Organizations and Markets

Economic Imperialism

28 February 2007 at 5:43 pm Peter G. Klein 3 comments

| Peter Klein |

This item in Tuesday’s W$J, “Is an Economist Qualified To Solve Puzzle of Autism?”, is required reading for those interested in the scope and methods of modern empirical economics. The piece focuses on Michael Waldman’s paper (with Sean Nicholson Nodir Adilov) linking autism to television, a link vehemently denied by other autism researchers and advocacy groups. More generally,

Prof. Waldman’s willingness to hazard an opinion on a delicate matter of science reflects the growing ambition of economists — and also their growing hubris, in the view of critics. Academic economists are increasingly venturing beyond their traditional stomping ground, a wanderlust that has produced some powerful results but also has raised concerns about whether they’re sometimes going too far.

Ami Klin, director of the autism program at the Yale Child Study Center, says Prof. Waldman needlessly wounded families by advertising an unpublished paper that lacks support from clinical studies of actual children. “Whenever there is a fad in autism, what people unfortunately fail to see is how parents suffer,” says Dr. Klin. “The moment you start to use economics to study the cause of autism, I think you’ve crossed a boundary.”

Moreover — how unusual is this for a newspaper story — there’s also an extended discussion of instrumental-variables estimation.

Waldman’s paper uses precipitation levels as an instrument for time watching TV to address the potential for reverse causality. Rainfall is exogenous, so while kids genetically predisposed toward autistic behavior may tend to watch more TV, they aren’t more likely to live in Seattle or Portland. If there is more autism in rainy places than dry places, it is likely that the additional time spent indoors — presumably in front of the tube — is at least one of the causes. Notes the WSJ reporter:

Such debates are likely to grow as economists delve into issues in education, politics, history and even epidemiology. Prof. Waldman’s use of precipitation illustrates one of the tools that has emboldened them: the instrumental variable, a statistical method that, by introducing some random or natural influence, helps economists sort out questions of cause and effect. Using the technique, they can create “natural experiments” that seek to approximate the rigor of randomized trials — the traditional gold standard of medical research.

Instrumental variables have helped prominent researchers shed light on sensitive topics. Joshua Angrist of the Massachusetts Institute of Technology has studied the cost of war, the University of Chicago’s Steven Levitt has examined the effect of adding police on crime, and Harvard’s Caroline Hoxby has studied school performance. Their work has played an important role in public-policy debates.

The article concludes with a detailed discussion of some of these studies, along with a helpful summary table which I’ve reproduced below.

It’s all very interesting. But what would Steve Sailer say?

Examples of instrumental-variables research in economics:

*Initial publication or working paper

Entry filed under: - Klein -, Methods/Methodology/Theory of Science.