Tuesday, 19 October 2010

Clio and the economist

There is a new paper out in the Journal of Economic Surveys on Clio and the Economist: Making Historians Count. The abstract of the paper by David Greasley and Les Oxley reads:
Cliometrics reconnected economic history an economics in the 1960s. The deeper foundations of cliometrics research lie in the longer standing traditions of quantitative history and the contemporaneous growth of the social sciences and computing. Early cliometrics research
reinterpreted economic history through the lens of neo-classical economics. Over the past half century cliometrics has matured and now utilizes a broad array of theoretical perspectives and statistical methods to help understand the past. The papers introduced here illustrate the achievements of several key areas of cliometrics research and show how new theoretical perspectives, innovative data construction and sophisticated econometric methods are the hallmarks of the discipline.
In the paper Greasley and Oxley write
The heat of the early debates, the label of the new economic history, and the controversies surrounding counterfactuals and applying neo-classical economics to re-evaluate long-standing historical questions sometimes disguises the wider foundations of cliometrics. In that wider setting several intellectual traditions shaped the emergence and the subsequent evolution of
cliometrics. The ones that now stand out include:

  1. Quantitative history and most especially the construction of historical series of prices, wages and incomes, which have long traditions dating back to at least the 19th century.
  2. Quantitative social science of the 1950s and 1960s which placed emphasis on empirical research, and the use of censusand mass survey data. Sociologists for example, pioneered the use of sampling and significance testing to handle large volumes of social data, see Hudson (2000). The manipulation of large data sets was facilitated by concomitant developments in computing.
  3. Econometric testing, including of macroeconomic business cycles models which developed strongly in the 1930s; seeMorgan (1990). Tinbergen’s (1939) Statistical Testing of Business Cycles published in 1939 drew on classical statistical methods but also set out the best practices for applied econometrics which eventually became embedded in cliometrics.
  4. Cliometrics has been an evolving discipline, with its shifts in direction and emphasis in part reflecting newdevelopments in economic theory. Most importantly the return of growth theory to centre stage in mainstream economics and the development of endogenous growth models in the 1990s enabled cliometricians to reduce their relianceof neo-classical models and measures of residual productivity, see Greasley and Oxley (1997).
  5. The evolution of cliometrics has also been strongly influenced by new developments in econometrics methods, most especially in the analysis of non-stationary time series following the work of Engle and Granger (1987).
Is it just me or does that list make it look like microeconomics doesn't exist, or at least plays
little or no part in historical economics? The paper has little to say about the actually interesting bits of
historical economics, that is the microeconomics bits.

I'm thinking of work such as that by several authors which looks at the characteristics that determine contract choice using data on historical agricultural contracts. Ackerberg and Botticini (2002), for example, looks at agricultural contracts between landlords and tenants in early Renaissance Tuscany. Their abstract reads
Empirical work on contracts typically regresses contract choice on observed principal and agent characteristics. If (i) some of these characteristics are unobserved or partially observed and (ii) there are incentives whereby particular types of agents end up contracting with particular types of principals, estimated coefficients on the observed characteristics may be misleading. We address this endogenous matching problem using a data set on agricultural contracts between landlords and tenants in early Renaissance Tuscany. Controlling for endogenous matching has an impact on parameters of interest, and tenants’ risk aversion appears to have influenced contract choice.
Oriana Bandiera provides another example with her paper on "On the Structure of Tenancy Contracts: Theory and Evidence from 19th Century Rural Sicily". This looks at the empirical determinants of contract length utilising data on tenancy agreements signed between 1870 and 1880 in the district of Siracusa, Italy. The abstract reads,
This paper analyses the empirical determinants of contract length, a key and yet neglected dimension of contractual structure. I use data on tenancy agreements signed between 1870 and 1880 in the district of Siracusa, Italy to estimate the choice over length and compensation schemes jointly.

The findings indicate that the choice of contract length is driven by the need to provide incentives for non-observable investment, taking into account transaction costs and imperfections in the credit markets that make incentive provision costly. The results also illustrate that since both length and the compensation scheme are used to provide incentives within the same contract, joint analysis is important for a correct interpretation of the evidence.
An example other work not covered in the survey would be Jeremiah Dittmar's paper, “Information Technology and Economic Change: The Impact of the Printing Press”. The abstract reads:
The movable type printing press was the great innovation in early modern information technology, but economists have found no evidence of its impact in measures of aggregate productivity or income per person. This paper examines the technology from a new perspective by exploiting city-level data on the establishment of printing presses in 15th century Europe. I find that between 1500 and 1600, cities where printing presses were established in the late 1400s grew at least 60 percent faster than similar cities which were not early adopters. I show that cities that adopted printing in the late 1400s had no prior growth advantage and that the association between adoption and subsequent growth was not due to printers anticipating city growth or choosing auspicious locations. These findings imply that the diff usion of printing accounted for between 20 and 80 percent of city growth 1500-1600. They are supported by historical evidence and instrumental variable regressions that exploit distance from Mainz, Germany — the birth place of printing — as an instrument for early adoption. The printing press reduced the costs of transmitting information between cities, but fostered new face-to-face interactions and localized spillovers. Print media notably fostered the development of skills, knowledge, and innovations valuable in commerce.
Here we see the use of data disaggregated to the level of cities, rather than the more usual national income type data, to look at the effects of changes in technology on growth and finding interesting results that the macro data miss.

There is also work such as that by John McDonald and G. D. Snooks on the "Domesday Economy: A New Approach to Anglo-Norman History". McDonald and Snooks apply modern theoretical and statistical methods to the data of the Domesday Book (1086) to analyse the system of manorial production and the nature of the national tax system known as danegeld in eleventh-century England. Domesday Book includes detailed information on land ‘ownership’, income, resources, and fiscal responsibility for almost every manor in 1086 and, in some cases, in 1066. The data allows the authors to estimate production functions for the manors in the Anglo-Norman economy.

All of this suggests to me that there are interesting and important things that micro theory and data can tell us about the past that are missed by the concentration on macro theory and data. We await a good survey.

No comments: