Friday, September 24, 2010

Mostly Harmless Econometrics: An Empiricist's Companion

Mostly Harmless Econometrics: An Empiricist's Companion Review



This is a great book that I really wish had been written when I was first learning econometrics. It is probably best appreciated by someone who has already taken one or two econometrics classes and has had some exposure to applied econometrics research. If you haven't taken econometrics yet you will not really appreciate the 'paradigm shift' that they are trying to explain nor appreciate some of the humor and storytelling. But if you are like myself someone who first learned econometrics more than a decade ago you'll find yourself reading this book page by page with appreciation. I feel that it is helping me to develop a much more mature understanding of the field of applied micro econometrics (helping me to confirm hunches and general notions I already and also new gems of insight). There are many cookbooks that might explain the methods in more depth (e.g. Cameron and Trivedi Microeconometrics) but that's not the purpose of this book. It's purpose is to make you think more about 'research design' which is to say about the questions that you pose, and how you pose them, rather than the methods that you use to try to arrive at answers. For too long econometricians got lost in the details of methods without taking a step back to think about some really fundamental questions first. The book is filled with examples of both good and bad research and you'll be surprised at how bad some past very influential research looks in light of modern day paradigms. It's not that these earlier researchers didn't know enough math, it's that they used the math without clear enough purpose.

This book will make you a better economist and beyond that make you see the world around you slightly differently. You'll end up with a keener eye for all those natural experiments happening all around you. If you are an advanced undergraduate, MA or starting PhD student with any pretensions of becoming engaged in original applied economics research this book should be a "must have" on your bookshelf.




Mostly Harmless Econometrics: An Empiricist's Companion Overview


The core methods in today's econometric toolkit are linear regression for statistical control, instrumental variables methods for the analysis of natural experiments, and differences-in-differences methods that exploit policy changes. In the modern experimentalist paradigm, these techniques address clear causal questions such as: Do smaller classes increase learning? Should wife batterers be arrested? How much does education raise wages? Mostly Harmless Econometrics shows how the basic tools of applied econometrics allow the data to speak.

In addition to econometric essentials, Mostly Harmless Econometrics covers important new extensions--regression-discontinuity designs and quantile regression--as well as how to get standard errors right. Joshua Angrist and Jörn-Steffen Pischke explain why fancier econometric techniques are typically unnecessary and even dangerous. The applied econometric methods emphasized in this book are easy to use and relevant for many areas of contemporary social science.

  • An irreverent review of econometric essentials
  • A focus on tools that applied researchers use most
  • Chapters on regression-discontinuity designs, quantile regression, and standard errors
  • Many empirical examples
  • A clear and concise resource with wide applications



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