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Southern income reconsidered: A reply
Explorations in Economic History 12, 101-102 (1975)
Southern
Income Reconsidered: A Reply
GERALD
GUNDERSON
Mt. Holyoke
College
Professor Gallman has undertaken a lengthy critique of the methods I employed to examine the credibility of accepted measures of Southern Antebellum income. His comments might serve as a useful pedagogical exercise, particularly because they illustrate the dangers of not employing economic analysis to check for consistency in statistics which report economic parameters. Professor Gallman provides a lengthy list of things which might have gone wrong with my investigation; the slave hire-rates might be inappropriate and vary more by area than the two zones which I employed; there might be unanticipated variations in weather and agricultural yields in that census year; and the extrapolation from commodity output to personal income or from regional to state income may be inappropriate; and others. Rather than take up each specific comment, it will suffice to emphasize two general points. First, it is not true that even though the data may be subject to errors, the final results are necessarily weakened. I employed what was essentially a one-sided test, so that biases in the data tend to weaken or reinforce the results depending on the specific deviation of the data concerned. Some biases probably work their way into all economic statistics, as Gallman would probably be one of the first to acknowledge, but the important question is not their existence but rather whether the techniques used in the construction of the statistics tend to control or be swamped by their existence. While Gallman has suggested how biases might have developed in the data I employed, he has not attempted to demonstrate that they might operate systematically so as to mitigate the results. Second, even if the data did produce a systematic bias which weakened the results, it is still necessary to demonstrate that it was of sufficient magnitude to explain the anomalies reported. Gallman does not report any such exercise, and a few brief simulations indicate that it would take enormous biases in the basic data to explain the discrepancies. For example, the paper reports one such exercise in footnote 11. By then referring to Table 3, it is easy to verify that even if the average slave earnings for the state of Alabama are reduced by 40%, which implies an overstatement of 67%, the implied per capita output of free citizens of Alabama rises from $29 to $54. Even at this level it is still only 55% of the reported level of neighboring 101 Copyright o 1975 by Academic Press, Inc. All rights of reproduction in any form reserved.
102
GUNDERSON
Mississippi. In order to equalize the per capita output of free citizens of the two states it would be necessary for the output of slaves in Alabama to have been overstated by 800%! Anomalies of that magnitude must be explained by something far more basic than the biases created by the normal construction of run-of-the-mill economic statistics. In short, although Gallman has raised the possibility of weakness in the procedures he has not provided any concrete support to his claim that they do, in fact, constitute a fatal blow to my results. This brings us to the central point. On a number of occasions Gallman suggests that the data were not of sufficient quality for the form of the statistical tests I was employing. The only difficulty is that no such formal statistical tests were performed in the paper! As I worked with the data it became readily apparent that it failed to pass a much more basic test, economic credibility. Rather than lead the reader through a formal, and more tedious, investigation, therefore, I simply demonstrated that the income estimates for certain well defined sections of the South in 1840 violated the most basic economic axioms. The amount of output reported in certain localities was simply much too low to explain the quantity of economic resources employed in those areas. Either the population was drastically overcounted or the locality provided an exception to normal economic behavior or, by far the most likely, output was drastically understated. Gallman suggests that this might be the result of variations in weather, or similar random forces in agriculture, but this I doubt, particularly because such variations were so pronounced across the county lines which coincided with census boundaries. Even if it were true, it would, in effect, be concurring with my objections to the existing income levels. It amounts to saying that while the figures report the actual amounts earned in 1840, they are very much out of line with normal or prevailing levels. Gallman makes several attempts to substantiate the traditional estimates by checking them against other aggregate indicators, but his efforts are not very convincing. Cotton exports for 1850 do not create much confidence in the validity of estimates of cotton production 10 years previously. Nor does the fact that Seaman and Easterlin have examined the figures and, in the latter case, continue to report similiar results provide any assurance in itself. Economic statistics, like other forms of scholarship, should be credible only to the extent that they provide the best fit with existing evidence, not by their acceptance by length of time or number of adherents. The dilemma remains that our existing estimates of Southern Ante-bellum income imply economic nonsequiturs and they must, therefore, be used with appropriate caution.
Southern
Income Reconsidered: A Reply
GERALD
GUNDERSON
Mt. Holyoke
College
Professor Gallman has undertaken a lengthy critique of the methods I employed to examine the credibility of accepted measures of Southern Antebellum income. His comments might serve as a useful pedagogical exercise, particularly because they illustrate the dangers of not employing economic analysis to check for consistency in statistics which report economic parameters. Professor Gallman provides a lengthy list of things which might have gone wrong with my investigation; the slave hire-rates might be inappropriate and vary more by area than the two zones which I employed; there might be unanticipated variations in weather and agricultural yields in that census year; and the extrapolation from commodity output to personal income or from regional to state income may be inappropriate; and others. Rather than take up each specific comment, it will suffice to emphasize two general points. First, it is not true that even though the data may be subject to errors, the final results are necessarily weakened. I employed what was essentially a one-sided test, so that biases in the data tend to weaken or reinforce the results depending on the specific deviation of the data concerned. Some biases probably work their way into all economic statistics, as Gallman would probably be one of the first to acknowledge, but the important question is not their existence but rather whether the techniques used in the construction of the statistics tend to control or be swamped by their existence. While Gallman has suggested how biases might have developed in the data I employed, he has not attempted to demonstrate that they might operate systematically so as to mitigate the results. Second, even if the data did produce a systematic bias which weakened the results, it is still necessary to demonstrate that it was of sufficient magnitude to explain the anomalies reported. Gallman does not report any such exercise, and a few brief simulations indicate that it would take enormous biases in the basic data to explain the discrepancies. For example, the paper reports one such exercise in footnote 11. By then referring to Table 3, it is easy to verify that even if the average slave earnings for the state of Alabama are reduced by 40%, which implies an overstatement of 67%, the implied per capita output of free citizens of Alabama rises from $29 to $54. Even at this level it is still only 55% of the reported level of neighboring 101 Copyright o 1975 by Academic Press, Inc. All rights of reproduction in any form reserved.
102
GUNDERSON
Mississippi. In order to equalize the per capita output of free citizens of the two states it would be necessary for the output of slaves in Alabama to have been overstated by 800%! Anomalies of that magnitude must be explained by something far more basic than the biases created by the normal construction of run-of-the-mill economic statistics. In short, although Gallman has raised the possibility of weakness in the procedures he has not provided any concrete support to his claim that they do, in fact, constitute a fatal blow to my results. This brings us to the central point. On a number of occasions Gallman suggests that the data were not of sufficient quality for the form of the statistical tests I was employing. The only difficulty is that no such formal statistical tests were performed in the paper! As I worked with the data it became readily apparent that it failed to pass a much more basic test, economic credibility. Rather than lead the reader through a formal, and more tedious, investigation, therefore, I simply demonstrated that the income estimates for certain well defined sections of the South in 1840 violated the most basic economic axioms. The amount of output reported in certain localities was simply much too low to explain the quantity of economic resources employed in those areas. Either the population was drastically overcounted or the locality provided an exception to normal economic behavior or, by far the most likely, output was drastically understated. Gallman suggests that this might be the result of variations in weather, or similar random forces in agriculture, but this I doubt, particularly because such variations were so pronounced across the county lines which coincided with census boundaries. Even if it were true, it would, in effect, be concurring with my objections to the existing income levels. It amounts to saying that while the figures report the actual amounts earned in 1840, they are very much out of line with normal or prevailing levels. Gallman makes several attempts to substantiate the traditional estimates by checking them against other aggregate indicators, but his efforts are not very convincing. Cotton exports for 1850 do not create much confidence in the validity of estimates of cotton production 10 years previously. Nor does the fact that Seaman and Easterlin have examined the figures and, in the latter case, continue to report similiar results provide any assurance in itself. Economic statistics, like other forms of scholarship, should be credible only to the extent that they provide the best fit with existing evidence, not by their acceptance by length of time or number of adherents. The dilemma remains that our existing estimates of Southern Ante-bellum income imply economic nonsequiturs and they must, therefore, be used with appropriate caution.