Abel, a loyal MR reader from Valencia, asks:
I've recently been reading an introductory book on nonparametric models (Nonparametric and Semiparametric Models: an Introduction – Härdle et al) and the apparent flexibility of the approach makes me wonder why aren't those models more used in empirical economics.
Â¿Are their drawbacks too big? (The so-called "curse of dimension")
Â¿Perhaps it's just economist's community lack of knowledge or willingness to learn?
Â¿Are they perceived as a threat to conventional or more established estimation methods?
I would be really glad to hear your opinion and also the feedback in the comments.
He could have added "signalling" to the list, since many non-parametric methods are relatively easy and thus do not demonstrate the skill of the researcher. But the fundamental reason I think has to do with the nature of economics: non-parametric methods are most likely when you don't have a well-defined, formal structural model in mind. But many MR readers know more about this than I do, so please offer us your opinions…