A quiz for econ graduate students, or anyone else with too much time on his or her hands
Usually our quizzes are more on the whimsical side, but here is a serious one that requires a real investment of time.
Some academics (at most one out of the three is an economist) in the United Kingdom recently published a paper in a journal called Applied Economics claiming that a 1 percent increase in the price of beer in the U.K. leads to a 2 percent decline in violent crime. I don’t know how to link directly to the paper, but if you go to this Cardiff University website and scroll down, you will find a link called “Violence-related injury and the price of beer in England and Wales.” That link will take you to the paper.
The paper has sensible theory behind it, is well written, and has seemingly careful econometrics. As I read the paper, however, I had the sort of uneasy feeling that Malcolm Gladwell, in the first chapter of Blink, describes some experts having when viewing a supposedly ancient sculpture that turned out to be a fake. I couldn’t figure out what was wrong with the paper and went on to something else. But I was so bothered by it that I went and read it again. I think on that second reading I found the fundamental flaw in the paper.
So, here is a different kind of quiz. The first one to identify the problem I have in mind wins a signed copy of Freakonomics, a Freakonomics t-shirt if the new batch really exists, and also a Freakonomics yo-yo if those are ready. If they are so inclined, I further encourage the winner to try to get the original data, test my/his/her hypothesis and send a short comment to the journal.
Hint: there may be many other problems with the paper, but my concern is very specific and easily testable.
(Thanks to Sam Richardson for bringing this article to my attention.)