It's Gotta Be The Weather?

For basketball junkies Michael Jordan burst on the scene at Five-Star Basketball Camp, for fans of college basketball it was hitting a shot against Georgetown to win the National Championship as a freshman, for NBA fans it was a 63 point explosion against the Celtics in the playoffs, and for the general public it was a series of commercials directed by Spike Lee for NIKE that emphasized "It's gotta be the shoes?"  Twenty years later, Spike Lee has returned to commercial directing for Converse to highlight the amazing Dwayne Wade.  I don't know if there will be a catchy phrase such as "its gotta be the shoes" to explain Wade's amazing array of talents on the basketball court as there was for MJ.

But while NIKE produced a cultural icon in MJ, it was obvious that exclaiming the shoes didn't explain the special skills of Jordan (just do a youtube search of MJ).  It was, as we economists would put it, a spurious correlation.

Steve Dubner and Steve Levitt write in the NYT Magazine (11/5/06) discuss the economic consequences of changes in the weather.  "The beauty of weather," they argue, "is that it does its own thing, and whether the weather is good or bad, you can be pretty sure that it didn't come about in response to some human desire to fix a problem.  Weather is a pure shock to the system, which means that it is a valuable tool to help economists make sense of the world."

Well, if your methodology is that of 'natural experiments' perhaps, but I think basic economic reasoning is perhaps a much better tool for understanding the world.  Weather is not a causal factor in economic explanation, but a condition of the world.  The cause is human agency.  The entire Freakonomic phenomena often blurs this fundamental point and steers readers in the direction where they confuse statistical analysis of a phenomena with the economic analysis of a phenomena.  Using the technical tools  often used in economic analysis does not make for an economic analysis.  Economic reasoning is more than the techniques used by economists.  It is about the content of reasoning, not just the form that reasoning takes.  The economic way of thinking is about human purposes and plans, and the intended and unintended consequences of human action.  Institutional structures govern the way we interact with one another, and with our natural environment. But the critical factor in the analysis must always be the choosing individual.

Compare the impact of weather as discussed in the Dubner and Levitt article with the discussion found in Pete Leeson and Russ Sobel's "Weathering Corruption" study.  There weather might provide a shock, but the causal factor in the analysis is the purposive "rent-race" that governmental institutions create as a response to weather 'crises'.  In short, while the natural environment is of course always in the background, the economic issue is how alternative institutional regime work with human agency to determine how choosing individuals will behave with respect to the weather.  In the Leeson and Sobel story, corruption is not a consequence of weather any more than Michael Jordan's amazing abilities were a consequence of NIKE.  No, it is government policy about the weather that creates opportunities for corruption.

Steve Levitt (perhaps the Michael Jordan of economics) should turn to Stephen Dubner (perhaps the Spike Lee of economics) and give that same sly smile that MJ gave in those commercials when it is suggested "Its Gotta Be the Weather?"