When I was a colleague of Richard Thaler at the University of Rochester in the late 1970s, I learned from him Thaler’s First Law of Dieting. The law: Don’t eat beyond the point where it hurts. Somehow, for someone who won the Nobel prize for his insights about people’s limitations in acting rationally, that law seems particularly a propos. I think I asked him what his second law is and that he answered that he didn’t have one.
Similarly I have Henderson First Law of Econometrics, but I don’t have a second. It’s this:
When you read an econometric study done after 2005, the probability that the researcher has failed to take account of an objection that a non-economist will think of is close to zero.
In the last few years, I’ve gone to a number of presentations by empirical economists at the Naval Postgraduate School, usually by labor economists. The economists presenting are either my (now former) junior colleagues or visiting economists. One reason the presentations take so long is that the presenters carefully lay out all the ways that they have covered or corrected for various factors that a casual listener or even a fairly careful listener would think of.
As a result, my opinion of the quality of empirical work has increased substantially.
Why did I choose the year 2005? It’s a little arbitrary, but I seem to have noticed an increase in care in the last 10 years or so.
One thing that made me think of this was commenter Justin’s excellent response to commenter Alan Goldhammer on this recent post of mine.
READER COMMENTS
Alan Goldhammer
Jul 1 2018 at 5:00pm
David – First a quick editorial comment, I think you meant to write “When I was a colleague of Richard Thaler…” Sentence as written doesn’t make sense.
Second, and more importantly, I think my reading of the paper is markedly different from that of Justin. Perhaps I should take solace in being singled out yet again in one of your subsequent posts.
David Henderson
Jul 1 2018 at 5:38pm
Yes, that’s what I meant. Change made. Thanks, Alan.
Jeff Hallman
Jul 1 2018 at 5:01pm
Hallman’s First Law of Econometrics: The data are out to get you.
In June of 1989 I was one year out of grad school and the P* paper coauthored by Dick Porter, Dave Small and myself made the front page of NY Times. It contained a simple model that exploited the stationarity of M2 velocity to do a very good job of forecasting inflation. Right after we published, M2 velocity ceased behaving like a stationary process as it had for the previous half century and instead began a long trend upwards. So much for our model.
David Henderson
Jul 1 2018 at 5:39pm
LOL. Thanks.
Steve
Jul 1 2018 at 6:44pm
This is happening outside of academia as well. Steven Pinker’s and Robin Hanson’s new books, in particular, impress me with the thoroughness with which they anticipate and answer all possible arguments from the peanut gallery, before moving on to their next point.
It’s actually kind of tedious, but since I’m on their sides, I put up with it.
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