Comment on “Simulation and Estimation of Hedonic Models” by Heckman, Matzkin and Nesheim

Structural vs. Atheoretic Approaches to Econometrics 1 Michael P. KeaneARC Federation Fellow University of Technology Sydney and Research Fellow Arizona State University Abstract In this paper I attempt to lay out the sources of conflict between the so-called “structural” and “experimentalist” camps in econometrics. Critics of the structural approach often assert that it produces results that rely on too many assumptions to be credible, and that the experimentalist approach provides an alternative that relies on fewer assumptions. Here, I argue that this is a false dichotomy. All econometric work relies heavily on a priori assumptions. The main difference between structural and experimental (or “atheoretic”) approaches is not in the number of assumptions but the extent to which they are made explicit. JEL Codes: B23, C10, C21, C52, J24 Key Words: Structural Models, Natural Experiments, Dynamic Models, Life-cycle Models, Instrumental Variables 1 Address for correspondence: University of Technology Sydney, PO Box 123 Broadway NSW 2007 Australia, Phone: 61-2-9514-9742, Fax: 61-2-9514-9743, email: michael.keane@uts.edu.au. 1. Introduction The goal of this conference is to draw attention to the many researchers, especially young researchers, doing high quality structural econometric work in several areas of applied micro-economics. It is motivated by a ...