Modeling A.Joseph Guse Econ 398, Fall 2011

A Typical Article Outline Introduction Literature Review Conceptual Framework Empirical Approach – Description of Data – Empirical Model Results Conclusion References

Outline Example: Courtemanche, “Silver Lining” “Introduction” – Motivation: obesity is an expensive and growing problem – Briefly explain theoretical connection between gas prices and obesity. – Summarizes empirical results. “Background and Theory.” – Conceptual framework – Literature review. “Data.” – Describes data sources. – Describes how variables are constructed. – Presents summary statistics. “Reduced-Form Estimation – Lays out regression models. – Describes and interprets results. “Explaining the Gas Price Effect” – Extended Analysis to answer further questions about pathways. “Conclusion”

Outline Example: Garces Et Al, “LT Effect of Head Start” “Introduction” – Motivation: scope, size and intent of HS – States main Research Question: Long Term Effects – Describes More specific hypotheses and summarize findings “Background” – Brief history of HS – Literature review. – Conceptual Framework: sibling fixed effects “Data.” – Describes how PSID captures HS and other relevant data. – Describes relevant problems with survey data: recall error – Presents summary statistics. “Empirical Methods” – Lays out regression models. “Results” – Extensive Interpretation especially of difference between variations on regression model. “Conclusion”

What an Introduction Should Do? Motivate the Research Question State the Research Question Briefly explain the conceptual framework for your analysis Specific Hypotheses to be tested. Summarize empirical approach and findings

Literature Review Not necessarily a separate section. – Can be subsumed into introduction or theory / background sections Does not summarize entire articles. Relates articles to your question. – If directly attacked your question What did they find? How is your approach different? – If asked a different question Why are finding relevant? (Econometric method, causal pathway, analogous question, etc?)

Theory / Conceptual Framework Most papers: “Effect of X on Y”? This is where you tell a story about why we would expect an effect. – Does X affect human capital accumulation? Head Start (Garces et al, 2000; Kinsey 2012) Year Round Schooling (Wu and Stone, 2010) – Does X alter incentives? Gas Prices (Courtemanche, 2011) Tort Reform (Yang et al, 2008; Hopkins 2012) Insurance Elligibility (Currie and Gruber, 1996; Upton, 2012) Marginal Tax Rates (Goolsbee, 2000; MacKie-Mason, 1990) Ag Subsidies (Grote, 2012) Prison Spending (Grigsby, 2012) Wealth Effects (McFarland, 2012) – Does X Alter Institutional Environment? Government Form (Cornell and Kalt 2000; Johnson, 2012) Trade Blocks (Binder, 2012) – How? Enumerate Pathways to Y. – Link Back to Incentives / Behavioral model. Formal Model: Optimization model in which X alters “budget set”; comparative statics exercise generates hypotheses to be tested. Narrative: Just tell a story in which the behavioral model is respected but not formalized

Empirical Approach / Identification Lay out Regression Equation to be Estimated – Enumerate the “ideal” set of variables needed. – Relate back to conceptual framework. What will a positive means in terms of your theory? Explain exactly how you build the set of variables from the data available. Explain how you are accounting for problems. – Selection bias, omitted variable bias, measurement error, etc. Identification. – Sufficient Variation? – Sufficient Number of Observations? – Validity of IVs and Proxies? Several Models? To What end? What is being tested? Robustness / Falsification Tests.

Empirical Model Example: Card and Dahl (2009) Estimate Poission Regression with Mean Modeled as – log(μjt) = θj + Xjtγ + g(Sjt, yjt; λ). Where… g(Sjt, yjt, λ) = λ1·1(Sjt < −3) + λ2·1(Sjt < −3) 1(yjt = 0) + λ3·1(−3≤ Sjt ≤ 3) + λ4·1(−3≤ Sjt ≤ 3) 1(yjt = 0) λ5·1( Sjt > 3) + λ6·1( Sjt > 3) 1(yjt = 1) Link back to their behavioral model? Justified regression types? Identification Issues?

Empirical Model of Courtemanche Time Dummies: – BMIist = α0 + α1PGASst + α2Xist+τt + λs + εist Quadratic Trend: – BMIist = β0 + β1PGASst (3) + β2Xist+β3t + β4t2 + σs + ist Identification Issues? Link back to Conceptual Framework?

Garces et al * Family Fixed Effects - All about identification / controlling for omitted variables * Relates back to conceptual framework?