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Have econometric approaches helped or hindered our understanding of the…
Have econometric approaches helped or hindered our understanding of the past?
definition
econometrics
Econometrics is the application of statistical methods to economic data in order to give empirical content to economic relationships.
An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships"
determining causal relationship
OLS regression
least squares regression
most modern economists use to establish any kind of relationship
problems
especially problematic when you have very strong outliers. Of course the further away the larger the effect.
the dependent variables could correlate with each other
omission variable -> missing a variable that explains both.
disadvantage (usable but the data must be good)
one always needs to keep in mind that with any kind of tool, especially this saying comes from computer science but garbage in - garbage out.
Nico Voigtlaender and Wilhelm Both and anti-semitism in Nazi Germany -> very hard. It is the historians job here to call out what is unlikely to have happened. The fact problem here is that you have two economists claiming that the correlation between letters written to the Stürmer and the murdering was really high (the correlation) -> however, why just the Stürmer and not the völkischer beobachter? Also, especially in the beginning there were a few letters as well that were not as positive towards the newspaper.
you are very likely to miss some sort of component in general. Also economists then to rely too much on these tools.
Acemoglu Robinson the colonial origins of comparative development.
acemoglue: the colonial origins of comparative development. in this paper acemoglu and robinson show that settlers established certain types of institutions wherever the mortality rate was really high. But especially when looking at diseases the number of outliers is very high. However, the number of people who died from diseases is highly contested on both sides, regardless of what area, north or south America. How do you determine how many people survived Jamestown because they died because of diseases of freezing etc?
problems
Out of 64 countries inthe sample, only 28 countries have mortality rates that originate from within their borders. The other 36 countries in the sample are assigned rates based on conjectures the authorsmake as to which countries have similar disease environment
Patchy evidence: The problem here is that themortality rates for Mexico and Mali have been conjectured forward to create mortality ratesfor neighbouring similar disease environment countries. The rates of the above mentionedtwo countries have been used to infer mortality rates of 22 out of 36 countries.
generally smallpox comes in waves in different regions in very different times and sometimes strikes long after the have already established the instituion was for instance a major problem in north american frothy 1690s onwards as Paul Kelton has pointed out.
Cliometrics
with the ascension of cliometrics, other fields within economic history have been neglected such as the history of economic life. This was because there was a general revolution in the fields of economic history from Dewey to Samuelson. However, this stripping economic history into that kins of domain already happened earlier with Marshall and Keynes. Marhsalls use of biology is quite essential for that understanding. One might go even earlier than that and argue that it had started with Ricardo, and Mill and Jean Baptiste Say. However, what is problematic about these dude is that what they practived was not really an established field of economic history just yet.
Cliometrics was a school that was lauded by most economists such as Mcloskey and Fogel and Engermann (1971), Lee and Passel etc so you had a lot of people who lauded it and the number of people who used economic history in their daily life was constantly increasing.
obviously a lot was lost during this