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The Endogeneity Problem in Applied Fisheries Econometrics: A Critical Review

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  • Daniel Gordon

Abstract

The purpose of this essay is to bring attention to some serious problems that exist in econometric application of fisheries economic models. These problems in application are serious to the point of impeding our ability to do policy work. This essay will focus on two areas of econometric application; first, the violation of the fundamental exogeneity condition for applied econometrics $$E(\varepsilon |X)=0$$ E ( ε | X ) = 0 , where $$\varepsilon $$ ε is a stochastic error term and $$X$$ X is a matrix of right-hand-side explanatory variables, and second, the inappropriate use of data that is available for analysis. Both problems deal with the econometric issues of omitted and proxy variables. I will also comment on data necessary to carry out proper fisheries econometric research and policy analysis. Simulation techniques based on a known population regression equation are used to illustrate the extent of the empirical problems. Injecting real data into the simulations shows the bias that we can bring forward to the policy arena. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Daniel Gordon, 2015. "The Endogeneity Problem in Applied Fisheries Econometrics: A Critical Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(1), pages 115-125, May.
    • Handle: RePEc:kap:enreec:v:61:y:2015:i:1:p:115-125
    DOI: 10.1007/s10640-013-9740-1
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    References listed on IDEAS

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    1. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, March.
    2. Trond Bjorndal & Jon M. Conrad, 1987. "The Dynamics of an Open Access Fishery," Canadian Journal of Economics, Canadian Economics Association, vol. 20(1), pages 74-85, February.
    3. Dale Squires, 1988. "Production Technology, Costs, and Multiproduct Industry Structure: An Application of the Long-run Profit Function to the New England Fishing Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 359-378, May.
    4. ZELLNER, Arnold & KMENTA, Jan & DREZE, Jacques H., 1966. "Specification and estimation of Cobb-Douglas production function models," LIDAM Reprints CORE 12, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. Nils-Arne Ekerhovd & Daniel V. Gordon, 2020. "Profitability, Capacity and Productivity Trends in an Evolving Rights Based Fishery: The Norwegian Purse Seine Fishery," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 565-591, November.
    2. Ekerhovd, Nils-Arne & Kvamsdal, Sturla F., 2017. "Up the ante on bioeconomic submodels of marine food webs: A data assimilation-based approach," Ecological Economics, Elsevier, vol. 131(C), pages 250-261.
    3. Ravi Kashyap, 2022. "Are Instrumental Variables Really That Instrumental? Endogeneity Resolution in Regression Models for Comparative Studies," Papers 2203.14255, arXiv.org.

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    More about this item

    Keywords

    Fisheries economics; Omitted variables; Proxy variables; C1; Q22;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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