The dubious link between privatization and mortality

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Last March, Ryan questioned the veracity of an article in the British medical journal the Lancet, which claimed that privatization in post-communist countries was responsible for massive numbers of deaths. He included rebuttals from both The Economist (subscription required) and John Earle:

Earle points out that a very basic link in the chain of reasoning of the Lancet authors is missing - namely, mass privatization did not lead to substantial job loss. In fact, the effects on employment were typically neutral or positive

Still skeptical? A new paper by Scott Gehlbach and John Earle from the Upjohn Institute of Employment Research takes the axe to the Lancet's data:

The new analysis examines three simple checks that were made on the assumptions of the Lancet article: recomputing the measure of mass privatization, assuming a short lag for economic policies to affect mortality, and controlling for country-specific mortality trends. Any one of these changes greatly weakens the mortality-privatization correlation, and any two produce a correlation that is either zero or negative.

Indeed, the estimated effect of privatisation on mortality is negative when assuming 2-year lags and controlling for trends. Although the correct functional form is unknown, one could as easily conclude that privatisation lowered as raised mortality in the former Soviet Union.

Alas, if something sounds too bad to be true, it probably isn't.  

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