IESET.
Hypotheses·institutional quality·property_rights_long_run_income_frontier

Across a broad panel of economies 1960-2020, property-rights protection — measured by WGI Rule of Law, Fraser EFW legal-system and property-rights sub-index, and Heritage property-rights scores — predicts 40-year real income per capita growth more strongly than state investment share of GDP.

The pre-registered claim is that, in a horse-race regression, the coefficient on property-rights protection is larger in absolute t-statistic than the coefficient on state investment share, and that countries in the top tercile of property-rights protection show at least 0.5 percentage points higher annual growth than countries in the bottom tercile, after controlling for initial income, education, and geography.

SUPPORTEDengine/runs/property_rights_long_run_income_frontier

SUPPORTED — coef=+0.03081 (sign matches claim +), p=0.0144

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefNeeds review

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The data clearly moved in the predicted direction. coef=+0.03081 (sign matches claim +), p=0.0144

why it matters

This matters because institutional quality claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 51 country or place units from 1960 to 2020, using a panel fe design, with fixed effects for country and decade.

what was measured
What changed
  • Property rights protection index
  • State investment share income
What we checked
  • Real income per capita growth 40yr
  • Real income per capita growth 10yr
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/property_rights_long_run_income_frontier
1007550250196019902020USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_per_capita_growth_40yr across 51 sampled countries over 1960–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for property_rights_long_run_income_frontier. Published chart will be generated from engine/runs/property_rights_long_run_income_frontier/chart_data.json.

Who has skin in the game — schools predicting on this

3 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Classical Liberalwins if SUPPORTEDschool supportedEmpirical Pragmatist (the framework's house position)wins if SUPPORTEDschool supportedNew Institutional Economicswins if SUPPORTEDschool supported

Pre-registration

pre-registered
first-spec commit 5ce4495 · 2026-05-02T19:11:20Z
run generated · 2026-06-29T17:53:24Z

Across a broad panel of economies 1960-2020, property-rights protection — measured by WGI Rule of Law, Fraser EFW legal-system and property-rights sub-index, and Heritage property-rights scores — predicts 40-year real income per capita growth more strongly than state investment share of GDP. The pre-registered claim is that, in a horse-race regression, the coefficient on property-rights protection is larger in absolute t-statistic than the coefficient on state investment share, and that countries in the top tercile of property-rights protection show at least 0.5 percentage points higher annual growth than countries in the bottom tercile, after controlling for initial income, education, and geography.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) the property-rights coefficient is not positive and significant at p<0.05 on GDP growth, OR (b) in the horse-race the state-investment-share coefficient has a larger absolute t-statistic than property rights, OR (c) the top- tercile vs bottom-tercile 40-year mean growth gap is below 0.3 pp/year. A state-led-development reading wins cleanly if state investment outperforms property rights in the horse-race.

formal test & threshold
test:      panel_fe_horserace_property_rights_vs_state_investment
threshold: panel_FE_beta(property_rights → gdp_growth) > 0 at p<0.05 AND |t_stat(property_rights)| > |t_stat(state_investment_share)| in horse-race AND top_tercile_mean_gap_40yr >= 0.50 pp/yr

Method

Template
panel_fe
Fixed effects
country, decade
Clustering
country
Sample
51 countries · 1960 – 2020
Evidence type
associational

Panel FE with non-overlapping 10-year blocks to capture long- run effects and reduce noise. Primary test: horse-race of property-rights index vs state investment share. Cross- sectional robustness: 40-year long-difference (1960-2000 vs 2000-2020) using Maddison data. Robustness: exclude sub-Saharan Africa (where institutions are weakest and geography confounds strongest); exclude China (state-investment outlier).

Data

VariableSourceTransform
real_gdp_per_capita_growth_40yr
outcome
maddison:rgdpnapctier 3
log_diff_40yr
real_gdp_per_capita_growth_10yr
outcome
world_bank_wdi:NY.GDP.PCAP.KD.ZGtier 2
level
property_rights_protection_index
treatment
constructed:0.4×wgi:RL.EST + 0.3×fraser_efw:legal_system_property_rights + 0.3×heritage_efw:property_rightstier 5
level
state_investment_share_gdp
treatment
world_bank_wdi:NE.GDI.FTOT.ZStier 2
level
public_investment_share_gdp
treatment
imf:ggxwdn_ngdptier 2
level
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
years_schooling_average
control
barro_lee:years_schoolingtier 5
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
tropical_landlocked_dummies
control
constructed:geography_dummiestier 5
indicator
life_expectancy_at_birth
control
world_bank_wdi:SP.DYN.LE00.INtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — property_rights_long_run_income_frontier

Verdict: SUPPORTED — coef=+0.03081 (sign matches claim +), p=0.0144

Pre-registration

  • Claim: Across a broad panel of economies 1960-2020, property-rights protection — measured by WGI Rule of Law, Fraser EFW legal-system and property-rights sub-index, and Heritage property-rights scores — predicts 40-year real income per capita growth more strongly than state investment share of GDP. The pre-registered claim is that, in a horse-race regression, the coefficient on property-rights protection is larger in absolute t-statistic than the coefficient on state investment share, and that countries in the top tercile of property-rights protection show at least 0.5 percentage points higher annual growth than countries in the bottom tercile, after controlling for initial income, education, and geography.
  • Falsification rule: Not supported if (a) the property-rights coefficient is not positive and significant at p<0.05 on GDP growth, OR (b) in the horse-race the state-investment-share coefficient has a larger absolute t-statistic than property rights, OR (c) the top- tercile vs bottom-tercile 40-year mean growth gap is below 0.3 pp/year. A state-led-development reading wins cleanly if state investment outperforms property rights in the horse-race.
  • Falsification test: panel_fe_horserace_property_rights_vs_state_investment

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +0.03081
  • Std error: 0.01258
  • p-value: 0.0144
  • Observations: 2050, countries: 41
  • Within R²: 0.944
  • Fixed effects: entity=True, time=False
  • Clustering: country

Variables resolved

  • maddison:rgdpnapc → real_gdp_per_capita_growth_40yr (outcome, publisher=maddison, n=19706)
  • world_bank_wdi:NY.GDP.PCAP.KD.ZG → real_gdp_per_capita_growth_10yr (outcome, publisher=world_bank_wdi, n=13897)
  • constructed: 0.4×wgi:RL.EST + 0.3×fraser_efw:legal_system_property_rights + 0.3×heritage_efw:property_rights → property_rights_protection_index (treatment, publisher=property_rights_protection_index, n=3111)
  • world_bank_wdi:NE.GDI.FTOT.ZS → state_investment_share_gdp (treatment, publisher=world_bank_wdi, n=9870)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:SP.DYN.LE00.IN → life_expectancy_at_birth (controls, publisher=world_bank_wdi, n=14443)

Variables missing data

  • imf_weo:ggxwdn_ngdp (treatment, name=public_investment_share_gdp) — vintage not on disk
  • barro_lee:years_schooling (controls, name=years_schooling_average) — vintage not on disk
  • constructed: geography_dummies (controls, name=tropical_landlocked_dummies) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:24+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Maddison data provides the longest-run income series but ends in 2018 and has uneven coverage. PWT and WDI provide more complete panels but shorter horizons. The 40-year test relies primarily on Maddison with WDI/PWT backfill.

Authored framework. Read the transparency note.