“SO WHY ARE THEY CALLED “IDENTIFICATION PROBLEMS”? I can imagine Annalisa chuckling again over how counterintuitive economic jargon is. (Think of “rent” as an example).
Economists have chosen to talk about the problem of determining (measuring) the effect of different variables in terms of “identifying” those effects. To quote from the last sentence in yesterday’s post: “So how do you disentangle the effects of ability on wages from the effect of schooling? How do you solve the identification problem?” The “disentanglement problem” would have been a better name, I think.