The Table 2 Fallacy — conflating prediction and causation

Created
Fri, 27/02/2026 - 05:21
Updated
Fri, 27/02/2026 - 05:21
. A classic textbook example of the ‘Table 2 Fallacy’ in economics arises when estimating the return to education and misinterpreting regression coefficients. Suppose an economist wishes to estimate the causal effect of an additional year of schooling on earnings and estimates If the estimated coefficient is small and statistically insignificant, the economist might conclude […]