Tuesday, February 13, 2007

"Statistically Indistinguishable From Zero"

Oberholzer and Strumpf - the 2007 version of their landmark paper is updated and published in the very prestigious juried Journal of Political Economy from the University of Chicago.

My comments will follow at some point. Here's the abstract.

The Effect of File Sharing on Record Sales: An Empirical Analysis

Harvard University Business School
University of Kansas - School of Business

Journal of Political Economy, Vol. 115, pp. 1-42, February 2007

For industries ranging from software to pharmaceuticals and entertainment, there is an intense debate about the appropriate level of protection for intellectual property. The Internet provides a natural crucible to assess the implications of reduced protection because it drastically lowers the cost of copying information. In this paper, we analyze whether file sharing has reduced the legal sales of music. While this question is receiving considerable attention in academia, industry, and Congress, we are the first to study the phenomenon employing data on actual downloads of music files. We match an extensive sample of downloads to U.S. sales data for a large number of albums. To establish causality, we instrument for downloads using data on international school holidays. Downloads have an effect on sales that is statistically indistinguishable from zero. Our estimates are inconsistent with claims that file sharing is the primary reason for the decline in music sales during our study period.

(emphasis added)

And here's a link to the pre-publication version.


Thanks to Jon Newton for pointing out this publication.


1 comment:

  1. "Statistically indistinguishable from zero" is a term of art, that should not be construed as "is zero." With a sufficiently bad experimental design, almost anything will turn out to be statistically indistinguishable from zero. The methodology and statistical approach used here seem to me to be highly suspect, and not worthy of changing anyone's belief on whether or not there is a relation.