Economics, History, and Causation
Randall Morck () and
No 16678, NBER Working Papers from National Bureau of Economic Research, Inc
Economics and history both strive to understand causation: economics 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 bias: each successful use of an instrument potentially creates an additional latent variable bias problem for all other uses of that instrument - past and future. 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.
JEL-codes: C01 C21 C31 G0 M2 N0 (search for similar items in EconPapers)
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Published as Morck, Randall & Bernard Yeung. 2011. Economics, History, and Causation. Business History Review 85 : pp 39-63
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