Modeling
A. Joseph Guse
Econ 398, Fall 2011
A Typical Article Outline
•
•
•
•
Introduction
Literature Review
Conceptual Framework
Empirical Approach
– Description of Data
– Empirical Model
• Results
• Conclusion
• References
Outline Example: Courtemanche, “Silver Lining”
http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7295.2009.00266.x/pdf
• “Introduction”
– Motivation: obesity is an expensive and growing problem
– Briefly explain theoretical connection between gas prices and obesity.
– Summarizes empirical results.
• “Background and Theory.”
– Conceptual framework
– Literature review.
• “Data.”
– Describes data sources.
– Describes how variables are constructed.
– Presents summary statistics.
• “Reduced-Form Estimation
– Lays out regression models.
– Describes and interprets results.
• “Explaining the Gas Price Effect”
– Extended Analysis to answer further questions about pathways.
• “Conclusion”
Outline Example: Garces Et Al, “LT Effect of Head Start”
http://www.jstor.org/stable/3083291
• “Introduction”
– Motivation: scope, size and intent of HS
– States main Research Question: Long Term Effects
– Describes More specific hypotheses and summarize findings
• “Background”
– Brief history of HS
– Literature review.
– Conceptual Framework: sibling fixed effects
• “Data.”
– Describes how PSID captures HS and other relevant data.
– Describes relevant problems with survey data: recall error
– Presents summary statistics.
• “Empirical Methods”
– Lays out regression models.
• “Results”
– Extensive Interpretation especially of difference between variations on regression model.
• “Conclusion”
What an Introduction Should Do?
• Motivate the Research Question
• State the Research Question
• Briefly explain the conceptual framework for your
analysis
• Specific Hypotheses to be tested.
• Summarize empirical approach and findings
Literature Review
• Not necessarily a separate section.
– Can be subsumed into introduction or theory /
background sections
• Does not summarize entire articles.
• Relates articles to your question.
– If directly attacked your question
• What did they find?
• How is your approach different?
– If asked a different question
• Why are finding relevant? (Econometric method, causal
pathway, analogous question, etc?)
Theory / Conceptual Framework
•
Most papers: “Effect of X on Y”? This is where you tell a story about why we
would expect an effect.
– Does X affect human capital accumulation?
•
•
Head Start (Garces et al, 2000; Kinsey 2012)
Year Round Schooling (Wu and Stone, 2010)
– Does X alter incentives?
•
•
•
•
•
•
•
Gas Prices (Courtemanche, 2011)
Tort Reform (Yang et al, 2008; Hopkins 2012)
Insurance Elligibility (Currie and Gruber, 1996; Upton, 2012)
Marginal Tax Rates (Goolsbee, 2000; MacKie-Mason, 1990)
Ag Subsidies (Grote, 2012)
Prison Spending (Grigsby, 2012)
Wealth Effects (McFarland, 2012)
– Does X Alter Institutional Environment?
•
•
Government Form (Cornell and Kalt 2000; Johnson, 2012)
Trade Blocks (Binder, 2012)
– How? Enumerate Pathways to Y.
– Link Back to Incentives / Behavioral model.
•
•
Formal Model: Optimization model in which X alters “budget set”; comparative statics
exercise generates hypotheses to be tested.
Narrative: Just tell a story in which the behavioral model is respected but not formalized
Empirical Approach / Identification
• Lay out Regression Equation to be Estimated
– Enumerate the “ideal” set of variables needed.
– Relate back to conceptual framework. What will a positive means in
terms of your theory?
• Explain exactly how you build the set of variables from the data
available.
• Explain how you are accounting for problems.
– Selection bias, omitted variable bias, measurement error, etc.
• Identification.
– Sufficient Variation?
– Sufficient Number of Observations?
– Validity of IVs and Proxies?
• Several Models? To What end? What is being tested?
• Robustness / Falsification Tests.
Empirical Model Example: Card and Dahl (2009)
http://www.nber.org/papers/w15497
• Estimate Poission Regression with Mean
Modeled as
– log(μjt) = θj + Xjtγ + g(Sjt, yjt; λ) . Where…
• g(Sjt, yjt , λ) = λ1·1(Sjt < −3) + λ2·1(Sjt < −3) 1(yjt = 0)
• + λ3·1(−3≤ Sjt ≤ 3) + λ4·1(−3≤ Sjt ≤ 3) 1(yjt = 0)
• λ5·1( Sjt > 3) + λ6·1( Sjt > 3) 1(yjt = 1)
• Link back to their behavioral model?
• Justified regression types?
• Identification Issues?
Empirical Model of Courtemanche
•
Time Dummies:
–
•
Quadratic Trend:
–
•
•
BMIist = α0 + α1PGASst + α2Xist+τt + λs + εist
BMIist = β0 + β1PGASst (3) + β2Xist+β3t + β4t2 + σs + ist
Identification Issues?
Link back to Conceptual Framework?
Garces et al
* Family Fixed Effects
- All about identification / controlling for omitted variables
* Relates back to conceptual framework?