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Category: Econometrics

The Global Liveability Survey’s less than compelling methods, and an alternative

The Economist’s liveability Scale is under fire for downgrading Vancouver in the latest results. The reason given for the downgrade: traffic problems on the Malahat, a nearby mountain. The problem: the Malahat is on Vancouver Island, two hours away by ferry. How does the Economist calculate their scale, and are there better alterntatives?

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Did a Liberal MLA cause a change in district HST support?

Local linear sharp RD estimate: -0.12%, z=-0.05.

Filed under: Exercises in rigorous, pointless causal analyis.

Which districts voted against the HST?

Stephen Gordon laments British Columbians’ failure to ratify the HST, which will reduce our standard of living in B.C. for many years.The case in favour of the HST was overwhelming and no expert opposed the HST in public. Which people voted against their own best interests?

The Globe and Mail’s Chris Hannay presents some graphs showing proportion voting for the HST against certain demographic characteristics at the electoral district level. Districts with higher incomes tended to vote to keep the HST:


and a similar pattern holds for education: unconditionally, districts with more educated people were more likely to vote to keep the HST. Hannay implies that these effects are really the same effect: more educated people also tend to earn more, so the education—vote correlation is just another way of seeing that higher income people voted in their class interest.

An alternate explanation draws on my post from a couple of days ago on education and beliefs that economists understand the effects of taxation on the economy: uneducated people tend to place low weight on expert analysis, certainly including economic analysis. The direct impact of the HST on prices was easy for everyone to observe—they’re printed on cash register receipts. But the indirect effects, the effects on changes in embedded prices, were hard to observe. The HST was not in place long enough to observe effects on investment and growth. One had to yield to expert opinion to draw the correct conclusion that the HST is good policy.

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Who thinks economists know what they’re doing? Some econometric evidence.

Who thinks economists know what they’re doing? And who thinks we don’t have a clue? Has the financial crisis altered the public’s perceptions of economics? And if so, which people tend to have changed their minds? Sex, ethnicity, immigration status, religious attendance, and political ideology do not, some evidence presented in this post suggests, predict beliefs about economic understanding. Older people trust economists somewhat less, all else equal. The only basic demographic factor which is highly associated with the belief that economists don’t know what they’re doing is low educational achievement. The financial crisis does appear to have reduced the public’s credence in economists’ competence, but basic demographics don’t strongly predict which people changed their minds.

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I’m not drinking any gosh darned merlot!

The movie Sideways impugned merlot and heaped praise on pinot noir. Did Sideways cause changes in market outcomes for these varietals?

In The Sideways Effect: A test of changes in demand for merlot and pinot noir wines Cuellar et al provide some econometric evidence. They look for post-Sideways price and quantity changes in merlot and pinot noir relative to the “control” varietal cabernet sauvignon using scan data from the U.S.

First consider quantities:

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The rise of econometrics ?

Bryan Caplan speculates on reasons for the decline of economic theory, an apparent reduction over the last two decades in the status of theory in economics. He wonders how to measure changes in the status of theory and, assuming theory has declined, why?

My casual empiricism agrees with Bryan’s. What does actual empiricism┬ásay? As a crude first pass, I counted the number of articles in Jstor economics journals that contain the word “regression.” Of course not all articles that contain that word are empirical, nor do all empirical papers contain that word, but it seems a reasonable signal of empirical content. The proportion over time (one observation per decade) looks like
which shows that in the sample of journals tracked by jstor (which changes over time, muddying interpretation) the proportion of empirical papers, or at least papers which for some reason mention regressions, has been steadily increasing, although the rate of increase seems to have been lower 1970-2000 than prior to 1970 or after 2000.

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Cannabis policy and traffic accidents

Do reductions in enforcement of marijuana prohibition lead to more traffic accidents?

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