Comments on: Joining up the dots

By: Ragingpundits » Economic Freedom and Growth

Ragingpundits » Economic Freedom and Growth — Sun, 21 Aug 2005 20:08:26 +0000

[...] Source: http://crookedtimber.org/2005/03/29/joining-up-the-dots/ [...]

By: Crooked Timber » » A mess of pottage

Crooked Timber » » A mess of pottage — Sun, 17 Apr 2005 03:22:10 +0000

[...] his fascinating little paragraph about the Index of Economic Freedom (previously discussed here and here). Gerald P. O’Driscoll Jr., former editor of the annual Index of E [...]

By: leftinthewest.com » The Overwhelming Correlation Between Taxes and Growth

leftinthewest.com » The Overwhelming Correlation Between Taxes and Growth — Thu, 14 Apr 2005 22:40:55 +0000

[...] ber of blogs took a look at the correlation between the Heritage Foundation’s “Index of Economic Freedom” and economic growth. There wasn’t much correlatio [...]

By: Randolph Fritz

Randolph Fritz — Wed, 30 Mar 2005 01:53:19 +0000

“You can’t fit to white noise.”

If you filter it, you can make music from it. :-)

By: Nicholas Weininger

Nicholas Weininger — Tue, 29 Mar 2005 23:30:21 +0000

Which, now that I reread Henry’s original post, is pretty much what he was saying too. My bad for redundancy.

By: Nicholas Weininger

Nicholas Weininger — Tue, 29 Mar 2005 23:28:51 +0000

The obvious conclusion, to this libertarian, is that the Index of Economic Freedom tells us very little about actual economic freedom.

Which shouldn’t be a surprise, given comments #5 and #6 above, and given that what Heritage and WSJ want to promote has less to do with actual free markets and more with crony capitalism on the Bush model.

By: Decnavda

Decnavda — Tue, 29 Mar 2005 23:10:08 +0000

Julian Sanchez bloged this at Hit & Run, flatly stating that the results were SO contrary to his beliefs that he refused to believe it. I lot of the commentors tried to bring up methodologic flaws. In my opinion the best of those were (1)to point out that this is ONE study – essentially, more data needed. Fine, I would like to see more data, I don’t think that will help them much, but let’s let the data do the talking. And (2) some people mentioned that the freedom axis showed rankings rather than absolute scores. Again, I would like to see the chart the way they suggest. Maybe slightly better for them, but not much.

Still, the comment that got my attention was this one, by “jc”:

If the chart can be believed, then it’s both a case against freedom AND a case against regulation. Economically speaking.

This really is a good point that I would like those here to respond to. What’s the point of arguing against ecconomic libertarianism, any more than for it, if the regulators are not likely to do any better. Sure, you can say that the TYPE of regulation matters, but this chart does not support that: Ecconomic regulation success stories appear to be as random as ecconomic libertarian success stories.

By: theCoach

theCoach — Tue, 29 Mar 2005 23:02:36 +0000

In the feed that shows up as

By: theCoach

theCoach — Tue, 29 Mar 2005 23:00:12 +0000

The ATOM feed is distributing a post titled ‘Joining up the dots II’ with a link to “http://crookedtimber.org/2005/03/29/joining-up-the-dots-ii/” which results in a CrookedTimber 404 page.

Also, the nice quotes are sent down in an escaped CDATA section:
[’]

By: Daniel

Daniel — Tue, 29 Mar 2005 22:06:20 +0000

That is: Shouldn’t we be attempting to control for other variables that might be relevant?

Give over. Maybe if we saw the inklings of a connection but wanted to know whether it was statistically significant. But look at that scatterplot. You can’t fit to white noise.

By: Crooked Timber » » Joining up the dots II

Crooked Timber » » Joining up the dots II — Tue, 29 Mar 2005 21:15:35 +0000

[...] us | Main | Joining up the dots II Posted by Kieran Healy Like Henry and Max, I got a bit of a laugh out of the Left Business Observer [...]

By: DeadHorseBeater

DeadHorseBeater — Tue, 29 Mar 2005 21:06:22 +0000

Urk. That sentence after the cap-Conditional should point out that we want to know the conditional correlation. Essentially, we want to run a multivariate regression instead of a bivariate one.

By: DeadHorseBeater

DeadHorseBeater — Tue, 29 Mar 2005 21:04:17 +0000

The LBO author correctly points out that 1st week Stat 1 students know that correlation isn’t causation. Good stuff that.
Apparently the LBO author did not get through the rest of the course, whereby they discussed things like CONDITIONAL probabilities.
Namely, we would like to know the correlation (and thus potential for causation) between our outcome (growth) and input (freedom score) variables.

That is: Shouldn’t we be attempting to control for other variables that might be relevant?
Like initial level of GDP? (If we think that economic laggards tend to converge to leaders.)
Or whether the country had a civil war during the study period?
Or about a zillion other things (besides those reflected in this Freedom Score) that might affect growth?

This is not to defend Heritage—think tanks in generally have hack and/or second-rate tendencies. They may have committed similar sins of analysis, either by ignorance or malign intent.
But it is truly surprising to see a Timberite make such a mistake of ignorance. Or partisan hackitude.

By: Barry

Barry — Tue, 29 Mar 2005 20:44:19 +0000

And use of ranks is a standard technique to minimize the influence of outliers.

By: Doug Henwood

Doug Henwood — Tue, 29 Mar 2005 20:32:51 +0000

Just a little correction to the original entry: Heritage/WSJ’s preferred measure is the change in the Freedom Index over time and its relation to economic growth. I’m arguing that the change in the index can be contaminated by growth itself (not to mention scorer bias), so if the index means anything, the standing in a base year should have an effect on subsequent performance, because long-term decisions are made on the basis of structures that don’t change much over time.

Why rankings rather than growth itself? Because in economics (and the perception of welfare) it’s all relative.