Sunday, January 11, 2015

Econometrics vs. Ad Hoc Empiricism

In a post in 2013, titled "Let's Put the "ECON" Back Into Microeconometrics", I complained about some of the nonsense that is passed off as "applied econometrics". Specifically, I was upset about the disconnect between the economic model (if there is one) and the empirical relationships that are actually estimated, in many "applied" papers.

I urge you to look back at the post before reading further.

Here's a passage from that post:
"In particular, how often have you been presented with an empirical application that's based on just a reduced-form model that essentially ignores the nuances of the theoretical model?
I'm not picking on applied microeconomic papers - really, I'm not! The same thing happens with some applied macroeconomics papers too. It's just that in the micro. case, there's often a much more detailed and rich theoretical model that just lends itself to some nice structural modelling. And then all we see is a regression of the logarithm of some variable on a couple of interesting covariates, and a bunch of controls - the details of which are frequently not even reported."
Well, things certainly haven't improved since I wrote that. In fact, it seems that I'm encountering more and more of this nonsense. This isn't "econometrics", and the purveyors of this rubbish aren't "econometricians". 

My real concern is that students who are exposed to these papers and seminars may not recognize it for what it is - just ad hoc empiricism. 

© 2015, David E. Giles