Monday, March 25, 2013

Weights in Regressions

Solon et al. have a new paper on the use of weights in empirical analysis. Not only does the paper have a great title, but it addresses one of the more hairy issues in empirical work, when and how to use weights:

We discuss three distinct potential motives for weighting when estimating causal effects: (1) to achieve precise estimates by correcting for heteroskedasticity, (2) to achieve consistent estimates by correcting for endogenous sampling, and (3) to identify average partial effects in the presence of unmodeled heterogeneity of effects. In each case, we find that the motive sometimes does not apply in situations where practitioners often assume it does.

There is, of course, no foolproof recipe:

In situations in which you might be inclined to weight, it often is useful to report both weighted and unweighted estimates and to discuss what the contrast implies for the interpretation of the results. And, in many of the situations we have discussed, it is advisable to use robust standard error estimates.

Saturday, March 23, 2013

politikberatung durch ökonomInnen--Caveat emptor!

Haucap und Mödl, "Zum Verhältnis von Spitzenforschung und Politikberatung":

"Ökonomen agieren mit ihrer Forschung also im Wesentlichen auf zwei Märkten: Zum einen auf dem Markt für wissenschaftliche Publikationen im engeren Sinne, also den Fachzeitschriften, und zum anderen auf dem Markt für wirtschaftspolitische Beratung."

Sie zeigen:
* "nur jeder fünfte Artikel eines Ökonomen, der an einer Institution in Deutschland, Österreich oder der Schweiz forscht, [hat] einen besonderen Bezug zu spezifischen Problemen der Wirtschaftspolitik oder Ökonomie im deutschsprachigen Raum"

* "es [sind] primär nicht die forschungsstärksten Ökonomen ..., die sich in der Politikberatung engagieren"

Wednesday, March 13, 2013

Copyrighted Music

New research by Joel Waldfogel shows that the erosion of copyright does not necessarily lead to worse products. The study "Copyright Protection, Technological Change, and the Quality of New Products: Evidence from Recorded Music since Napster", published in the Journal of Law and Economics (working paper version), assesses the quality of recorded music since Napster.

Three different approaches are used (critics’ lists, music sales, and airplay data), assuming that if the music is better, it should be sold or played more often. Contrary to my own view, there is no evidence that the music released since Napster was of lesser quality. Copyright protection should therefore be weighted against producer surplus and consumer surplus.