Using instrumental variables to establish causal relationships in economics

[This is one of the finalists in the 2023 book review contest, written by an ACX reader who will remain anonymous until after voting is done. I'll be posting about one of these a week for several months. When you've read them all, I'll ask you to vote for a favorite, so remember which ones you liked]

In which I argue:

1. Why Nations Fail is not a very good book.

2. Its authors' academic papers are much better, so I steelman their thesis as best I can, but it's still debatable.

3. Even if correct, it is much less interesting and useful than it appears.

Epistemic status: I have a decade-old PhD in economics (not in the field of economic growth) and a handful of peer-reviewed papers in moderately-ranked journals. I'm not claiming to make any original technical points, or to give a comprehensive evaluation of the economic growth literature. My criticisms are largely straight from the authors' own mouths.

https://astralcodexten.substack.com/p/your-book-review-why-nations-fail