"Econometrics is in deep Trouble"

This line pretty much summaries McCloskey and Ziliak's position on the current usage of signifinant tests in econometrics:

"If McCloskey and Ziliak are right—that merely “statistical,” Fisherian significance is scientifically meaningless in almost all the cases in which it is presently used, and that economists don’t recognize this truth of logic, or act on it—then econometrics is in deep trouble."

The paper is part of a (an on-going?) debate between McCloskey/Ziliak and Kevin Hoover/Siegler.

I like this bit of the paper best (on the response of the academic elites to the McCloskey/Ziliak thesis) :

One eminent econometrican told us with a smirk that he agreed with us, of course, and never used mechanical t-testing in his own work (on this he spoke the truth). But he remained unwilling to teach the McCloskey-Ziliak point to his students in a leading graduate program because “they are too stupid to understand it.”

Another and more amiable but also eminent applied econometrican at a leading graduate program, who long edited a major journal, told us that he “tended to agree” with the point. “But,” he continued, “young people need careers,” and so the misapplication of Fisher should go on and on and on.

Tax All Those Tall People!

Greg Mankiw wrote:

"Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard utilitarian framework for tax policy analysis answers this question in the affirmative."

Read more here.

Arnold Kling at Econlog questioned Greg's use of Instrumental Variable in the latter's paper. And BTW, do read BOTH of his comments, (another, more recent one could be found here) they are some of the best, intuitive explanations that I have encounterd on the concept of Instrumental Variable.

Can Econometrics Trace the Roots of Autism

Economics professor Michael Waldman of Cornell said yes in an article featured in a WSJ story. Read more here.

Instrumental Variable is the key. Pros and cons of the technique are discussed in the story as well. As for me, I don't think I have anything more to add given my limited knowledge in econometrics. Comments are open though.