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Spurious Weather Effects

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  • Jo Thori Lind

Abstract

Rainfall is a truly exogeneous variable and hence popular as an instrument for many outcomes. But by its very nature, rainfall in nearby areas tends to be correlated. I show theoretically that if there are also spatial trends in outcomes of interest, this may create spurious correlation. In panel data models where fixed features can be dummied out, the same problem can occur if time trends are spatially dependent. Using Monte Carlo analysis, I show that standard tests can reject true null hypotheses in up to 99% of cases. I also show that this feature is present in a study of the effect of precipitation on electoral turnout in Norway. Using precipitation on non-election days, I show that the distribution of parameter estimates is far away from the theoretical distribution. To solve the problem, I suggest controlling for spatial and spatio-temporal trends using multi-dimensional polynomial approximations.

Suggested Citation

  • Jo Thori Lind, 2015. "Spurious Weather Effects," CESifo Working Paper Series 5365, CESifo.
    • Handle: RePEc:ces:ceswps:_5365
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    References listed on IDEAS

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    Cited by:

    1. Meier, Armando N. & Schmid, Lukas & Stutzer, Alois, 2019. "Rain, emotions and voting for the status quo," European Economic Review, Elsevier, vol. 119(C), pages 434-451.
    2. Olukorede Abiona & Martin Foureaux Koppensteiner, 2022. "Financial Inclusion, Shocks, and Poverty: Evidence from the Expansion of Mobile Money in Tanzania," Journal of Human Resources, University of Wisconsin Press, vol. 57(2), pages 435-464.
    3. Sara Cools & Martin Flatø & Andreas Kotsadam, 2020. "Rainfall shocks and intimate partner violence in sub-Saharan Africa," Journal of Peace Research, Peace Research Institute Oslo, vol. 57(3), pages 377-390, May.
    4. Mélanie Gittard, 2024. "Droughts, Migration and Population in Kenya," CIRED Working Papers halshs-04685409, HAL.
    5. Olukorede Abiona & Martin Foureaux Koppensteiner, 2016. "The Impact of Household Shocks on Domestic Violence: Evidence from Tanzania," Discussion Papers in Economics 16/14, Division of Economics, School of Business, University of Leicester.
    6. Lind, Jo Thori, 2020. "Rainy day politics. An instrumental variables approach to the effect of parties on political outcomes," European Journal of Political Economy, Elsevier, vol. 61(C).
    7. Philipp Ehrl & Leonardo Monasterio, 2021. "Spatial skill concentration agglomeration economies," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 140-161, January.
    8. Mélanie Gittard, 2024. "Impacts of repetitive droughts and the key role of experience : evidence from Nigeria," CIRED Working Papers halshs-04685420, HAL.
    9. Dorsch, Michael T. & Maarek, Paul, 2018. "Rent extraction, revolutionary threat, and coups in non-democracies," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1082-1103.

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    More about this item

    Keywords

    rainfall; spurious correlation; spatial correlation; Legendre polynomial;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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