We reexamine Mustard and Lott’s arguable study on the effect of “shall issue” gun laws on crime using an empirical standard error characteristic randomly generated from “placebo” laws. We find that the effect of shall issue laws on crime is much less well predicted than the Mustard and Lott 1997 and Lott 2000 effects indicate. We also find, however, that the cross equation regulations implied by the Lott Mustard theory are supported. A boomlet has occurred lately in using quasi herbal experiments to answer essential questions of public policy.
The intuitive power of this method, even though, has once in a while diverted recognition from the statistical assumptions that has to be made, particularly regarding standard errors. Failing to take into account serial correlation and grouped data can dramatically reduce primary errors suggesting greater truth in outcomes than is in reality the case. We find that the placebo law technique Bertrand, Duflo and Mullainathan 2002 is an invaluable addition to the econometrician’s toolkit.