Economics, History, and Causation

Business History Review Vol. 85, Issue 1, 2011

University of Alberta School of Business Research Paper No. 2013-230

Posted: 26 May 2013 Last revised: 4 Jun 2013

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Bernard Yin Yeung

National University of Singapore - Business School

Multiple version iconThere are 3 versions of this paper

Date Written: April 17, 2010

Abstract

Economics and history both strive to understand causation: economics by using instrumental variables econometrics, and history by weighing the plausibility of alternative narratives. Instrumental variables can lose value with repeated use because of an econometric tragedy of the commons: each successful use of an instrument creates an additional latent variable problem for all other uses of that instrument. Economists should therefore consider historians' approach to inferring causality from detailed context, the plausibility of alternative narratives, external consistency, and recognition that free will makes human decisions intrinsically exogenous.

Suggested Citation

Morck, Randall K. and Yeung, Bernard Yin, Economics, History, and Causation (April 17, 2010). Business History Review Vol. 85, Issue 1, 2011; University of Alberta School of Business Research Paper No. 2013-230. Available at SSRN: https://ssrn.com/abstract=2269832

Randall K. Morck (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governence Institute ( email )

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Asian Bureau of Finance and Economic Research ( email )

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Bernard Yin Yeung

National University of Singapore - Business School ( email )

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Singapore, 119245
Singapore
65 6516 3075 (Phone)
65 6779 1365 (Fax)

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