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Ten Things Applied Econometricians Should Keep in Mind

From a similarly titled post by Dave Giles:

  1. Always, but always, plot your data.
  2. Remember that data quality is at least as important as data quantity.
  3. Always ask yourself, “Do these results make economic/common sense”?
  4. Check whether your “statistically significant” results are also “numerically/economically significant”.
  5. Be sure that you know exactly what assumptions are used/needed to obtain the results relating to the properties of any estimator or test that you use.

On “Rationality,” Other Misinterpreted Words, and Cultural Exceptions

A long-time friend and colleague writes (in French, so my own loose translation follows):

Hey,

I was thinking about your post on rationality, a concept whose [economic] definition differs from its popular definition.

Other examples: “structural,” “public good,” or “efficiency.” In the limit, “profit” and “rent.”

Is it the layperson’s job to learn accurate definitions, or the economist’s job to be more precise about their vocabulary?

I think it’s our job to define the terms we use when we engage in public debates, for two reasons. First, because I believe the onus is always on the writer to be understood by his readers. That belief of mine probably stems from studying philosophy in college in a French-speaking university, and from the allergic reaction I got from being exposed to some of the most willingly obfuscating writing ever published (see Derrida, Jacques; or don’t.)

Is Industrial Policy the Key to Haiti’s Economic Development?

At the industrial park, female workers wearing chartreuse aprons and headscarves stream out of the blue factory buildings on their lunch break. Frandline Joseph sits outside. She sews for Sae-A and says she doesn’t like the work: “I don’t have time to sit.”

But she also says that she had no job before her current one, and life has improved since finding employment. “Now I work for 200 gourdes,” [Note: $5 daily — MFB.] she says, and can pay her daughter’s school fees in a country with a virtually non-existent public education system. “Before the park, I worked for nothing.”

Her story is similar to other published accounts, and that of Rosedaline Jean, a 22-year-old who’s worked for Sae-A for five months. “Before, I lived only by the grace of God,” says Jean. “Although I don’t have a husband or children, my life wasn’t easy because I wasn’t working. When I got here, a lot changed in my life.

“This isn’t the ideal job,” she continues, “but it’s better than nothing. I don’t intend to make a career in this job. I plan to start a business, and I’m already saving for it. But it’s difficult, because my salary is practically nothing.”

From an article by Tate Watkins in The Atlantic.