn’t that simple.

Double-Deficit Hypothesis and Interventions:

Dr. Maryanne Wolf: My colleague, Pat Bowers, and I, and others, (we weren’t the only two), advanced our hypothesis in the early nineties. Back then we were kind of John the Baptist-types. It was a little hard going there for a while. Then people started thinking,  we know they’re right. We still believe it’s phonology but there is no doubt that there are these kids . Here is where what we call the  double-deficit hypothesis  comes in:  there are these kids who have single deficits in phoneme awareness, single deficits in naming speed without phoneme, and then double-deficit kids who have both . The kids who have both reading fluency and comprehension issues have different reasons for reading failure than the kids who have only phoneme awareness issues.

David Boulton: And therefore, need different interventions to differentiate their way through what’s obstructing their processing.

Dr. Maryanne Wolf: Perfect. That was the whole point. If you believe that everything is phonology then there’s only one intervention needed, if you believe that there could be different reasons for this naming speed then you have to really make sure your intervention is going after all those different things and putting it in the intervention plans.

So, my work in the mid-nineties was funded by  Reid Lyon’s  group at  NICHD . They were funding us to begin to design whole new interventions based on our knowledge of both the reading brain and our knowledge of linguistics; all the things that go into what we do when we try to retrieve words in time, both at the phoneme level, the word level, and the whole connected-text level.

We began an intervention called  RAVE-O , which really emphasizes all that we knew and our evolving knowledge about how the brain processes words. We’ve got now considerable data that support us showing that the kids who have these naming speed and fluency issues are very much better served by this  RAVE-O fluency program . And the kids who have only a phonology issue are well-served by only phonology-oriented programs. So, our data is showing both the efficacy of our work and also the needs that these other kids have that go beyond the conventional phonological programs.

Orthographic Representation:

David Boulton: Excellent. Let’s go into rapid naming for a moment.

Dr. Maryanne Wolf: Sure.

David Boulton: Most children seem to be able to name the things that are around their world relatively easy compared to the challenge of reading.

Dr. Maryanne Wolf: Yes, definitely.

David Boulton: All right. But there’s a difference in reading that comes from the need to be able to name or to deal with letters and their letter sounds and stick them together fast.

Dr. Maryanne Wolf: That’s right.

David Boulton: To bundle them together in…

Dr. Maryanne Wolf: To put all of that together.

David Boulton: Right.

Dr. Maryann Wolf: You’re quite correct. There’s something called  orthographic representation.  We know a lot about phoneme representation but  we don’t know as much about what we’re doing when we rapidly make patterns of letters that are specific to our language versus another.  For example, in German you would see s-c-h-r very frequently. In English, you would never see it. The German child makes an orthographic representation, has a pattern…

David Boulton: As a structural unit.

Dr. Maryanne Wolf: Yes, as a unit. Some children with reading problems don’t have that unit. In English you have units that are specific to our language. Part of RAVE-O  is teaching those units explicitly and trying to make them faster and faster.

David Boulton: So, you’re trying to make sub-unit visual recognition happen fast.

Dr. Maryanne Wolf: Perfect. So, one piece of  RAVE-O  is devoted to making orthographic chunks automatic in the kids. Another piece is devoted to the experience of entertaining different meanings of a word. A lot of our kids are almost penalized because not only are they slower at putting those letters together, they’re slower at retrieving the meanings. So, a lot of them only have one meaning and  they’re missing the point or missing the joke or missing the poem because they don’t have that rapid retrieval of multiple meanings.  Nor did their system in the beginning allow them to.

David Boulton: Are you connecting that to the overall ecology of processing and bandwidth again?

Dr. Maryann Wolf: Well, it is very similar. At the same time we’re teaching orthographic patterns, we’re teaching them the search for multiple meanings of words. We’re teaching them how words can be used differently in syntax by adding on morphemes that are in patterns, -ed, -ing, -s, -ly, or pre-fixes: pre-, re-, all of those things. We want them to see them, but we also want them to know how they change the meaning. So, it’s all in there.

Processing Bottleneck Relative to Rapid Naming Difficulties:

David Boulton: Back to rapid naming for a moment. Have you found where you think the processing bottleneck is relative to difficulties with rapid naming?

Dr. Maryanne Wolf: Great question. I wish. I really wish. We have a lot of very high-falutin’ experiments. Some of them are literally speech-synthesis experiments where we computerize the speech stream and we look at exactly where the differences are. Is it in, like the visual, if you remember those  rapid naming tests , there’s five lines of ten symbols, like ten letters…

David Boulton: Yes.

Dr. Maryanne Wolf: Each of those letters are repeated two times on a line and there’s only five letters being repeated ten times in a group of fifty letters, so it’s not like a big deal of knowledge. But at the end of a line if the visual system is slow you’re going to be able to detect it in the amount of time that a student takes from one line to the next. That would be one logical hypothesis. Another is articulation. So, we would measure articulation. There are all these different hypotheses.

David Boulton: Right. You could use  Keith Rayner’s  work to differentiate what part is visual from what part is stuttering up in the articulatory circuitry.

Dr. Maryanne Wolf: Right. We’re trying to eliminate where we can, and in fact, we are not seeing gross visual differences at the end of the line. We think that there are some differences in some kids, but not all kids.  But what we do see is that the bottleneck is the time in between the articulation of one symbol and the beginning of the processing of the other . So, everything that’s in that gap, not the visual line, not articulation,  but everything that’s in that gap …

David Boulton: Kind of recovery and reset from articulation.

Dr. Maryanne Wolf: Yes, all that that comes before and after disinhibition from the previous stimulus setting it up. Here’s where visual processes can come in, but also hooking it up then to the phonological label. All those kinds of processes that go into access and retrieval and perception, those are in there. The time and the speech stream research shows us that’s where your money is. But that includes many different areas, so then you have to go into each one of those. And here’s where the field is, rightly, reluctant to get that complex. We aren’t reluctant. We are going to pursue it until we feel like we know which child has which area of problem but in fact it means that you have to have a pretty sophisticated set of tests to be able to say, “Well, this child has all of those areas slower.” Or, “This child has only one area that’s slower.”

So, what you have, if you will, it’s like we’ve narrowed it down to a set of processes. We’ve eliminated some things like articulation and gross eye movement. But in that subset we still don’t know which child has which or whether they have all of the above. That’s where I think the field is right now.

Dyslexia and Environmental Influences:

David Boulton: Excellent. Let’s climb back up for a minute. You used with some hesitancy with the word ‘dyslexia’.

Dr. Maryann Wolf: I use it always. But I think the world sometimes has more difficulty. Not my world, but I’m thinking this is more for the public.

David Boulton: Yes, it’s such an over-generalized term. I mean, it’s a term that’s like the Holy Grail, pick your definition and apply it.

Dr. Maryanne Wolf: Yeah.

David Boulton: You also use the term developmental dyslexia. What do we know about neurobiologically innate dyslexia versus dyslexia that is a consequence of the learning environment that children are growing in?

Dr. Maryanne Wolf: Well, that’s one of the interesting things about naming speed. I have to say, by and large, that our kids who have a lot of environmental issues, they do not have differences on naming speed on things like color or numbers, as long as they know their numbers and colors. That’s not the case for all kids. There really are extraordinary differences when you walk into kindergarten. But let’s say in second grade you find the kids who have some of the phoneme awareness issues that can certainly go with environmental causes, but naming speed seems more hardwired. You’ve got some real issues that you’re picking up here that are there forever. In the most compensated dyslexic adult that we’ve studied you still see these differences. And these are some Nobel Prize winners.

David Boulton: Are you familiar with  Hart and Risley’s  research?

Dr. Maryanne Wolf: Oh, gosh. There’s the Hart- Risley  studies on  the thirty million word gap . There’s no question that makes such a huge difference.

David Boulton: I would think that the other side of that is that the greater the number of articulations the children make, the better – the more that you do it, the faster you get at it.

Dr. Maryanne Wolf: Yes. In kindergarten I think you still have that, but let’s say the child’s been in the system for two years. At the level of naming a color or number you really are getting much closer, no matter what your environmental input is, unless it’s just disaster. So, we have this suspicion based on data that if you look at what we, I just hate this word, but the field historically has used terms like garden-variety poor reader or non-discrepant poor reader to describe children whose environment and intellectual quotient on an intelligence test or something like that is commensurate with their reading. Well, I don’t like those terms. But let’s just say environmental reasons for lack of a better word. Those kids on our tests look like every other kid on naming speed in grade two. In grade one, grade kindergarten, they’re a little down but they’re really getting as close as can be by grade two, even grade one. But the kids among them who are environmental and dyslexic, in my terms, their naming speed is going to be depressed down through eighth grade, and now we know into adulthood. It is a fundamental difference.

Percentage of Population with Innate Dyslexia:

David Boulton: Okay. Can you tell us what percentage of the population has innate dyslexia?

David Boulton: An overlay if possible. We’ve got a consensus between  Reid Lyon ,  James Wendorf  and  Sally Shaywitz , and others that seem to say that we’re talking about five or six percent that have some kind of innate or neurobiological, structural level difficulty. And that for the larger population of struggling readers, the primary difference for them is the learning environments they’ve been in and the kind of instruction they’re receiving.

Dr. Maryanne Wolf: You mean the balance of the percentages that people have would be more environmental. Is that what you mean?

David Boulton: I mean,  Reid Lyon’s  says ninety-five percent of the kids that have trouble with reading are instructional casualties.

Dr. Maryanne Wolf: Well, I really respect Reid so much. It’s just that sometimes he may exaggerate. Let’s just say that. And I love his exaggerations because they always help us and sometimes they help us by having to clarify things he’s said.

David Boulton: Or  James Wendorf , to whatever degree he’s independent, says that the  National Center for Learning Disabilities  research on the amount of innate neuro-biological learning disabilities happens to be at the same number.

Dr. Maryanne Wolf: Yes, well, I think that most people would say between five and ten percent. Closer to five, but between five and ten percent of a given population would have some kind of neuro-biological foundation for the dyslexia. We know increasingly about the genetic components. We’re not there yet, but there’s such rich genetic knowledge going on. I think in any given place you’ve really got a lot of different factors going on and environmental is a big word that I would prefer to  parse .

David Boulton: Yes, I agree. I totally agree.

Bilingual, ELL and African American Vernacular English Learners:

Dr. Maryanne Wolf: So, the  parsing  that I would do includes what are the children who are bi-lingual or English-language learners? What effect does that have? This is an issue that a social linguist colleague and I are working on, his name is  Chip Gidney  and he’d be a wonderful person for you to interview. He’s a person here at Tufts who is working on African American children who speak African American Vernacular English. You know we have Standard English as a dialect and Vernacular English as another dialect. Well, what are some of the issues that you have when the two dialects are so close and yet you are learning to read in one of those?

David Boulton: Which has vocabulary and nuances that are quite different.

Dr. Maryanne Wolf: Yes, but also the phoneme level. So, we’re really looking at some of the phonological difficulties of some of the kids who speak African American Vernacular English and we’re hoping like heck that some of that research will point the way to understanding what’s going on with that particular percentage. Then you have your children of poverty who, like your  Todd Risley  study, have not had the same deck of cards that the other kids have. They’re walking into kindergarten totally different linguistically.

David Boulton: Well, my understanding of  Risley’s  work was that it really came down to the amount of talking going on.

David Boulton: And that it didn’t matter whether it was somebody that was rich and taciturn or poor and talkative, that the language exposure had two influences. One, in the field of linguistic exercise, developing vocabulary, developing processing speed, developing phonemic awareness differentiation, all that…

Dr. Maryanne Wolf: Yep.

David Boulton: And at the same time that the greater number of words tended to be of a more positive affect.

Dr. Maryanne Wolf: It’s amazing what all that work means. And  Catherine Snow  and  David Dickinson  and others also have shown that dinner talk is important. How we talk, how much we speak, what do we do with our language around children? This is so important for our pre-school teachers to know. I had one wonderful dissertation on that and there are so many things that we should be doing that we can do easily but that are not happening and that’s one of them: the development of language in our children.

I think the pediatricians can play a role here, too. My hope has always been, and some people are doing this, that when you have your well visits you also have a little set of books or other things that the mother or father or caretaker can take home and use with their children at each juncture of each year, those first five years. So, that’s a really important potential asset for our society that we don’t use enough.

David Boulton: Right. There’s a lot of different programs that are moving in that direction.

Dr. Maryanne Wolf: Yes, and that’s great. Everything we can do.

Percentage of Population with Rapid Naming Difficulty:

David Boulton: Let’s go back to rapid naming. What percentage of the population do you think has trouble with that?

Dr. Maryanne Wolf: Well, we’re doing pie charts, if you will, of all the kids who have reading disabilities. We are finding that in that five to ten percent who’ve been identified as really having hard-core impaired reading issues, one, (now it’s tricky to follow, but it’s actually simple), one large portion, fifty percent approximately, has what we call double-deficit or issues both in phoneme awareness and naming speed. So, hold onto that.

David Boulton: Good.

Dr. Maryanne Wolf: So, the classic dyslexic has both. But then you can also have children who have only phoneme awareness issues and not all the accoutrements of the naming speed, so that’s about twenty-five percent, or let’s say twenty-ish.

Another twenty-ish have only naming speed issues. They go on to have fluency and comprehension difficulties, of course, but for other reasons than the phoneme awareness single-deficit. Now here’s the tricky part. If you add the two, the double with the single, you’ll see that you have approximately seventy to seventy-five percent of the population of these kids having phoneme awareness and the same is true for naming speed.

David Boulton: I see.

Dr. Maryanne Wolf: So, that’s where it gets a little tricky.

David Boulton: I understand.

Dr. Maryanne Wolf: Then if you add my numbers up, you’ll see there’s a missing ten percent and that ten percent are other factors and we don’t have them understood yet. So, by no means do I want anyone to think that naming speed and phoneme awareness are the only things that can predict or that they’re the only patterns of deficit. If it were that simple we wouldn’t have this rich heterogeneity out in front of us.

Status Quo is Not Working:

David Boulton: Right. I ask this to just kind of get a baseline for the next stage of the conversation, which is, though I’m touched and moved and feel great compassion for the five to ten percent in this range that are having this problem, I’m also, and perhaps to an even greater degree, concerned about the larger extent of the population experiencing reading-related difficulties, which are outside the strict boundaries here.

David Boulton: And when we talk about eighty-seven percent of African-American fourth-grade children reading below fourth grade…

Dr. Maryanne Wolf: That’s right, fourth grade.

David Boulton:  There are emotional consequences and there are cognitive consequences. So in that sense, this learning to read process is ‘learning disabling’ to a vast dimension of our population.

David Boulton: And that’s my main concern.

Dr. Maryanne Wolf: There are several things that we need out there. We need programs that are developing these language skills from pre-school on. That’s first. Second, in kindergarten we need to have a lot of work done on phoneme awareness in the school language, which is Standard American English. This has got to be because the kids have a dialect that’s too close. This is tough. It makes the English learning even tougher.

David Boulton: Right. Have you encountered Jean van Keulen’s work?

Dr. Maryanne Wolf: No. I haven’t.

David Boulton: This is somebody who’s studied differences in the black community looking at the street language and nuances of social talk versus the vocabulary level that’s necessary for reading to take off in school. She’s in San Francisco, was the Director of San Francisco’s Head Start, and also a Professor at the University of San Francisco. [She wrote a book called:  Speech, Language, Learning, and the African American Child ]

Dr. Maryanne Wolf: That’s a good lead because my colleague  Chip Gidney  and I, especially Chip – this has got to be one of the next big directions in this work.

The paucity of work in this area is an outrage.  The  NICHD  has supported this direction in our research. We have fifty percent of our sample as African American kids so that that can facilitate us learning about this. We’re doing transcripts and tapes and one of our next directions is to get a grant to study this in far more depth and really understand what are some of the treatment differences with the kids in the different programs that we are using with them, just in terms of kids; not kids who are African American but kids who are African American and speak Vernacular English versus those who don’t.

We’ve controlled for everything, SES [Socio-economic status], IQ, etc., so this kind of direction of study will, I think, help us go some distance. I want to say one other thing.  Jeanne Chall , the great reading researcher at Harvard, who was also one of my advisors, right before she died she called me in and knew of this direction that  Chip Gidney  and I are trying to take and said, “This is the single most important problem in reading research today and not enough people know it.”

So, if you can do, in your work, David, something to highlight or spotlight how this eighty-seven percent of kids is struggling under our noses and how the status quo is not working.

Reading is Not Natural:

David Boulton: That’s my greater concern, as I said and it concerns me at a couple levels that we can somewhat start to get to because I’m interested in cycling back to the issue of timing and how that relates to all of this. We’re talking about sixty-four percent of twelfth graders below proficient in the country across the board, all races. There’s one conversation which is  the neurological construction of this virtual reality experience we call reading and the unnatural to our organism, artificial challenges that are involved in getting the brain to assemble this.

Dr. Maryanne Wolf:  New circuits. The whole thing is new circuits are required for the brain. It is not natural. It is an unnatural, novel set of connections.

David Boulton: Right.  There is artificial infrastructure that has to develop in the brain to do this.

Dr. Maryanne Wolf: That’s right. But we are poised to be able to do that. That’s one of the wonderful aspects of our brain. But some brains have it easier than others.

David Boulton: Yes, and that comes back to there’s so much of that variation which you might say is neuro-biological, and then there’s so much of that variation that has to do with how the environment has exercised the fundamental individual layers that have to congeal and work together at this next stage.

Dr. Maryanne Wolf: You’ve got it.

Engagement is Imperative and Affect is Key:

David Boulton: Relative to that, one of the missing pieces, and every neuroscientist I’ve talked to agrees with how important it is but very few people have gotten any traction or handle on, is  the role of affect in and upon cognition at the high-frequency assembly levels that we’re talking about.

Dr. Maryanne Wolf: Yeah. There’s no question that that’s one… I will be so bold as to say that is the secret weapon of my program.

David Boulton: Really.

Dr. Maryanne Wolf: Absolutely. The Big E in RAVE-O is for Engagement, engagement in language. It is imperative. If you don’t have it, if the teacher doesn’t engage… And it’s engagement not only of the learner, I have to say, it’s engagement by the teacher as well. We want to make that really as clear as we can. You need an engaged teacher and you need an engaged learner  because that affect component, whether you call it motivation, engagement, I don’t care what you call it, it can make or break learning of those increments that are necessary.

David Boulton:  It’s what is creating the ‘span’ of attention.

Dr. Maryanne Wolf: That’s exactly right. And we have to hook them.

David Boulton: Well, it goes both ways. I mean, clearly cognition is doing what affective interest driving.

Dr. Maryanne Wolf: That’s right. Look at the brain, how it’s structured from the start – what is happening even in the wiring of a baby in terms of circuits? The  amygdala  is one of the first areas that is being wired and is learning to work. Before the  hippocampus , what is the  amygdala  doing? It’s involved in emotion and emotion plus memory.

And so you have even from the very beginning the key importance of affect. In this respect Freud was right.

David Boulton: Did you ever encounter  Silvan Tomkins ’  Affect Imagery and Consciousness ?

Dr. Maryanne Wolf: No.

David Boulton: He developed a model of affect and its relationship to cognition that I find an important one. He not only speaks to affect as this biological pre-cursor to emotion.

Dr. Maryanne Wolf: Well, that’s certainly…I agree with that.

David Boulton: But also speaks to the effect that affect switching has on cognitive entrainment, or at least that’s my interpretation.

Dr. Maryanne Wolf: That’s interesting. I don’t know the work though. I’ll have to take a look. There’s another person that you might be interested in who is equally passionate about that and that is  David Rose . He and I went to Harvard together years ago and were two of the few people who were trying to put neuroscience together back then. It’s so curious, he’s now the head of a huge company called  CAST  here in Massachusetts and he’s really modeling in his computerized educational offerings cognition, plus affect, plus obviously his knowledge of neurology. He’s always talking about the combination.

He and I really believe in engaged learning as a key to cognition.

David Boulton: Yes. Some of my early work is what I used to call the  cycle of engagement , and in particular, what causes the erosion of attention that breaks down engagement.

Dr. Maryanne Wolf: Well, I should be reading that!

David Boulton: The interesting thing to me is that if you go to affect theory, what it says is that as we become frustrated in relation to our interest-intention, our affect system tends to cause a shift in affect from interest into shame.

Dr. Maryanne Wolf: Oh, wow.

David Boulton:  And that as soon as the interest starts to shift, two things happen. Number one, the affective power to sustain the entrainment of cognition on the task has been dissipated, and so, two, there’s a bandwidth division because now we’re starting to become self-conscious. And so that is stuttering up reading.

Dr. Maryanne Wolf: Wow, and if you look at our kids you see that on their faces.

David Boulton: Exactly. So, one of the things I’m really interested in is how do we get a facial view? How do we monitor what’s happening on the inside, the outside, and then correlate all of that to the kinds of ambiguity challenges that children are experiencing in the nested levels of ambiguity that are involved in reading?

Dr. Maryanne Wolf: Well, that’s a fancier way of saying what we’re trying to do when we teach these RAVE-O lessons because we have increments that change fairly rapidly to both maintain interest and engagement, but most importantly allow success.

So, we get success and engagement together. That’s the reciprocal. Then we switch to the next, and then the next, and then the next, so that…

David Boulton: You’re ratcheting up and staying inside a threshold of enough success feeding back.

Dr. Maryanne Wolf: Yes. That’s part of what we’re doing.

Psychological Aversions to Reading – Shame is Our Enemy:

David Boulton: That’s excellent . It’s really clear as we go around and talk to teenagers and adults of all ages and ranges about their difficulties with reading, that they have developed a psychological level aversion to reading.

Dr. Maryanne Wolf:  Oh, absolutely. Who wouldn’t?

David Boulton:  Of course. It’s a perfectly natural thing. But if we take that and break that down into the more micro-time processes involved in the assembly down below, you could ask: what happens if we develop a pre-conscious shame-aversion to the feeling of confusion involved in learning to read?

Dr. Maryanne Wolf:  You know I haven’t thought in these terms. But as you say them there is no question that’s our enemy. Shame.  And it happens so soon in the process because they know who the Bluebirds are and the Sparrows. Everyone knows who is who.

Dr. Maryanne Wolf: And they know that they should be able to do that and they think that if they can’t that they’re dumb, ergo shame and the whole, almost John Steinbeckian-cycle, the rejected child kicks the cat, blah, blah, blah.

David Boulton: We call it the downward spiral of shame.

Dr. Maryanne Wolf: Yes, that’s it.

David Boulton: And the most important thing is not just the surface observation we can make of people that are struggling here, but the high-frequency cognitive implications because as people become more and more guarded about the shame, the threshold with which they go to shame is dropping and dropping and dropping.

Dr. Maryanne Wolf: Yes. Boy, is that true. Well, you’ve got it. So, you don’t need me.

David Boulton: Yes, I do.

Dr. Maryanne Wolf: You definitely don’t!

Timing is Critical:

David Boulton: Let’s go to timing. One of the things that I’m particularly interested in drawing out is that when we look at all these different time-precarious dimensions of the assembly of reading, we’ve got the visual tracking stuff that  Keith Rayner’s  work is showing.

Dr. Maryanne Wolf:  We’ve got it from every step of the way: attention, vision, orthography, phonology, semantic retrieval, articulation…

David Boulton:  And all of these things have to co-implicate …

Dr. Maryanne Wolf: Yes.

David Boulton:  With a certain periodicity of refreshing the next cycle in attention or the thing breaks down and crashes.

Dr. Maryanne Wolf: That’s right.  So, timing can be a function of one piece of the circuit or it can be a cascading effect of that on the rest…

David Boulton: Or a weak cycle frequency.

Dr. Maryanne Wolf: Exactly. And what causes that? I don’t know but I hope I do before I die.

David Boulton: Yeah, you and me both.

Dr. Maryanne Wolf: There is no question that in some of our double-deficit kids that are so slow, they are slow in, I’ll bet if I had the ability to really trace it, I’ll bet they were slow in almost each component, if not each component. Now, there’s another person that you may want to talk to. Her name is  Zvia Breznitz  from Haifa, Israel who is studying through ERPs [event-related brain potentials] the differences between visual and auditory processing rates and she’s finding, if you will, a mismatch; that there’s a discrepancy between the way they should work together in time and the way they…

David Boulton: The synchronization. My greatest interest at this level is the synchromesh that’s happening between all these different planes that have to co-implicate and it’s correspondence to working out the artificial forms of ambiguity in this code.

Dr. Maryanne Wolf: I’m so intrigued by that. It’s not that I know as much as  Zvia , but  Zvia  is really pursuing that and you should at least email her. Also,  Chuck Perfetti  was thinking along similar lines at one point. Though, its  Zvia  who’s actually studied it and seen it in the evoke potential work.

David Boulton: Fantastic. I’ll follow up with her, thank you. It’s been a delight to talk with you.

Stewarding the Health of Learning:

Dr. Maryanne Wolf: For me, too. Now, what is your background because you know so much?

David Boulton: I’m a learner. My main thing is that I’ve been on the track of what I call  stewarding the health of our children’s learning . I think that’s the central organizing principle that can unite a lot of different dimensions of work, in  that I really believe that the health of our children’s learning is the most important thing for us to bring forth.

Dr. Maryanne Wolf: I couldn’t agree more.

David Boulton: And so for the past twenty years I’ve been looking at what is it that’s obstructing, what is it that is the fundamental…

Dr. Maryanne Wolf: Impediment.

David Boulton: Impediment to the health of their learning. Not what they’re learning about, in particular. That’s how I came to reading late, when my own children had reading troubles. And the more that I’ve understood the dimensions and the history and the code and what happened to English in the fifteenth century, the economic arguments of  Coleman , and the  Hart-Risley  work and what have you, the more I’m convinced that we need to have a complete social reframe in how we think about this.

Dr. Maryanne Wolf: I’m all for it. I got in that way.

David Boulton: Well, that’s where we’re together. That’s what our mission is.

Dr. Maryanne Wolf: I can’t wish you more luck on it.

David Boulton: Thank you so much.

Special thanks to volunteer Carol Covin for transcribing this interview.

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Dyslexia and the double deficit hypothesis

• Part I Basic Research: Understanding Reading Disability
• Published: December 1997
• Volume 47 , pages 69–87, ( 1997 )

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• Nathlie A. Badian 1 , 2  

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The double deficit hypothesis (Bowers and Wolf 1993) maintains that children with both phonological and naming-speed deficits will be poorer readers than children with just one or neither of these deficits. In the present study, we drew on this hypothesis to help understand why some children have a serious reading impairment. In addition, by adding an orthographic factor, we extended it to a triple deficit hypothesis. Participants were 90 children aged 6 to 10 years. Dyslexic children, whose reading was low for age and for expected level, garden-variety poor readers, reading-level matched younger children, and low verbal IQ good readers, were compared. The dyslexic group was significantly lower then the garden-variety poor readers and the low verbal IQ good readers on most measures, and lower than the younger group on phonological measures. Findings support the double deficit hypothesis of Bowers and Wolf, and also the triple deficit hypothesis. Most of the poorest readers, nearly all of whom qualified as dyslexic, had a double or triple deficit in phonological, naming-speed, and orthographic skills. Conclusions were that dyslexia results from an overload of deficits in skills related to reading, for which the child cannot easily compensate.

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Wolf, M. In press. A provisional, integrative account of phonological and naming-speed deficits in dyslexia: Implications for diagnosis and intervention. In Cognitive and Linguistic Foundations of Reading Acquisition: Implications for Intervention Research , ed. B. Blachman. Hillsdale, NJ: Lawrence Erlbaum Associates.

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Nathlie A. Badian

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Badian, N.A. Dyslexia and the double deficit hypothesis. Ann. of Dyslexia 47 , 69–87 (1997). https://doi.org/10.1007/s11881-997-0021-y

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Definition of hypothesis

Did you know.

The Difference Between Hypothesis and Theory

A hypothesis is an assumption, an idea that is proposed for the sake of argument so that it can be tested to see if it might be true.

In the scientific method, the hypothesis is constructed before any applicable research has been done, apart from a basic background review. You ask a question, read up on what has been studied before, and then form a hypothesis.

A hypothesis is usually tentative; it's an assumption or suggestion made strictly for the objective of being tested.

A theory , in contrast, is a principle that has been formed as an attempt to explain things that have already been substantiated by data. It is used in the names of a number of principles accepted in the scientific community, such as the Big Bang Theory . Because of the rigors of experimentation and control, it is understood to be more likely to be true than a hypothesis is.

In non-scientific use, however, hypothesis and theory are often used interchangeably to mean simply an idea, speculation, or hunch, with theory being the more common choice.

Since this casual use does away with the distinctions upheld by the scientific community, hypothesis and theory are prone to being wrongly interpreted even when they are encountered in scientific contexts—or at least, contexts that allude to scientific study without making the critical distinction that scientists employ when weighing hypotheses and theories.

The most common occurrence is when theory is interpreted—and sometimes even gleefully seized upon—to mean something having less truth value than other scientific principles. (The word law applies to principles so firmly established that they are almost never questioned, such as the law of gravity.)

This mistake is one of projection: since we use theory in general to mean something lightly speculated, then it's implied that scientists must be talking about the same level of uncertainty when they use theory to refer to their well-tested and reasoned principles.

The distinction has come to the forefront particularly on occasions when the content of science curricula in schools has been challenged—notably, when a school board in Georgia put stickers on textbooks stating that evolution was "a theory, not a fact, regarding the origin of living things." As Kenneth R. Miller, a cell biologist at Brown University, has said , a theory "doesn’t mean a hunch or a guess. A theory is a system of explanations that ties together a whole bunch of facts. It not only explains those facts, but predicts what you ought to find from other observations and experiments.”

While theories are never completely infallible, they form the basis of scientific reasoning because, as Miller said "to the best of our ability, we’ve tested them, and they’ve held up."

• proposition
• supposition

hypothesis , theory , law mean a formula derived by inference from scientific data that explains a principle operating in nature.

hypothesis implies insufficient evidence to provide more than a tentative explanation.

theory implies a greater range of evidence and greater likelihood of truth.

law implies a statement of order and relation in nature that has been found to be invariable under the same conditions.

Examples of hypothesis in a Sentence

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'hypothesis.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

Greek, from hypotithenai to put under, suppose, from hypo- + tithenai to put — more at do

1641, in the meaning defined at sense 1a

Phrases Containing hypothesis

• counter - hypothesis
• nebular hypothesis
• null hypothesis
• planetesimal hypothesis
• Whorfian hypothesis

Articles Related to hypothesis

This is the Difference Between a...

This is the Difference Between a Hypothesis and a Theory

In scientific reasoning, they're two completely different things

Dictionary Entries Near hypothesis

hypothermia

hypothesize

Cite this Entry

“Hypothesis.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/hypothesis. Accessed 17 May. 2024.

Kids Definition

Kids definition of hypothesis, medical definition, medical definition of hypothesis, more from merriam-webster on hypothesis.

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Britannica.com: Encyclopedia article about hypothesis

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What is the national deficit?

A deficit occurs when the federal government’s spending exceeds its revenues. The federal government has spent $ more than it has collected in fiscal year (FY) , resulting in a national deficit.

Fiscal year-to-date (since October ) total updated monthly using the Monthly Treasury Statement (MTS) dataset.

Compared to the national deficit of $ for the same period last year ( Oct -1 - Invalid Date ), our national deficit has by $ .

Key Takeaways

A budget deficit occurs when the money going out exceeds the money coming in for a given period. On this page, we calculate the deficit by the government’s fiscal year.

In the last 50 years, the federal government budget has run a surplus five times, most recently in 2001.

To pay for government programs while operating under a deficit, the federal government borrows money by selling U.S. Treasury bonds, bills, and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to investors who purchased these securities.

Understanding the National Deficit

A budget deficit occurs when money going out ( spending ) exceeds money coming in ( revenue ) during a defined period. In FY 0 , the federal government spent $ trillion and collected $ trillion in revenue, resulting in a deficit. The amount by which spending exceeds revenue, $ trillion in 0 , is referred to as deficit spending.

The opposite of a budget deficit is a budget surplus , which occurs when the federal government collects more money than it spends. The U.S. has experienced a fiscal year-end budget surplus five times in the last 50 years, most recently in 2001.

When there is no deficit or surplus due to spending and revenue being equal, the budget is considered balanced .

The terms “national deficit”, “federal deficit” and “U.S. deficit” have the same meaning and are used interchangeably by the U.S. Treasury.

• Balanced Budget

A surplus occurs when the government collects more money than it spends.

The last surplus for the federal government was in 2001.

The chart below shows a breakdown of how the U.S. deficit compares to the corresponding revenue and spending.

The Causes of Deficits and Surpluses

The size of the national deficit or surplus is largely influenced by the health of the economy and spending and revenue policies set by Congress and the President. The health of the economy is often evaluated by the growth in the country’s gross domestic product (GDP) , fluctuations in the nation’s employment rates, and the stability of prices. Simply put, when the country’s people and businesses are making less money, the amount collected by the government also decreases. Similarly, when the economy is doing well and people and businesses are earning more money, the government collects more. On the spending side, the increase or decrease of spending also impacts the budget, creating deficits or surpluses.

Legislation increasing spending on Social Security, health care, and defense that outpace revenue can increase the deficit. While revenue increased during the COVID-19 pandemic, from approximately $3.5 trillion in 2019 to $4 trillion in 2021, increased government spending related to widespread unemployment and health care caused spikes in the deficit. Visit USAspending.gov to learn more about the federal response to COVID-19 .

The Difference Between the National Deficit and the National Debt

The terms deficit and debt are frequently used when discussing the nation’s finances and are often confused with one another.

To pay for a deficit, the federal government borrows money by selling Treasury bonds , bills , and other securities. The national debt is the accumulation of this borrowing along with associated interest owed to the investors who purchased these securities. As the federal government experiences reoccurring deficits, which are common, the national debt grows. To learn more about the national debt, visit the National Debt Explainer .

The visualization below shows how deficits from previous years are added to the current year’s deficit to equal total debt. This illustration is simplified to show how debt and deficit are different. In reality, the U.S. government must pay interest on the national debt. This interest expense increases spending each year, increasing spending (and thus, deficits) as the debt grows.

U.S. Deficit by Year

Since 2001, the federal government’s budget has run a deficit each year. Starting in 2016, increases in spending on Social Security, health care, and interest on federal debt have outpaced the growth of federal revenue .

From FY 2019 to FY 2021, federal spending increased by about 50 percent in response to the COVID-19 pandemic .

Please note: This data visual only includes completed fiscal years.

Learn More about the Deficit

For more information about the national deficit, please explore more of Fiscal Data and check out the extensive resources listed below.

See the datasets behind the national deficit

• Date Range 03/31/2015 - 04/30/2024
• Last Updated 05/16/2024
• Release Frequency Monthly
• 14 Data Tables
• Date Range 09/30/1998 - 04/30/2024
• Last Updated 05/10/2024
• 3 Data Tables

• Date Range 09/30/1995 - 09/30/2023
• Last Updated 02/20/2024
• Release Frequency Annually
• 8 Data Tables
• Date Range 10/03/2005 - 05/15/2024
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• 9 Data Tables

The double-deficit hypothesis: a comprehensive analysis of the evidence

Affiliation.

• 1 Department of Educational Psychology, University of British Columbia, Vancouver.
• PMID: 16512081
• DOI: 10.1177/00222194060390010401

The double-deficit hypothesis of developmental dyslexia proposes that deficits in phonological processing and naming speed represent independent sources of dysfunction in dyslexia. The present article is a review of the evidence for the double-deficit hypothesis, including a discussion of recent findings related to the hypothesis. Studies in this area have been characterized by variability in methodology--how dyslexia is defined and identified, and how dyslexia subtypes are classified. Such variability sets limitations on the extent to which conclusions may be drawn with respect to the double-deficit hypothesis. Furthermore, the literature is complicated by the persistent finding that measures of phonological processing and naming speed are significantly correlated, resulting in a statistical artifact that makes it difficult to disentangle the influence of naming speed from that of phonological processing. Longitudinal and intervention studies of the double-deficit hypothesis are needed to accumulate evidence that investigates a naming speed deficit that is independent of a phonological deficit for readers with dyslexia. The existing evidence does not support a persistent core deficit in naming speed for readers with dyslexia.

Publication types

• Research Support, Non-U.S. Gov't
• Dyslexia / etiology*
• Psychological Theory*

The federal budget deficit explained in four graphs and 400 words

Analysis The federal budget deficit explained in four graphs and 400 words

The government has just delivered the first back-to-back budget surpluses in nearly two decades.

But, as quickly as they arrived, those surpluses are forecast to disappear, from next financial year for as far as Treasury's estimates go, to the middle of next decade.

This graph shows the picture.

Last financial year's $22.1 billion surplus and this year's $9.3 billion surplus are mainly due to "cyclical" factors.

Quite simply, that means the economy has been performing above average with fewer people unemployed and more people in work, higher commodity prices and bigger business profits — all those things mean higher tax receipts and lower welfare payments.

Due to income tax bracket creep, high inflation also tends to boost government receipts more than it lifts expenses.

It also explains why the surplus will disappear — it's because the federal government has a "structural deficit".

That is, when the economy performs at more average levels, Treasury expects the government to spend more than it raises in revenue.

What is it spending money on?

Rising interest rates have hurt government finances, while Treasury says "Australia faces long‑term fiscal challenges due to climate change, an ageing population, regional security and rising demand for care and support services."

But, as you can see from this graph, a deficit is situation normal for the federal government.

And it's generally not down to economic bad luck.

As you might have noticed in the first graph, we've had just a few years of structural surplus in recent budget history — 2020-21, 2021-22 and 2022-23 — with a couple years of structural balance in 2017-18 and 2018-19.

But, even over that period, the groundwork had been laid for a return to structural deficit, with the tax cut plan passed by the Morrison government in July 2019.

The $20 billion-plus hit to revenues from the amended version of Stage 3 of those tax cuts accounts for at least two-thirds of next financial year's forecast $28.3 billion deficit.

Should we be worried?

On alert but not alarmed is probably the fair answer.

Treasury's forecasts have the structural deficit shrinking over time to virtually disappear by 2034-35.

But that relies largely on bracket creep to lift the tax take from 25.2 to 26.2 per cent of GDP over the next decade.

At the same time, it assumes government spending rises only slightly from 26 to 26.3 per cent of GDP.

If correct, it would see total federal government debt peak at 35.2 per cent of GDP in June 2027, before declining to 30.2 per cent by June 2035 as economic growth outpaces extra borrowing.

Compared to similar advanced economies, Australia would remain right near the bottom of the pile for government debt levels.

Which is just as well, because our private debt levels remain among the world's highest.

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Suspended solicitor’s explanation over client account deficit makes situation ‘even worse’, says High Court president

Ronan o’brien has made ‘very serious admissions’ effectively of dishonesty, says mr justice david barniville.

In the High Court, Mr Justice David Barniville said he was 'not at all satisfied' he has been given a full account of what happened to some of the client funds held by Ronan O’Brien & Co Solicitors or the source of funds he used to plug deficits

Explanations given by a suspended solicitor regarding deficits in client funds has made his position “even worse” and left many unanswered questions, the High Court president has said.

Mr Justice David Barniville this week made orders enabling the Law Society to take control of the client accounts, books and records of Ronan O’Brien & Co Solicitors, with a practice on Church Street, Cavan.

Ronan O’Brien has made “very serious admissions” effectively of dishonesty and now admits to all of the findings of a Law Society committee’s findings against him, the judge said.

“Perhaps one of the worst aspects” of the case is that during the investigation Mr O’Brien gave explanations to the Law Society for the whereabouts of money and in doing so implicated a third-party solicitor firm that was “wholly innocent”, Mr Justice Barniville added.

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The judge was “not at all satisfied” he has been given a full account of what happened to some of the client funds held by the O’Brien firm or the source of funds he used to plug deficits.

Last week he suspended Mr O’Brien from practising after hearing a Law Society committee found he had been dishonest in his practice as a solicitor and there was an apparent “significant” deficit in a client account.

The Law Society initiated its investigation last February after the Legal Services Regulatory Authority notified it of a complaint from a couple over €300,000 held by the firm as part of the sale of their property in Virginia, Co Cavan.

They alleged these sale proceeds had been with the office since July 2021 and had not been remitted to Start Mortgages, a financial institution that held a cross charge over another property they owned in Dublin, the court heard.

Law Society investigating accountant Stephanie Furey found a €38,482 balance on the couple’s client account as of January. An apparently unauthorised payment of €239,500 of the €300,000 sale proceeds was transferred from the client account to another solicitor firm in November 2022, she said in an affidavit.

Mr O’Brien said this was a part payment to Start Mortgages. However, he provided no supporting documentation to verify that this solicitor firm was acting for the financial institution and the file disclosed that Start Mortgages had provided its own bank details to facilitate an electronic transfer directly, added Ms Furey.

She found an overall apparent deficit of €245,650 in client funds held by the O’Brien company as of January 31st, 2024. She noted a €6,150 shortfall on a probate matter following an apparent payment from a client account to a litigation client last September.

Her investigation also uncovered a €105,000 transfer from a client account to the firm’s office account but this appeared on the client ledger as a payment to the client. The money had been held since December 2022 as part of a client’s acquisition of a property at Connelly Street, Cavan, from a receiver, she said.

Asked if the property acquisition was complete and to explain why the sum moved to the office account, Mr O’Brien allegedly said the purchase had not concluded and the funds were being held on the client’s behalf in escrow as part of a larger settlement with the receiver.

Ms Furey said Mr O’Brien did not provide vouching documentation for this explanation.

At an emergency meeting of the Law Society’s disciplinary committee, Mr O’Brien’s solicitor acknowledged that the €239,500 should not have been paid from the couple’s account to the other solicitor firm. Mr O’Brien’s representative confirmed the transfer had been made in respect of another client’s properties.

The committee was told Mr O’Brien claimed he paid €239,500 to Start Mortgages last month with money from the office account, which was “personal funds”.

This week, Mr Justice Barniville acceded to a request from barrister Eoghan O’Sullivan, for the Law Society, for the regulatory body to be allowed to take control of the records and accounts of the O’Brien company.

Mr O’Sullivan said Mr O’Brien has apologised for certain matters and for the first time accepts the couple’s funds were “misappropriated”. He said his client has received “scant information” regarding how Mr O’Brien claims to have funded the deficit reduction.

He added: “The society has no confidence in Mr O’Brien at all arising from various untruths that have been told.”

Jonathan Kilfeather SC, for Mr O’Brien, said the solicitor had consented to an order suspending him from practise. He argued it was unnecessary for the organisation to take control of the office accounts and records given these were now being handled by independent local solicitors who have undertaken to report anything untoward.

The judge was satisfied the Law Society should be put in charge of the matters. He said this was necessary to ensure client money is protected.

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Astronomers say we may live at the center of a cosmic void 2 billion light-years wide that defies the laws of cosmology

• Evidence suggests that our galaxy is inside a cosmic void, a vast expanse of relatively empty space.
• But according to our laws of cosmology, this void shouldn't exist.
• New research says such a void may explain unusual behavior in nearby galaxies.  

Our home galaxy, the Milky Way , is just one of billions in our universe. So, in the grand scheme of things, we're not so special. But zoom in to our local cosmic neighborhood, and that story begins to change.

A growing list of observations suggests we live in the crosshairs of a giant cosmic void — the largest ever observed. Astronomers first suggested such a void in 2013 and evidence for its existence has been stacking up ever since.

But the kicker is that this giant void shouldn't exist in the first place. If it does exist, that means something is probably amiss with our understanding of the cosmos.

We may live in a void that shouldn't exist

According to a fundamental theory of cosmology named the cosmological principle , matter in the universe should be uniformly distributed on very large scales.

The reason this matters is that by assuming uniformity, scientists can apply the same laws of physics to nearby objects as objects at the fringes of the early universe. In other words, everything operates under the same universal laws .

It's a simple, straightforward approach to studying and understanding our universe, and it suggests that voids — such as the one we may live in — shouldn't exist.

But multiple observations over the past decade suggest that matter in the universe may clump into regions of high and low densities , meaning it may not be so uniform after all.

"By now it's pretty clear that we are in a significant underdensity," Indranil Banik, a postdoctoral research fellow at the University of St. Andrews, told Business Insider.

"There's a few people that are still opposed to it to a limited extent. For example, some people have correctly argued that such a void shouldn't exist in the standard model, which is true. That unfortunately doesn't prove it's not there," he added.

Banik coauthored a paper published late last year in the peer-reviewed journal Monthly Notices of the Royal Astronomical Society that suggests we may live near the center of this void — named the KBC void — that's about 2 billion light-years wide. Wide enough to fit 20,000 Milky Way galaxies in a row stretching from one end to the other.

The KBC void defies the laws of cosmology

The KBC void isn't totally empty. It can't be, because we live in it. But, if Banik and his colleagues' calculations are correct, the void would be about 20% emptier than space outside its border.

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That may not seem like a big deficit, but it's enough to cause some confusing behavior in our local cosmic neighborhood, according to the recent study.

In particular, nearby stars and galaxies are moving away from us faster than they should be. Cosmologists have a value, named the Hubble constant , which they use to help describe how fast the universe's expansion is accelerating.

The Hubble constant should be the same value wherever you look, whether it's close by or very far away. The problem is that the galaxies and stars in our local neighborhood appear to be moving away from us faster than the Hubble constant predicts, essentially defying our law of cosmology that describes how the universe grows and evolves.

Astronomers can't agree on what's causing this discrepancy in the Hubble constant, and the contention has become known as the Hubble tension .

Banik and his colleagues suggest the void could be a solution because high-density regions with stronger gravity outside the void could be pulling galaxies and stars toward them.

Banik argues that these outflows could explain why cosmologists have calculated a higher value for the Hubble constant when looking at nearby objects. Stuff moves faster in the void, flying out of our empty region toward crowded outer space.

Mystery solved? Not yet.

If the void does exist, as evidence suggests, that may mean we need to revise some of the physical laws we use to describe the cosmos. After all, Banik's theory would explain why the Hubble constant is higher in our local cosmic region.

"The hypothesis that a local void could explain the Hubble tension by inducing significant outflows seems sound in principle, especially given the supporting observational data cited in the study," Brian Keating, a cosmologist and physics professor at University of California San Diego who studies the Hubble constant, told BI in an email.

But there are still questions that need to be answered. For one, how far does the influence of the void extend?

"If the local void isn't representative of the wider cosmos , this may only provide a local solution, not a global one — that wouldn't 'solve' the Hubble tension," Keating wrote.

Keating also noted that Banik's theory had certain limitations, writing that the study's results were dependent on the type of void model used. Different models yield different predictions about void effects and the "bulk flow," or the average speed of galaxies as they move through the cosmos. Plus, models can only offer a simplified view of what the void really is.

All of this means that the void could offer a solution, but "it is not a definitive 'proof' yet of the resolution of the tension," Keating wrote.

There are other solutions to consider too, such as early dark energy . This theory proposes a new form of energy that affects the universe's expansion rate in its early stages, ultimately leading to the Hubble tension we observe today, as Keating said.

But Banik noted that the early-dark-energy theory conflicted with certain truths about the universe. For example, we'd have to amend the ages of ancient stars to make it work. Otherwise, these stars would have to be older than the universe itself, Banik said.

So, he's sticking to his void theory. His next research project is set to analyze supernovae data to figure out whether the Hubble constant returns to the value predicted by our standard model of cosmology outside the void. If his theory is correct, there shouldn't be any Hubble tension outside the void's borders.

"This is the main thing which sometimes keeps me up a little bit — worrying about if the supernovae really show that we're in a universe that's actually expanding faster , and there's no sign of the void edge," Banik said.

Until then, the Hubble tension remains a mystery waiting to be solved.

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