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Economics, History, and Causation

Author

Listed:
  • 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
    Note: CF
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    File URL: http://www.nber.org/papers/w16678.pdf
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    References listed on IDEAS

    as
    1. Deepak Lal, 1993. "Poverty and Development," UCLA Economics Working Papers 707, UCLA Department of Economics.
    2. Peter Blair Henry & Conrad Miller, 2009. "Institutions versus Policies: A Tale of Two Islands," American Economic Review, American Economic Association, vol. 99(2), pages 261-267, May.
    3. Randall K. Morck, 2005. "A History of Corporate Governance around the World: Family Business Groups to Professional Managers," NBER Books, National Bureau of Economic Research, Inc, number morc05-1, June.
    4. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    5. Caroline Fohlin, 2005. "The History of Corporate Ownership and Control in Germany," NBER Chapters,in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 223-282 National Bureau of Economic Research, Inc.
    6. David L. Weimer, 1986. "Collective Delusion In The Social Sciences: Publishing Incentives For Empirical Abuse," Review of Policy Research, Policy Studies Organization, vol. 5(4), pages 705-708, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Electrification, skills and manufacturing
      by Chris Colvin in NEP-HIS blog on 2012-01-29 00:15:01

    Citations

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    Cited by:

    1. Kun Tracy Wang & Dejia Li, 2016. "Market Reactions to the First-Time Disclosure of Corporate Social Responsibility Reports: Evidence from China," Journal of Business Ethics, Springer, vol. 138(4), pages 661-682, November.
    2. Harrison, Ann E. & Lin, Justin Yifu & Xu, Lixin Colin, 2014. "Explaining Africa’s (Dis)advantage," World Development, Elsevier, vol. 63(C), pages 59-77.
    3. repec:eee:corfin:v:44:y:2017:i:c:p:215-232 is not listed on IDEAS
    4. Nathan Foley-Fisher & Eoin McLaughlin, 2013. "Irish Land Bonds: 1891-1938," ESE Discussion Papers 239, Edinburgh School of Economics, University of Edinburgh.
    5. Cull, Robert & Xu, Lixin Colin & Yang, Xi & Zhou, Li-An & Zhu, Tian, 2017. "Market facilitation by local government and firm efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 460-480.
    6. 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.
    7. Knack, Steve & Xu, Lixin Colin, 2017. "Unbundling institutions for external finance: Worldwide firm-level evidence," Journal of Corporate Finance, Elsevier, vol. 44(C), pages 215-232.
    8. Peter Wysocki, 2011. "New institutional accounting and IFRS," Accounting and Business Research, Taylor & Francis Journals, vol. 41(3), pages 309-328, August.

    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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