Mismeasurement in empirical political economy: Sanctions have more impact than implied by popular night lights data
* 주관: 서울대학교 경제학부, 경제연구소 한국경제혁신센터, SSK, BK21
* 본 세미나는 BK21+(2023-1학기) 세미나 참석으로 인정됩니다.
- 세미나 참석인정을 원하는 학생은 세미나 종료 후 참석자 명단을 작성해주시기 바랍니다.
Abstract
Empirical research on the political economy of development has recently benefited from using novel remote sensed data that should be free from political manipulation. For example, whether dictatorships exaggerate their economic growth record or whether sanctions reduce economic activity in sanctioned countries has been studied using satellite-detected night lights data. Most studies use data from the Defense Meteorological Satellite Program (DMSP), designed for observing clouds for short-term weather forecasts rather than for long-run observation of economic activity on earth. The DMSP data are flawed by blurring, and by bottom-coding due to poor low-light detection. The resulting measurement errors may bias econometric evaluations. To see if this is so we use a difference-in-differences analysis of impacts on night lights of shutting down the Kaesong Industrial Zone in North Korea, which South Korea closed in 2016 as a sanction for North Korea’s nuclear tests. We estimate that luminosity in the affected region declined by about 50%, and this effect is always precisely estimated if the highly accurate Visible Infrared Imaging Radiometer Suite (VIIRS) data are used. Yet with the more widely used DMSP data, apparent impacts are imprecisely estimated and are far smaller. A decomposition shows that attenuation in estimated treatment effects if DMSP data are used is especially from false zeroes, which may also bias evaluations in other dimly lit places. Despite the potential value of novel sources of (big) data like satellite-detected night lights, we should not lose sight of some of their basic measurement error features when conducting empirical research in the political economy of development.