Monday, February 15, 2010

The importance of historical data

In two recent papers -- one aimed at historians of economics ["Philosophy and a Scientific Future of History of Economics"], the other aimed at economic historians ["Prophecy, Eclipses and Whole-Sale Markets: A Case Study on Why Data Driven Economic History Requires History of Economics, a Philosopher's Reflection"] - I argued that historical data can play a constitutive (and important) role in ongoing research.
In both papers I argued that historians can not merely supply crucial data for economic theorizing but also help improve theorizing. While I offered some clever suggestions from economics and its history (including an example from Babylonia!), some of my best evidence was derived from crucial episodes in history of astronomy (in which historical data and historical knowledge played a non-trivial role). I was a bit annoyed with myself for not finding an example from more 'relevant' and 'contemporary' economics.
Anyway, in a recent review of Thomas A. Stapleford, _The Cost of Living in America: A Political History of Economic Statistics, 1880-2000, Trevon Logan concluded his favorable review of Tom's very fine book [disclosure: Tom is editing one of my papers in an edited volume on Chicago economics] with a telling and informative annecdote: "About a year ago I was attending a seminar on the misuses of the Penn World Tables -- the large and well used panel dataset of country GDP and other macro indicators. The seminar speaker discussed the fact that revisions of the data changed the results of many well-cited and influential papers. These included studies of the effects of assassinations on growth, the relationship between volatility and growth, and civil conflict and growth. An elder statesman remarked that economists today do not pay much attention to issues such as the measurement of prices and inflation, and that we (as a profession) are worse for it. I agree. [...] Even more, all of our time series or panel estimates depend, critically, on getting the prices right -- applied microeconomists are not exempted."
How cool is that?!
Anyway, it is to be hoped that Tom's book will help people make the case that in economics historians are more than worth keeping around. (Certainly, the financial crisis should have taught folk that having people around that know something of the past can be very useful.)

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