Study: Nebraska Counties With Wal-Marts See Slower Growth

Give me a break.  Both sides have used logical debate and both sides have name-called or gone off on tangents.  However, one thing that I have noticed is that the pro-Wal-Mart/status quo people will try to distort or over simplify the anti-Wal-Mart people.  Also, some people aren’t as articulate or educated about certain details, but they still have a right to express their opinion.

Generic,

“Both sides have used logical debate and both sides have name-called or gone off on tangents.”

This is true, but look at the posts and see the ratio.  You are one of the few who does actually debate, but, what about the post that says, “Wal-mart sux”, what value does that post bring into the discussion?

“ However, one thing that I have noticed is that the pro-Wal-Mart/status quo people will try to distort or over simplify the anti-Wal-Mart people.”

That is only your opinion, because you tend to want to believe only your position.  In another thread, a anti Wal-Mart poster claims that RX techs get paid $5,45 an hour, have only a 3rd grade education and have trouble counting over 20, how much truth is there in that?  You work at Wal-Mart, is this truth or is it BS.  Also, do you believe that Wal-Mart does NOT offer health insurance and is therefore DUMPING their employees into the Medicaid system, or is it really the employees CHOICE to get on Medicaid?

“Also, some people aren’t as articulate or educated about certain details, but they still have a right to express their opinion.”

And, that was my point, some people here are trying to get educated and people from both sides should have the right to be heard, so that those people can get a balanced view to make their educated decisions on.

How could you possibly compare one town against another? How can social scientist and agricultural economist compare anything Bob? Maybe by using the standard techinques of their profession, you know, like engineers, biologists etc do? Would you believe the study if it showed that counties with Wal-Marts did better than counties without Wal-Marts? I bet you would. It’s not like this is the first study to come out with these conclusions.

A Univerisity of Nebraska study shows..... Doesn’t the N on their helmets stand for Knowledge?

Again, like the statistician says in the other article, this must be gospel. WM causes slow economic growth. I thought the money in Nebraska was in ethanol production...you know environmentally-friendly, zero-emmission fuel?

evilwalmart,

I would always distrust any study that claimed a figure down to the penny ("counties with a Wal-Mart was $142.62 below the average annual growth"), most reliable studies have a plus or minus error rate, so they would probably use a percentage rate or a range, not quote an exact figure.

Besides, even Azzam said himself, that, ““This isn’t necessarily cause and effect, Wal-Mart is a manifestation of the restructuring going on in the U.S. economy ... It’s a symptom of the economy, not necessarily a cause.”

I don’t see where WMW is making a big deal about it. They posted a story from the associated press. Bob, they are claiming an average down to the penny.  When you figure an average that sometimes happens.  I agree with your simplistic example but if the error (variance) was that big I doubt the authors would even mention the study. It would be meaningless and unpublishable.  And, it’s not ‘error rate’ (whatever that is) that we are discussing, it’s standard deviation. For the result reported to be statistically significant p<.05.

The study applied a standard cross-country empirical growth model to study growth in a cross-county setting within a state within the United States.  Counties within a state are observed to grow at different speeds just as do countries (compare China, for example, to Poland or Namibia). Applying a growth model to states within the United States or counties within a state poses less problems than applying them across countries.  I can think of three main reasons. First, although counties within the US do grow at different speeds, they do not diverge from one another as countries do. Second, a researcher does not have to control for differences in political regimes, norms, etc.....Third, data on political units within a country are more comparable than across countries and more reliable, especially in the US where we have a more sophisticated and honest data collection infrastructure.

The empirical question we addressed was as follows: After one controls for standard determinants of growth (initial income, level of education, population, population density, expenditures on infrastructure, adjacency to I-80, whether a country is rural or urban, etc........), is there a difference in average growth between counties that have a Wal-Mart and counties that don’t?  Someone asked me why didn’t you look at counties with Starbucks and counties without. Yes, we could have, but Starbucks is not in the top 5 fortune 500, is the not the largest employer in the US, and is less likely to be a “strong” engine for growth as Wal-Mart does. 

Joseph Schumpeter, one of the most influential economists in growth theory, and whose work influences modern growth economists, would probably see Wal-Mart as the perfect example of innovative companies needed to fuel growth in a capitalistic economy.  A simple explanation of Schumpeter’s theory can be accessed at http://en.wikipedia.org/wiki/Creative_destruction

Anyhow, after controlling for the standard growth variables, the variable indicating presence or absence of Wal-Mart has a coefficient of -142.62 with a t-ratio of -2.111.  In fact we ran 5 alternative models to see how robust that relationship is. the point estimates ranged from -136.68 to 169.23 and were all statistically significant at leat at the 5 percent level, with two statistically significant at the 1 percent level.

Does that mean Wal-Mart “caused” the negative relationship? The answer is “We Do Not Know.” To establish cause and effect in economics is a tall order because effects are based on Ceteris Paribus assumption . In the real world things cannot be held fixed.  May agronomy colleagues who do research in a greenhouse can fix things. However, one can draw stronger conculsions if one is armed with a “structural” model, i.e., a model that had several simultaneous equations.  This is something a PhD student in our department is showing interest in doing.

So,what is the bottom line you may ask? The bottom line is that our finding is an interesting empirical regularity that I hope will trigger some further research about the link between the Wal-Martization of retailing and economic growth. I am not a regional economists, but my reading of literature in that area tells me that one should not expect find a link because retailing belongs to the non-basic sector. Unlike companies that belong to the basic sector (Boeing, for example), retaliers do not contribure as much to growth because demand for their product is not tied to the local economy. Of course if a county has a Boeing plant and a Wal-Mart, we may have a different story. 

I hope this clarifies things.

Sincerely,

Azzeddine Azzam
Professor

Azzeddine Azzam,

“the point estimates ranged from -136.68 to 169.23”

Maybe I’m just not getting it.  How do you get a ‘coefficient of -142.62, when the bottom of the range is -136.68?  Isn’t -142.62, less than -136.68?

By range, I meant the range of the 5 point estimates from the 5 models we estimated, not the range of the point estimate -142.62. The point estimates and t-ratios (in parentheses) from the 5 models are:
Model 1: -142.62(-2.111)
Model 2: -161.35(-2.631)
Model 3: -136.08(-2.119)
Model 4: -169.23(-2.743)
Model 5: -163.43(-2.805)

AA.