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Eric Loken writes:
I guess they needed to add some drama to Hermine’s progress.
P.S. The above post was pretty short. I guess I should give you some more material. So here’s this, that someone sent me:
You’ve written written about problems with regression discontinuity a number of times.
This paper that just came in on the NBER Digest email looks like it has another very unconvincing regression discontinuity. I haven’t read the paper—I’m just looking at the picture. But if you asked me to pick out the discontinuity from the data, I think I’d have a lot of trouble…
Among other things, it looks like if you take their linear specification seriously, we should expect negative patents for firms with assets below 50 million pounds if eligible for SME (left), or for firms below 80 million pounds if ineligible (right). So, um, maybe we shouldn’t take those lines very seriously.
Also the minimum x value edge looks suspiciously as though it’s been chosen to make the left-side regression line go as high as possible. Wouldn’t be an issue if they had doing some kind of LOESS regression, of course.
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