IESET.
Hypotheses·institutional quality·free_market_shock_therapy_social_cost

Rapid market liberalisation (price decontrol, mass privatisation, trade opening) under weak institutions produces large short-run welfare losses—rising mortality, falling life expectancy, rising inequality, and collapsing output—that may persist for at least a decade, compared to gradual reformers or non-reformers at similar initial income levels.

The claim challenges naive laissez-faire by documenting the social cost of reform speed when institutional scaffolding is absent, over 1989-2010.

PARTIALengine/runs/free_market_shock_therapy_social_cost

PARTIAL — mean_gap=-3.156, |gap|/pre_sd=1.8, p_perm=0.367; claim direction ambiguous

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

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 evidence is suggestive but not decisive. mean_gap=-3.156, |gap|/pre_sd=1.8, p_perm=0.367; claim direction ambiguous

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 30 country or place units from 1989 to 2010, using a synthetic control design.

what was measured
What changed
  • Shock therapy episode
  • Reform speed index
What we checked
  • Life expectancy at birth
  • Inequality index
  • Poverty headcount 2 15
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

4 input datasets, 4 unresolved missing series, provenance status: incomplete.

Results

engine/runs/free_market_shock_therapy_social_cost
1007550250198920002010RUSUKRBLRKAZPOLHUNCZE
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show life_expectancy_at_birth across 30 sampled countries over 1989–2010.
The shapes above are stylised — none of the lines are real data.
Placeholder for free_market_shock_therapy_social_cost. Published chart will be generated from engine/runs/free_market_shock_therapy_social_cost/chart_data.json.

Pre-registration

pre-registered
first-spec commit 5ce4495 · 2026-05-02T19:11:20Z
run generated · 2026-05-15T19:31:29Z

Rapid market liberalisation (price decontrol, mass privatisation, trade opening) under weak institutions produces large short-run welfare losses—rising mortality, falling life expectancy, rising inequality, and collapsing output—that may persist for at least a decade, compared to gradual reformers or non-reformers at similar initial income levels. The claim challenges naive laissez-faire by documenting the social cost of reform speed when institutional scaffolding is absent, over 1989-2010.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if shock-therapy countries show life-expectancy and GDP trajectories indistinguishable from or superior to gradual reformers in a synthetic- control or event-study design, or if welfare losses are fully reversed within 5 years.

formal test & threshold
test:      synthetic_control_shock_therapy_vs_gradual_1989_2010
threshold: [object Object]

Method

Template
synthetic_control
Sample
30 countries · 1989 – 2010
Evidence type
causal

Synthetic control or staggered DiD with gradual reformers (China, Vietnam) and non-reformers as donor pool.

Data

VariableSourceTransform
life_expectancy_at_birth
outcome
world_bank_wdi:SP.DYN.LE00.INtier 2
level
gini_index
outcome
world_bank_wdi:SI.POV.GINItier 2
level
poverty_headcount_2_15
outcome
world_bank_wdi:SI.POV.DDAYtier 2
level
real_gdp_per_capita
outcome
maddison:rgdpnapctier 3
log
shock_therapy_episode
treatment
constructed:rapid_price_decontrol_plus_mass_privatisationtier 5
indicator
reform_speed_index
treatment
constructed:efw_change_first_5ytier 5
level
initial_life_expectancy
control
world_bank_wdi:SP.DYN.LE00.INtier 2
level
initial_gdp_per_capita
control
maddison:rgdpnapctier 3
log
soviet_industrial_structure_index
control
constructed:heavy_industry_share_1989tier 5
level
ethnic_fractionalisation
control
constructed:alestina_fractionalisationtier 5
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — free_market_shock_therapy_social_cost

Verdict: PARTIAL — mean_gap=-3.156, |gap|/pre_sd=1.8, p_perm=0.367; claim direction ambiguous

Pre-registration

  • Claim: Rapid market liberalisation (price decontrol, mass privatisation, trade opening) under weak institutions produces large short-run welfare losses—rising mortality, falling life expectancy, rising inequality, and collapsing output—that may persist for at least a decade, compared to gradual reformers or non-reformers at similar initial income levels. The claim challenges naive laissez-faire by documenting the social cost of reform speed when institutional scaffolding is absent, over 1989-2010.
  • Falsification rule: The hypothesis is falsified if shock-therapy countries show life-expectancy and GDP trajectories indistinguishable from or superior to gradual reformers in a synthetic- control or event-study design, or if welfare losses are fully reversed within 5 years.

Synthetic-control estimate

  • shape: synth_did
  • treated_country: RUS
  • event_year: 1999
  • n_donors: 29
  • donor_weights (top): {'UKR': 0.5785, 'LVA': 0.3873, 'BIH': 0.0342, 'BLR': 0.0, 'KAZ': 0.0}
  • pre_rmse: 1.7670823046455195
  • pre_period_sd: 1.7328744082362297
  • mean_post_gap: -3.156003168316662
  • end_period_gap: -2.8499796681808363
  • post_period_years: [1999, 2010]
  • placebo_p_value: 0.36666666666666664
  • n_placebos: 29
  • method: synthetic-control via NNLS, permutation inference

Variables resolved

  • world_bank_wdi:SP.DYN.LE00.IN → life_expectancy_at_birth (outcome, n=16931)
  • world_bank_wdi:SI.POV.GINI → gini_index (outcome, n=2430)
  • world_bank_wdi:SI.POV.DDAY → poverty_headcount_2_15 (outcome, n=2862)
  • maddison:rgdpnapc → real_gdp_per_capita (outcome, n=19706)
  • world_bank_wdi:SP.DYN.LE00.IN → initial_life_expectancy (controls, n=16931)
  • maddison:rgdpnapc → initial_gdp_per_capita (controls, n=19706)

Generated by scripts/run_synth_did.py at 2026-05-15T19:31:29+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.

Authored framework. Read the transparency note.