Wednesday, March 09, 2005

Fun With Guys Trying To Have Fun With Surveys

by Tom Bozzo

Earlier today, I threatened to take on a post at Mahalanobis by HedgeFundGuy, "Bankrupt Survey Data," which purports to debunk a recent survey of personal bankruptcies*, cited in Paul Krugman's Tuesday New York Times column among other places. Regular commenter Ken Houghton egged me on, so here goes.

1. HedgeFundGuy suggests, "Survey data are always very suspect, which is why economists generally do not use them." This is simply ludicrous. It took me about two seconds to draw up a short list of survey-based data widely, if not universally, used by U.S. (macro)economists:
BTW, some of the above survey data are "tendentious." For instance, the CPS determines self-employment through self-reporting by survey respondents, and under certain circumstances actually being paid is not necessary to be considered "employed" for CPS analysis purposes.

2. HedgeFundGuy's argument regarding the bankruptcy study is... lacking. Here is a summary:
I've previously expressed sympathy with the argument that surveys results in medical journals (not to mention most statistical results published in social science journals) should be better documented. However, the Health Affairs paper is not, properly construed, making an extraordinary claim requiring extraordinary justification.

In short, far from tearing the study up, as Alex Tabarrok suggests, HedgeFundGuy has offered nearly nothing to actually discredit the study. Five demerits for the Marginal Revolutionaries: they won't make the blogroll this quarter.

HedgeFundGuy might have made some hay out of the AER paper (cite) had he been so inclined. That paper, which I skimmed for the purposes of this post, provides mixed evidence for exogenous events as drivers of bankruptcy filings. The authors suggest that filers' strategic behavior is of primary importance, though their analysis also appears to show that factors such as divorce and income shocks have very large effects on the marginal probability of bankruptcy filing. (They also offer repeated caveats about the difficulty of identifying behavioral hypotheses from their analysis.) It should be common knowledge that health shocks can readily cause large adverse income shocks.


Todd Zywicki is a little more infomative at Volokh Conspiracy, but still relies too much on the Straw Man. For instance, he complains:
Nor does the requirement of $1,000 in unpaid medical bills within 2 years of bankruptcy seem like a very plausible measure of serious financial problems.
The abstract of the Health Affairs paper states that
Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness... [emphasis added]
and, Earth to GMU, if you're not rich, nearly $12,000 in out-of-pocket medical expenses is a lot of money.

But it's getting late. I'll just add a parting shot that Zywicki has a law review article making, among other things, an Olsonian collective-action case for why the role of creditors in pushing bankruptcy reform might be overstated. I don't think Zywicki's argument holds water, but I'll save that one for another day.


* "MarketWatch: Illness And Injury As Contributors To Bankruptcy," by David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler.
Comments: Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?