Money and Markets: Essays in Honor of Leland B. Yeager

Good ideas and bad regressions 75Let us examine how aspects of the LT regression model fit my characterizationof PC empirical research. We examine LT for the following: (1) absence of astructural model; (2) many proxy variables; (3) a proxy variable search; and (4)absence of advanced econometric methods.1. No structural model. Throughout their paper LT talk about production functionsand markets. These are familiar concepts to us all, but the actual empirical workbears little resemblance to any of these constructs. LT estimate a single equationmodel with citations as the dependent variable and article length, author citations,and several indicators of bad writing as independent variables. There is no connectionto production, supply, or demand. 9 The result is a “pro forma reduced form”model.Using the theory–model distinction discussed by Holcombe, one can see that thegap between production functions, markets, and the LT empirical work is large.Although many economic concepts are discussed in the LT paper, no structuralmodel is presented. This is a characteristic of research in the sociology ofeconomics.2. Proxy variables. All of the variables used in the LT regression model are proxies.Citations is a proxy for quality or value. The following are all proxies for writingquality: words per sentence, number of footnotes, number of footnotes that interruptsentences, use of “bad words” such as “like” and very,” the use of “five-dollar”words, the use of “is,” the use of rhetorical questions, the presence of table ofcontents paragraphs, and excessive introduction and summarizing.3. Proxy variable searches. LT do not appear to spend much time on a proxy variablesearch, probably because they found a publishable result quickly, but their Table 1does indicate two alternative measures of poor writing: Bad Footnotes and Percent BadFootnotes.4. Advanced econometrics. I have stated earlier that advanced econometric methodsare often not used because the problems associated with estimating a pro formareduced form containing proxies and searched over proxies will discourage othersfrom providing advice or assistance. I offer a suggestion about how the LT papermight be improved but also freely admit that I, and I suspect others, can generatelittle enthusiasm for the undertaking. The nature of the dependent variable affordsthe opportunity to apply a limited-dependent variable model. The dependentvariable in the LT paper is the number of citations to a journal article. As this is aninteger, estimation by OLS will lead to unbiased but inefficient estimation. What isoften done in this case is to estimate a limited-dependent variable model known asa Poisson regression (see Maddala 1983: 51). This model is easy to estimate usingthe LIMDEP software.However, the absence of a Poisson regression from the LT paper is not the point.Had this been a paper in labor economics or industrial organization, the referees