The Social Costs of Gun Ownership: Spurious Regression and Unfounded Public Policy Advocacy
MAGKS Joint Discussion Paper No. 32-2013
35 Pages Posted: 11 Jul 2013
Date Written: July 08, 2013
In 2006, a study, published in the Journal of Public Economics, employing a panel regression of 200 U.S. counties across 20 years, found a significant elasticity of homicides with respect to ﬁrearms ownership. Based on this ﬁnding the authors made the public policy recommendation of taxing gun ownership. However that study fell prey to the ratio fallacy, a trap known since 1896. All the "explanatory power" (goodness-of-ﬁt-wise and significance-wise) of the original analysis was due to regional and inter-temporal differences and population being explained by itself. When the ratio fallacy is accounted for, all authors’ results can no longer be found. This is illustrated in this paper using a balanced panel from the data for 1980 to 2004. My ﬁndings are robust to (i) alternative specifications not subject to the ratio problem, (ii) using only data from 1980 to 1999 as in the original paper, (iii) using an unbalanced panel for 1980 to either 1999 or 2004, (iv) applying weighting as done by the original authors and (v) using data aggregated at the state level.
Keywords: gun ownership, social costs, ratio fallacy, spurious regression
JEL Classification: C51, H21, I18, K42
Suggested Citation: Suggested Citation