Counterfactual Assumptions Research Articles

Non‐Scale Endogenous Growth with R&D and Human Capital

AbstractThis paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. A general model is developed where, consistent with recent literature, growth is non‐scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non‐scale endogenous growth is possible under less stringent conditions. The findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.

Cancer patients' participation in population-based health surveys: findings from the HUNT studies.

BackgroundThe magnitude of participation bias due to non-participation should be considered for cancer patients invited to population-based surveys. We studied participation rates among persons with and without cancer in a large population based study, the Nord-Trøndelag Health Study (HUNT).MethodsCitizens 20 years or above living in the Nord-Trøndelag County of Norway have been invited three times to comprehensive health surveys. The invitation files with data on sex, invitation date and participation were linked to the Cancer Registry of Norway. In a first step unadjusted crude participation rates (participants/invited persons) were estimated for cancer patients (CaPts) and non-cancer persons (NonCaPers), followed by logistic regression analyses with adjustment for age and sex. To evaluate the “practical” significance of the estimated odds ratios in the cancer diagnosis group, relative risks were also estimated comparing the observed rates to the estimated rates under the counterfactual assumption of no earlier cancer diagnosis among CaPts.ResultsOverall 3 % of the participants in the three HUNT studies were CaPts and 59 % of them had been diagnosed with their first life-time cancer >5 years prior to each survey. In each of the three HUNT surveys crude participation rates were similar for CaPts and NonCaPers. Adjusted for sex and age, CaPts’ likelihood to participate in HUNT1 (1984–86) and HUNT2 (1995–97), but not in HUNT3 (2006–2008), was statistically significantly reduced compared to NonCaPers, equaling a relative risk of 0.98 and 0.96, respectively. The lowest odds ratio emerged for CaPts diagnosed during the last 2 years preceding a HUNT invitation. Only one-third of CaPts participating in a survey also participated in the subsequent survey compared to approximately two-thirds of NonCaPers, and 11 % of CaPts participated in all three HUNT surveys compared to 37 % of NonCaPers.ConclusionIn the three HUNT surveys no or only minor participation bias exist as to CaPts’ participation rates. In longitudinal studies selection bias as to long-term cancer survivorship should be taken into account, the percentage of repeatedly participating CaPts diminishing more strongly than among NonCaPers.

Contribution heterogeneity and the dynamics of contributions in repeated public good games

Using data from four previous experiments, I examine the relationship between contribution heterogeneity and the changes in average contributions that occur from round to round. Specifically, I develop and test the hypothesis that when there is greater contribution heterogeneity in a particular round, average contributions will decrease more between the current round and the next round, all else being equal. I find strong support for my hypothesis with partner and stranger matching, and with and without belief elicitation about the average contributions of others. When beliefs are elicited, changes in average contributions tend to be positively associated with changes in average beliefs, but the relationship is not as strong as the one between changes in average contributions and contribution heterogeneity. In order to determine the driving force underlying the empirical relationship between contribution heterogeneity and changes in average contributions, I simulate contributions under different counterfactual assumptions about belief heterogeneity and contribution preference heterogeneity using one of the data sets. I compare the simulation models in terms of how well each matches the data. The simulations indicate that contribution preference heterogeneity is a stronger factor underlying the dynamics of contributions than belief heterogeneity.

Effect of a maternal and child health handbook on maternal knowledge and behaviour: a community-based controlled trial in rural Cambodia.

Maternal and child health (MCH) handbooks are comprehensive home-based booklets designed to integrate MCH records. Although empirical evidence suggests the handbooks are more effective than current card-type records, this has not been scientifically demonstrated. The objectives of this study were to evaluate the impact of the MCH handbook on maternal knowledge and behaviour as measured by antenatal care (ANC) attendance, delivery with skilled birth attendants (SBAs) and delivery at a health facility. The Cambodian version of the MCH handbook was developed and introduced in two health centres, and two other health centres served as controls. Pre-intervention and post-intervention surveys were conducted with 320 women from the intervention areas and 320 women from the control areas who had given birth within 1 year before the survey. We evaluated the impact of the handbook by using difference-in-differences (DID) analysis and calculated adjusted odds ratios for pre–post changes in key indicators by using logistic regression. In addition, we interviewed multiparous women, health staff and health volunteers to assess the acceptance and cultural appropriateness of the handbook. Content analysis was performed with the English-translated transcriptions. The DID analyses revealed that all key indicators increased in the intervention group against counterfactual assumptions. The intervention also increased maternal knowledge of all topics addressed except for the risk of severe bleeding after delivery; this may be attributable to the influence of cultural belief. Logistic regression showed that the intervention increased ANC attendance, delivery with SBAs and delivery at a health facility, even after adjusting for maternal age, education and economic conditions. The qualitative data indicated that the handbook was well received and culturally appropriate. Thus, the MCH handbook is a reasonable and superior alternative to current card-type maternal records.

Humorous communication in social and political issues

Humor is a common and effective rhetoric strategy for conveying ideas. This paper examines scripts fromCelebrity Imitation Show, a Taiwanese TV program, and investigates characteristics of humorous expressions via the Asymmetry Approach (Viana 2010). More specifically, we examined: (1) how humorous expressions are identified through humor criteria in the show; and, (2) how ridicule is integrated into humorous expressions to convey criticism toward political or social issues. Results indicate that asymmetrical attributes exist in humorous expressions, in which sarcasm and nonsense in the foreground script ridicule the targets in the background script. In this manner, linguistic absurdity attracts the audience by adding linguistic diversity to humorous expressions. Furthermore, shifting targets between two scripts is another strategy to satirize incidents. In sum, the asymmetrical attributes in scripts produce humor, while ironic effects can be elicited from counterfactual assumptions within.

Is Dependence Corruption the Solution to America's Campaign Finance Problems?

Lawrence Lessig has suggested that the answer to contemporary campaign finance issues is reframing it as dependence corruption problem. I examine the merits of this approach from a political science perspective, and offer an alternative way to look at the same problem. Professor Lessig’s original intent account rests on too many contestable counterfactual assumptions about what the Founders would have thought about conditions and political practices that they could not have imagined in their day. Moreover, the argument that the Constitution’s intent is direct popular sovereignty alone ignores the Electoral College and US Senate elections based on geography. Nonetheless, I suggest that a simpler alternative is to think of the problem as one of democratic distortion, and that the solution under the current constitutional constraints requires continuing efforts to open up donor participation to all voters, fixing the broken disclosure system and preserving the current system of congestion pricing.

Counterfactual reasoning: From childhood to adulthood

The objective of this study was to describe the developmental progression of counterfactual reasoning from childhood to adulthood. In contrast to the traditional view, it was recently reported by Rafetseder and colleagues that even a majority of 6-year-old children do not engage in counterfactual reasoning when asked counterfactual questions (Child Development, 2010, Vol. 81, pp. 376–389). By continuing to use the same method, the main result of the current Study 1 was that performance of the 9- to 11-year-olds was comparable to that of the 6-year-olds, whereas the 12- to 14-year-olds approximated adult performance. Study 2, using an intuitively simpler task based on Harris and colleagues (Cognition, 1996, Vol. 61, pp. 233–259), resulted in a similar conclusion, specifically that the ability to apply counterfactual reasoning is not fully developed in all children before 12years of age. We conclude that children who failed our tasks seem to lack an understanding of what needs to be changed (events that are causally dependent on the counterfactual assumption) and what needs to be left unchanged and so needs to be kept as it actually happened. Alternative explanations, particularly executive functioning, are discussed in detail.

Generalised Taylor and Generalised Calvo Price and Wage Setting: Micro‐evidence with Macro Implications

The Generalised Calvo and the Generalised Taylor models of price and wage setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard dynamic stochastic general equilibrium model. The Generalised Taylor model is found to help rationalise the hump-shaped and persistent response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.

Causal Explanation and Fact Mutability in Counterfactual Reasoning

Recent work on the interpretation of counterfactual conditionals has paid much attention to the role of causal independencies. One influential idea from the theory of Causal Bayesian Networks is that counterfactual assumptions are made by intervention on variables, leaving all of their causal non‐descendants unaffected. But intervention is not applicable across the board. For instance, backtracking counterfactuals, which involve reasoning from effects to causes, cannot proceed by intervention in the strict sense, for otherwise they would be equivalent to their consequents. We discuss these and similar cases, focusing on two factors which play a role in determining whether and which causal parents of the manipulated variable are affected: Speakers' need for an explanation of the hypothesized state of affairs, and differences in the ‘resilience’ of beliefs that are independent of degrees of certainty. We describe the relevant theoretical notions in some detail and provide experimental evidence that these factors do indeed affect speakers' interpretation of counterfactuals.

Quantile Estimates of Counterfactual Distribution Shifts and the Effect of Minimum Wage Increases on the Wage Distribution

SummaryThe paper presents a method for estimating the effects of a policy change on an outcome distribution that uses a comparator quantile rather than a control group and provides methods for estimating the variances of the estimators. The empirical analysis presents estimates of ‘spillover’ effects of increases in the UK minimum wage, i.e. effects on the wages of those who are already above the minimum, under various counterfactual distribution shift assumptions. Evidence is presented against a simple scaled counterfactual. On the basis of the proposed counterfactual estimated spillover effects are small and in most cases do not reach above the fifth percentile.

Generalized Taylor and Generalized Calvo Price and Wage-Setting: Micro Evidence with Macro Implications

The Generalized Calvo and the Generalized Taylor model of price and wage-setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro-area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard DSGE model. The Generalized Taylor model is found to help rationalizing the hump-shaped response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.

What If Kelo v. City of New London Had Gone the Other Way

Kelo v. City of New London is one of the most controversial decisions in U.S. Supreme Court history. The Kelo Court held that the Public Use Clause of the Fifth Amendment allows government to condemn private property and transfer it to other private parties for purposes of “economic development.” This Article considers the question of what might have happened if the Supreme Court decided Kelo v. City of New London in favor of the property owners. Such counterfactual analysis may seem frivolous. But it is, in fact, useful in understanding constitutional history. Any assessment of the impact of a legal decision depends on at least an implicit judgment as to the likely consequences of a ruling the other way. Analysis can be improved by making these implicit counterfactual assumptions clear and systematically considering their implications.Part I briefly describes the Kelo case and its aftermath, focusing especially on the massive political backlash. That backlash led to numerous new reform laws. However, many of them turned out to be largely symbolic. Part II discusses the potential value of a counterfactual analysis of Kelo. It could help shed light on a longstanding debate over the effects of Supreme Court decisions on society. Some have argued that court decisions have little impact, mostly protecting only those rights that the political branches of government would protect of their own accord. Others contend that this pessimistic view underrates the potential effect of Supreme Court decisions.Part III considers the possible legal effect of a ruling in favor of the property owners. Such a decision could have taken several potential forms. One possibility is that the Court could have adopted the view advocated by the four Kelo dissenters: that economic development condemnations are categorically forbidden by the Public Use Clause. This would have provided strong protection to property owners and significantly altered the legal landscape. On the other hand, the Court could easily have decided in favor of the property owners on one of two narrower grounds. Such a ruling would have led to much weaker protections for property owners.Part IV weighs the potential political impact of a decision favoring the property owners. Such an outcome might have forestalled the massive political backlash that Kelo caused. Ironically, a narrow ruling in favor of the owners that did not significantly constrain future takings might have left the cause of property rights worse off than defeat did. On the other hand, a strong ruling categorically banning economic development takings would likely have done more for property rights than the backlash did, especially considering the uneven nature of the latter. Furthermore, political movements sometimes build on legal victories, as well as defeats, as happened in the case of the Civil Rights movement in the wake of Brown v. Board of Education. It is possible that property rights advocates could have similarly exploited a victory in Kelo.

Landscapes without the car: a counterfactual historical geography of twentieth-century Britain

Despite increased concern about environmental damage and resource depletion, the private motor car, and associated automobility, are taken-for-granted aspects of twenty-first-century life. This paper makes the counterfactual assumption that private ownership of cars was severely restricted at the start of the twentieth century, and uses a range of historical data to examine the ways in which such a scenario might have impacted on transport infrastructure, personal mobility and urban life. It is argued that, even without the wholesale adoption of the motor car as a means of personal transport, patterns of everyday mobility would not have differed significantly from today so long as other forms of transport had remained or expanded to cope with this demand. However, such a scenario would probably have required journeys to be planned in different ways, may have been qualitatively different from travel today, and could have disadvantaged particular groups of the population, including some women. A landscape without cars would probably also have altered the form of cities, with services provided closer to where people live, and levels of air pollution substantially lower. The counterfactual historical analysis is used to argue that, although there is little likelihood of cars being banned in Britain, greater restrictions on private motor vehicles would not necessarily lead to the fundamental changes in everyday mobility that some might predict.

Generalized Taylor and Generalized Calvo Price and Wage-Setting: Micro Evidence with Macro Implications

The Generalized Calvo and the Generalized Taylor models of price and wage-setting are, unlike the standard Calvo and Taylor counterparts, exactly consistent with the distribution of durations observed in the data. Using price and wage micro-data from a major euro-area economy (France), we develop calibrated versions of these models. We assess the consequences for monetary policy transmission by embedding these calibrated models in a standard DSGE model. The Generalized Taylor model is found to help rationalizing the humpshaped and persistent response of inflation, without resorting to the counterfactual assumption of systematic wage and price indexation.

How (not) to think about idealisation and ceteris paribus-laws

Semantic dispositionalism is the theory that a speaker’s meaning something by a given linguistic symbol is determined by her dispositions to use the symbol in a certain way. According to an objection by Kripke, further elaborated in Kusch (Analysis 65(2):156–163, 2005), semantic dispositionalism involves ceteris paribus-clauses and idealisations, such as unbounded memory, that deviate from standard scientific methodology. I argue that Kusch misrepresents both ceteris paribus-laws and idealisation, neither of which factually approximate the behaviour of agents or the course of events, but, rather, identify and isolate nature’s component parts and processes. An analysis of current results in cognitive psychology vindicates the idealisations involved and certain counterfactual assumptions in science generally. In particular, results suggest that there can be causal continuity between the dispositional structure of actual objects and that of highly idealised objects. I conclude by suggesting that we can assimilate ceteris paribus-laws with disposition ascriptions insofar as they involve identical idealising assumptions.

Estimating the Energy Gap Among US Children: A Counterfactual Approach

Our goal was to quantify the magnitude of energy imbalance responsible for the increase in body weight among US children during the periods 1988-1994 and 1999-2002. We adopted a counterfactual approach to estimate weight gains in excess of normal growth and the implicit "energy gap"--the daily imbalance between energy intake and expenditure. On the basis of Centers for Disease Control and Prevention growth charts, we constructed weight, height, and BMI percentile distributions for cohorts 2 to 4 and 5 to 7 years of age in the 1988-1994 National Health and Nutrition Examination Survey (N = 5000). Under the counterfactual "normal-growth-only" scenario, we assumed that these percentile distributions remained the same as the cohort aged 10 years. Under this assumption, we projected the weight and height distributions for this cohort at 12 to 14 and 15 to 17 years of age on the basis of their baseline weight-for-age and stature-for-age percentiles. We compared these distributions with those for corresponding age groups in the 1999-2002 National Health and Nutrition Examination Survey (N = 3091) approximately 10 years after the 1988-1994 National Health and Nutrition Examination Survey. We calculated differences between the counterfactual and observed weight distributions and translated this difference into the estimated average energy gap, adjusting for increased total energy expenditure attributable to weight gain. In addition, we estimated the average excess weight accumulated among overweight adolescents in the 1999-2002 National Health and Nutrition Examination Survey, validating our counterfactual assumptions by analyzing longitudinal data from the National Longitudinal Survey of Youth and Bogalusa Heart Study. Compared with the counterfactual scenario, boys and girls who were aged 2 to 7 in the 1988-1994 National Health and Nutrition Examination Survey gained, on average, an excess of 0.43 kg/year over the 10-year period. Assuming that 3500 kcal leads to an average of 1-lb weight gain as fat, our results suggest that a reduction in the energy gap of 110-165 kcal/day could have prevented this increase. Among overweight adolescents aged 12 to 17 in 1999-2002, results indicate an average energy imbalance ranging from 678 to 1017 kcal/day because of an excess of 26.5 kg accumulated over 10 years. Quantifying the energy imbalance responsible for recent changes in weight distribution among children can provide salient targets for population intervention. Consistent behavioral changes averaging 110 to 165 kcal/day may be sufficient to counterbalance the energy gap. Changes in excess dietary intake (eg, eliminating one sugar-sweetened beverage at 150 kcal per can) may be easier to attain than increases in physical activity levels (eg, a 30-kg boy replacing sitting for 1.9 hours with 1.9 hours walking for an extra 150 kcal). Youth at higher levels of weight gain will likely need changes in multiple behaviors and environments to close the energy gap.

When to Start a Fight and When to Fight Back: Liability Disputes in the Workers’ Compensation System

Contrary to the original intention of no‐fault workers’ compensation laws, employers deny liability for a substantial fraction of on‐the‐job injuries. We develop and estimate a simple structural model that explains the high rate of litigation as a consequence of asymmetric information. We estimate the model using data for a large sample of back injuries in Minnesota. Simulations under the counterfactual assumption that all denied workers pursue their claims suggest that the strategic incentive accounts for 30%–40% of observed liability disputes.

Public choice and political philosophy: Reflections on the works of Gordon Spinoza and David Immanuel Buchanan

The paper explores some of the surprisingly many relations between theories of public choice and political philosophy. Focusing on variants of Homo oeconomicus it does so systematically rather than historically. But it factors in the history of the two disciplines along with some recent developments in (experimental) economics. This sheds new light on the counterfactual assumption that in politics everybody should be supposed to be a knave and suggests that we better seek factually sound behavioral foundations for Public Choice.

Responsibility and punishment: whose mind? A response

Cognitive neuroscience is challenging the Anglo-American approach to criminal responsibility. Critiques, in this issue and elsewhere, are pointing out the deeply flawed psychological assumptions underlying the legal tests for mental incapacity. The critiques themselves, however, may be flawed in looking, as the tests do, at the psychology of the offender. Introducing the strategic structure of punishment into the analysis leads us to consider the psychology of the punisher as the critical locus of cognition informing the responsibility rules. Such an approach both helps to make sense of the counterfactual assumptions about offender psychology embodied in the law and provides a possible explanation for the human conviction of the existence of free will, at least in others.

Staggered prices and trend inflation: some nuisances

Most of the papers in the sticky-price literature are based on a log-linearization around the zero inflation steady state, a simplifying but counterfactual assumption. This paper shows that when trend inflation is considered, both the long-run and the short-run properties of DGE models based on the Calvo staggered price model change dramatically. It follows that results obtained by models log-linearized around a zero inflation steady state are quite misleading. Furthermore, the same is not true for models based on the Taylor staggered price model, which is robust to changes in trend inflation. As a conclusion, the Taylor model is to be preferred, unless one is willing to index nominal variables.