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1. Let's Take the Bias Out of Econometrics

Author:
Duo Qin
Publication Date:
12-2016
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This study exposes the cognitive flaws of ‘endogeneity bias’. It reviews how conceptualisation of the bias has evolved to embrace all major econometric problems, despite extensive lack of hard evidence. It reveals the crux of the bias – a priori rejection of causal variables as conditionally valid ones, and of the bias correction by consistent estimators – modification of those variables by non-uniquely and non-causally generated regressors. It traces the flaws to misconceived error terms in statistical modelling and estimation consistency. It highlights the need to shake off the bias to let statistical learning play an active and formal role in econometrics.
Topic:
Economics, Economic Theory, Models, and Bias
Political Geography:
Global Focus

2. Compulsory Schooling and the Returns to Education: A Re-examination

Author:
Sophie van Huellen and Duo Qin
Publication Date:
09-2016
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
We re-examine the effect of compulsory school law on education in the US pioneered by Angrist and Krueger (1991). We show that the standard instrumental variable approach of the education variable not only yields empirically inconsistent estimates, but is conceptually confused. The confusion arises from the rejection of the key causal variable as a valid conditional variable. By route of a causally explicit model design we are able to identify the circumstances under which the formerly rejected variable can yield valid inference values. Our investigation demonstrates the importance of building data-consistent models over estimator choice in successful research designs.
Topic:
Education, Governance, Economic Theory, and Models
Political Geography:
North America and United States of America

3. Inextricability of Autonomy and Confluence in Econometrics

Author:
Duo Qin
Publication Date:
06-2014
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
This paper examines how ‘confluence’ and ‘autonomy’, two key concepts introduced by Frisch around 1930, have disappeared in econometrics textbooks and why only some fragments of the two have survived mainstream econometrics. It relates the disappearance to the defect in the textbook position of equating a priori theoretical models as correct structural models unequivocally. It shows how the confluence-autonomy pair in unity reflects the complexity of econometricians’ goal to find and verify robust and economically meaningful models out of numerous interdependent variables observable from the real and open world. The complexity deems it essential for applied research to have a set of model design rules combining both a priori substantive reasoning and a posteriori statistical testing. Such a need also puts the task of ensuring an adequately minimum model closure to top priority for applied modellers, a task much more important than the textbook task of parameter estimation.
Topic:
Economics, Intellectual History, Economic Theory, and Models
Political Geography:
Global Focus

4. Modelling Scale Effect in Crosssection Data:The Case of Hedonic Price Regression

Author:
Duo Qin and Yimeng Liu
Publication Date:
09-2013
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
An innovative and simple experiment with cross-section data ordering is carried out to exploit a basic and common feature between many economic variables – nonlinear scale dependence. The experiment is tried on hedonic price regression models using two data sets, one for automobiles and the other computers. The key findings are: (a) Hedonic price indices can be significantly biased if they are constructed using models which disregard possible nonlinear scale effects latent in random data samples; (b) Scale-based data ordering offers considerable potential to filter such scale-dependent information from cross-section samples; (c) The filtering can be easily carried out by systematic adoption of dynamic modelling methods.
Topic:
Science and Technology, Economic Theory, Models, and Price Regression
Political Geography:
Global Focus