Proxies in the New Political Economy: Caveat Emptor |
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| Authors: | John R. Hanson II |
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| Affiliation: | Hanson;: Professor, Texas A&M Unviersity, Department of Economics, College Station, TX 77843–4228. Phone 1–979–845–4593, Fax 1–979–847–8757, E-mail |
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| Abstract: | Some common professional criteria for evaluating econometric tests that use proxies for political, social, and institutional variables as regressors may lull scholars into a false sense of security about specious results. The highly publicized correlations between income and economic freedom based on the economic freedom indexes supplied by the Fraser Institute, Heritage Foundation, and Freedom House are used as illustrations. Because these correlations bear strong resemblances to one another, most economists would consider them mutually supportive. Yet this is not so, implying that mutual resemblance and consistency are not criteria for judging econometric results. (JEL B49 , C19 ) |
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