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Measurement errors in popular night lights data may bias estimated impacts of economic sanctions: Evidence from closing the Kaesong Industrial Zone

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  • Bonggeun Kim
  • John Gibson
  • Geua Boe‐Gibson

Abstract

Satellite‐detected night lights data are widely used to evaluate economic impacts of sanctions. Such data should be free from political manipulation. However, measurement errors in these data, from blurring and bottom‐coding, are rarely considered. To study such errors, we use a difference‐in‐differences analysis of impacts of closing the Kaesong Industrial Zone in North Korea—a sanction South Korea imposed in 2016. Luminosity in the affected region declined by a precisely estimated 50 percent. When using the popular Defense Meteorological Satellite Program (DMSP) night lights data the apparent impacts are imprecisely estimated and far smaller. Measurement errors in DMSP data may distort evaluations of sanctions.

Suggested Citation

  • Bonggeun Kim & John Gibson & Geua Boe‐Gibson, 2024. "Measurement errors in popular night lights data may bias estimated impacts of economic sanctions: Evidence from closing the Kaesong Industrial Zone," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 375-389, January.
    • Handle: RePEc:bla:ecinqu:v:62:y:2024:i:1:p:375-389
    DOI: 10.1111/ecin.13183
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    References listed on IDEAS

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    1. Lee, Yong Suk, 2018. "International isolation and regional inequality: Evidence from sanctions on North Korea," Journal of Urban Economics, Elsevier, vol. 103(C), pages 34-51.
    2. Bluhm, Richard & Krause, Melanie, 2022. "Top lights: Bright cities and their contribution to economic development," Journal of Development Economics, Elsevier, vol. 157(C).
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    11. Omoniyi Alimi & Geua Boe-Gibson & John Gibson, 2022. "Noisy Night Lights Data: Effects on Research Findings for Developing Countries," Working Papers in Economics 22/12, University of Waikato.
    12. Arbatli, Cemal Eren & Gomtsyan, David, 2021. "Sectarian aid, sanctions and subnational development," European Economic Review, Elsevier, vol. 139(C).
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