Does Econometrics Resolve Issues?
Bryan Caplan’s statement, “In social science, the best arguments prove more than the best studies,” reminds me of a conversation I was in earlier this week. Economist Jeff Hummel said he couldn’t think of even one controversial issue that had been resolved with econometrics. The other 4 economists present, including me, immediately started trying to think of counterexamples. The first one that came to my mind was Milton Friedman’s consumption function. Jeff agreed that this had resolved an issue but pointed out that Friedman did it simply with data, not with econometrics. The other examples that the other economists came up with were similar: data had resolved the issue but it didn’t require econometrics.
Question: Can you think of an issue that has been resolved with econometrics?
Ground Rule: It can’t be simply that the person who did the econometrics convinced himself or herself. It has also to be that a number of people previously on the other side of the issue changed their minds in response to the econometrics.