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Economics, History, and Causation

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  • Randall Morck
  • Bernard Yeung

Abstract

Economics and history both strive to understand causation: economics using instrumental variables econometrics and history by weighing the plausibility of alternative narratives. Instrumental variables can lose value with repeated use because of an econometric tragedy of the commons bias: each successful use of an instrument potentially creates an additional latent variable bias problem for all other uses of that instrument - past and future. Economists should therefore consider historians' approach to inferring causality from detailed context, the plausibility of alternative narratives, external consistency, and recognition that free will makes human decisions intrinsically exogenous.

Suggested Citation

  • Randall Morck & Bernard Yeung, 2011. "Economics, History, and Causation," NBER Working Papers 16678, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16678
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    1. Electrification, skills and manufacturing
      by Chris Colvin in NEP-HIS blog on 2012-01-29 00:15:01

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    3. Ayyagari, Meghana & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2012. "Financing of firms in developing countries : lessons from research," Policy Research Working Paper Series 6036, The World Bank.
    4. Heath, Davidson & Ringgenberg, Matthew C. & Samadi, Mehrdad & Werner, Ingrid M., 2019. "Reusing Natural Experiments," Working Paper Series 2019-21, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    5. Harrison, Ann E. & Lin, Justin Yifu & Xu, Lixin Colin, 2014. "Explaining Africa’s (Dis)advantage," World Development, Elsevier, vol. 63(C), pages 59-77.
    6. Leonardo M. Klüppel & Lamar Pierce & Jason A. Snyder, 2018. "Perspective—The Deep Historical Roots of Organization and Strategy: Traumatic Shocks, Culture, and Institutions," Organization Science, INFORMS, vol. 29(4), pages 702-721, August.
    7. Morten Jerven, 2016. "The Failure of Economists to Explain Growth in African Economies," Development Policy Review, Overseas Development Institute, vol. 34(6), pages 889-893, November.
    8. Graham Brownlow, 2015. "Back to the failure: an analytic narrative of the De Lorean debacle," Business History, Taylor & Francis Journals, vol. 57(1), pages 156-181, January.
    9. McLaughlin, Eoin & Foley-Fisher, Nathan, 2013. "Irish Land Bonds: 1891-1938," SIRE Discussion Papers 2013-109, Scottish Institute for Research in Economics (SIRE).
    10. Peter Wysocki, 2011. "New institutional accounting and IFRS," Accounting and Business Research, Taylor & Francis Journals, vol. 41(3), pages 309-328, August.
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    15. Alexis Cellier & Pierre Chollet & Jean†François Gajewski, 2016. "Do Investors Trade around Social Rating Announcements?," European Financial Management, European Financial Management Association, vol. 22(3), pages 484-515, June.
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    17. Öberg, Stefan, 2021. "The casual effect of fertility: The multiple problems with instrumental variables for the number of children in families," SocArXiv peuvz, Center for Open Science.

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    More about this item

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • G0 - Financial Economics - - General
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • N0 - Economic History - - General

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