Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93516 
Year of Publication: 
2013
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 32-2013
Publisher: 
Philipps-University Marburg, Faculty of Business Administration and Economics, Marburg
Abstract: 
In 2006, a study, published in the Journal of Public Economics, employing a panel regression of 200 U.S. counties across 20 years, found a significant elasticity of homicides with respect to firearms ownership. Based on this finding the authors made the public policy recommendation of taxing gun ownership. However that study fell prey to the ratio fallacy, a trap known since 1896. All the explanatory power (goodness-of-fit-wise and significance-wise) of the original analysis was due to regional and intertemporal differences and population being explained by itself. When the ratio fallacy is accounted for, all authors' results can no longer be found. This is illustrated in this paper using a balanced panel from the data for 1980 to 2004. My findings are robust to (i) alternative specifications not subject to the ratio problem, (ii) using only data from 1980 to 1999 as in the original paper, (iii) using an unbalanced panel for 1980 to either 1999 or 2004, (iv) applying weighting as done by the original authors and (v) using data aggregated at the state level.
Subjects: 
Gun Ownership
Social Costs
Ratio Fallacy
Spurious Regression
JEL: 
C51
H21
I18
K42
Document Type: 
Working Paper

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