11 May
2006
11 May
'06
4:51 a.m.
On Thu, 11 May 2006, aram harrow wrote:
thanks for the comments!
how about the more boring but descriptive:
Pharmaceutical market size and innovation: Can we estimate causal effects?
its not clear what's causing what from the title.
Attempts to directly measure the effect of market size on
innovation---a key economic question---typically run into severe
problems of endogeneity and omitted variable bias. One possible
solution (due to Acemoglu and Linn, 2004) is to use exogenous
demographic trends to estimate the market size for different
as instruments?
categories of drugs. However, after controlling for
category and time
fixed effects to remove endogeneity, the residual variation in market
size becomes so small that robust estimation of its effect on
innovation becomes impossible.
tho they think it is, right? not clear from what you wrote
For example, a change of less than
0.2% in drug usage patterns could be chosen to either
eliminate or triple the estimated effects of market size on new drug
approvals. We are left with a dilemma: either to base estimates
on large variations in market size that are vulnerable to
endogeneity, or to use small fluctuations that are hopelessly
sensitive to minor specification errors.
On 5/10/06, Gary King <king(a)harvard.edu> wrote:
maybe the title should be 'market size and innovation or innovation and
market size'?
but that's only if your point really is about endogeneity. you use the
word, but the text of the abstract sounds like its about model dependence.
i'd resolve that confusion too.
Gary
On Wed, 10 May 2006, Dan Hopkins wrote:
Sounds like it will be a good paper.
On the title... Hmmm... Keep in mind that many more people will read
the
title than the first sentence, so the first
sentence should be
subordinate
to the title, not vice versa. Imagine someone
skimming a table of
contents that she has just been emailed: can she glean your argument from
your title? I might modify the title to mention pharmaceuticals
directly,
and to try to make your argument.
Also, your title and first sentence suggest that you are interested in
market size and innovation generally--but then in sentence two you
introduce pharmaceuticals. The transition from general to specific
strikes me as slightly abrupt. Again, mentioning pharmaceuticals in the
title could help signal what the paper is really about.
Finally, I am not sure I understand the core contribution. Past research
has used ostensibly exogenous demographic variation to estimate how
changing market sizes impact drug innovation. But where exactly does
drug usage come in--do such techniques need to make assumptions about
usage rates? I wasn't quite clear on that.
And a note for future work: on the issue of sensitivity to exogeneity,
you
might check out Jonathan Wand's short
article in the Political
Methodologist from a few years ago, it provides an algorithm for
estimating results' sensitivity to exogeneity assumptions.
Best,
Dan
On Tue, 9 May 2006, aram harrow wrote:
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our apologies for being so late.
------------
Market size, innovation and the spectre of endogeneity
Melinda Elias and Aram Harrow
Endogeneity often plagues attempts to find the effect of market size
on innovation. One possible solution (due to Acemoglu and Linn,
2004) is to measure pharmaceutical innovation by new drug approvals
and to estimate market size based on exogenous demographic trends.
We show that this approach is extremely sensitive to (possibly
endogenous) changes over time in the age profiles of markets for
different drug categories. For example, a change of less than 0.2% in
drug usage patterns could be chosen to either eliminate or triple
the estimated effects of market size on new drug approvals. This
sensitivity is a consequence of the strong colinearity between
market size and the time and drug fixed effects.
----------
the title is so that the first sentence of the paper can be "A spectre
is haunting economics---the spectre of endogeneity." if the crowd
judges this joke too corny, it can be dropped.
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