Economics is very concerned with causal inference. Here’s three recent examples of papers whose identification strategies are more interesting than their (unsurprising) results.
This is not to say that we shouldn’t keep honing the methodological toolkit – good evidence for your presuppositions is better than bad evidence. Plus, every now and then, a clever empirical strategy also turns out to lead to a counter-intuitive result.
The Causal Effect of Studying on Academic Performance
ToddÂ Stinebrickner & Ralph StinebricknerÂ
Despite the large amount of attention that has been paid recently to understanding the determinants of educational outcomes, knowledge of the causal effect of the most fundamental input in the education production function – students’ study time and effort – has remained virtually non-existent. In this paper, we examine the causal effect of studying on grade performance using an Instrumental Variable estimator. Our approach takes advantage of a unique natural experiment and is possible because we have collected unique longitudinal data that provides detailed information about all aspects of this experiment. Important for understanding the potential impact of a wide array of education policies, the results suggest that human capital accumulation is far from predetermined at the time of college entrance.
Why Parents Worry: Initiation into Cannabis Use by Youth andÂ Their Educational Attainment”
Jan Van Ours & Jenny WilliamsÂ Â Â Â
In this paper we use individual level data from the Australian National Drug Strategy Household Survey to study the relationship between initiation into cannabis use and educational attainment. Using instrumental variable estimation and bivariate duration analysis we find that those initiating into cannabis use early in life are much more likely to dropout of school compared to those who start later on. Moreover, we find that the reduction in years of schooling depends on the age at which initiation occurs, and that it is larger for females than males.
Is the “Surge” Working?Â Some New FactsÂ
There is a paucity of facts about the effects of the recent military “Surge” on conditions in Iraq and whether it is paving the way for a stable Iraq.Â Selective, anecdotal and incomplete analyses abound. Policy makers and defense planners must decide which measures of success or failure are most important, but until now few, if any, systematic analyses were available on which to base those decisions. This paper applies modern statistical techniques to a new data file derived from more than a dozen of the most reliable and widely-cited sources to assess the Surge’s impact on three key dimensions:Â the functioning of the Iraqi state (including violent civilian casualties); military casualties; and financial markets’ assessment of Iraq’s future.Â The new and unusually rigorous findings presented here should help inform current evaluations of the Surge and provide a basis for better decision making about future strategy.Â The analysis reveals mixed evidence on the Surge’s effect on key trends in Iraq.Â The security situation has improved insofar as violent civilian fatalities have declined without any concurrent increase in casualties among coalition and Iraqi troops.Â However, other areas, such as oilÂ production and the number of trained Iraqi Security Forces have shown no improvement or declined.Â Evaluating such conflicting indicators is challenging.Â There is, however, another way to assess the Surge.Â This paper shows how data from world financial markets can be used to shed light on the central question of whether the Surge has increased or diminished the prospect of today’s Iraq surviving into the future.Â In particular, I examine the price of Iraqi state bonds, which the Iraqi government is currently servicing, on world financial markets.Â After the Surge, there was a sharp decline in the price of those bonds, relative to alternative bonds.Â This decline signals a 40% increase in the market’s expectation that Iraq will default.Â This finding suggests that, to date, the Surge is failing to pave the way toward a stable Iraq and may in fact be undermining it.