are "benevolent autocrats" good for economic development?

Pyrrhus

I am not sure about the value of Dictators connections with Economic development, but so far the examples given in this thread are related more to failure. An example of a Success is Chile with the famous "Chicago boys" and Augusto Pinochet story.

I bolded this part as I am not sure what you mean by "very crude"? Econometrics has become very sophisticated and flexible. Its methods are used in many other areas such as finance, marketing, medical sciences, and others. Furthermore, you don't seem to understand that the omitted variables have different effects on the estimates. Economists typically control for the variables that are more relevant, and thus try to reduce the bias on the estimates. It is possible that there are variables omitted that will bias the estimates, but what is actually important is the magnitude of the bias. "Small" bias is not a problem.

BWV

I do not think that multilinear regressions are particulary sophisticated tools and of course they are always flexible enough to serve the biases of whoever is using them. Page 22 of Easterly's paper discusses the well recognized problems with partial correlations of equally plausible variables along with bivariate and multivariate regressions on several factors. I think he would agree that that part is hardly the centerpiece of the paper as some economist with a contrary view could construct a different model that fit their biases. You cannot control for every variable, nor even suppose that all the important ones are measurable. Can you name one important controversy in economics that has been resolved through the use of econometric methods? I am not aware of any.

Pyrrhus

"Classical" Regression models are only a type of method used in econometrics, that's of course without mention the different extensions done by econometricians to handle different types of data (cross sectional, time series, repeated observations...). Other econometric advancements include Mixture logit, Cointegration, Tobit, GARCH, hybrid choice and others. Regardless of the mathematical sophistication, and its flexibility to handle different types of data generating processes such as random parameters, or corner solutions. The philosophy in statistical modeling is always parsimony. This of course can be tested for nested and nonnested models as well. Thus, I do take offend of you calling years of advancements in statistical theory... crude statistical tools.

Of course, Econometric modeling without an underlying theory is futile, and it requires validation with the data, and thus data must be available to cross-validate such estimates. However, models based on economic theory have solid grounds as the assumptions may be corroborated, as well as the expectations of the researchers with regards to the direction of the effects of the variables. This does not mean that such models do not undergo cross-validation, and thus new data is acquired were the predictions of the model can be tested vs. observed choices.

You mention that a problem with the econometric modeling is the omitted variables bias. This is but one problem (others include state dependence, feedback, endogenous sample design, heteroskedasticity...), yes. However, there are MANY methods developed that may reduce the bias that range from econometric "patches" such as instrumental variables, proxy variables to experimental designs like those advocated by experimental economics. Furthermore, again the importance is the magnitude of the bias how much effect does the variable inclusion has on the estimates and that the results will be spurious at best.

Finally, I don't think is useful to call econometric development gibberish, and just write it off as well as its results. This is not only pedantic, but it undermines years of theoretical and empirical research on economics. You need to understand that a lot of the development on econometrics has been done to deal with such types of problems, and with many proving successful to warrant significant consideration. Thus, once the econometric advancement is done, it disseminates and new papers will incorporate the changes and test on previous data to reverify previous results already published (a requirement of many economic journals is that the authors provide data, and any statistical routine they programmed because it might not be available along with the paper), and also use on new data to offer more flexibility in the model.

Pyrrhus

Two cases the come to mind are deregulation of electric utilities and airlines in the USA. It is just a matter of searching for the many estimates supporting such economic policies. A classic paper is Nerlove 1963 for electric utilities.

WhoWee

Again, you can't expect to compare Somalia to Haiti to South Korea (or anywhere else) - until you have analyzed each of them separately, (understand them separately), and have included (and weighed) all variables.

BWV

but the point is you can't do that - the methodology does not exist other than creating seemingly plausible "just so" stories

BWV

getting off track here, started another thread on the issue of the reliability of econometric methods
http://www.physicsforums.com/showthr...68#post3446768

WhoWee

I honestly did not realize there is no methodology available to study the history, economy and variables of a single country.

BWV

You can do so qualitatively and support your conclusions with data - that is what historians do all the time - but others with differing views can often construct equally compelling counter-stories. Its a mistake to think, however, that there is some pure, quantitative, quasi-scientific truth that can be gained from available data

WhoWee

I guess what you're really saying is the paper cited in the OP - by William Easterly - should be dismissed as just another conclusion that's easy to challenge?

BWV

No, because its this skepticism that Easterly himself raises as the reason to doubt narratives of great top-down economic leadership

WhoWee

Then he's your example of someone "with differing views can often construct equally compelling counter-stories"?

BWV

Easterly mentions Pinochet
Interestingly GDP growth was significantly higher in the 90s after Pinochet was deposed

russ_watters

The OP contains neither a question nor a thesis statement that I can see, so the discussion seems to me to be floundering. BWV, could you please provide them so we know what the point is.

BWV

It contains both

A) question - do benevolent autocrats exist that, despite their flaws, are responsible for periods of high economic growth?

B) thesis - proof of this is lacking due to the reasons listed by Easterly

russ_watters

No, neither of those appear in the OP and the question is somewhat different from the question in the title of the thread (the OP itself contains no questions) -- and your thesis statement does not answer the question. Though you may have thought you implied it, you didn't. For future reference, please be explicit about what your point is.....however, there's still a problem:

For the points themselves:
The question in the title is actually worded as assuming they do exist (though it could imply a theoretical assumption), which is generally not a good way to word a question. The question above is much better as a problem statement.

Your Friedman quote implied to me a thesis that China is an example, answering the question affirmatively (Q: Do benevolent dictatorships exist? A: Yes, and here's an example). The Easterly quote doesn't actually attempt to answer the question or refute the affirmative answer given, but rather is a discussion of an assumed psychosis that is behind an affirmative answer. In other words, it takes as an assumption that the affirmative answer is flawed, then lists hypothetical flaws and biases that may be responsible -- without actually examining any examples or making an effort to prove the case.

The point is, if you want to answer the question "Do benevolent autocrats exist....?" you must actually examine the examples given, not talk about hypothetical flaws that may or may not apply.

BWV

That is ridiculous, I quoted in the OP the whole abstract of Easterly's paper which clearly stated the problem and the thesis:

As Easterly states, the burden of proof rests on those who would allege that there have been benevolent autocrats who are responsible for periods of high economic growth. Just like a skeptic does not have to refute each and every instance of a reported UFO sighting and can state that the overall methodology and evidence offered by UFO proponents is lacking and suggest cognitive errors that may explain the phenomena of UFO sightings, Easterly is perfectly justified in outlining a position that states that current economic methods are insufficient to establish a casual link between strong autocratic leaders and economic growth. If you are familiar with economics, you will know that arguments are couched in the framework of a statistical null hypothesis rather than attempting to ascertain some existential truth.