2. METHODOLOGY
Prediction vs Explanation (for future policies)
Aiming for Interpretability and Simplicity so as to
guide (rather than dictate) policies
Proxy for Innovation is change in Real GDP change
Linear model of Innovation?
3. BIAS
Assume similarity between states
Innovation → GDP change, but converse may be
false
Reliability and Precision (i.e. Startups)
4. VARIABLE SELECTION
Meaningless Variables:
Region
Non-Innovative Industries (Agriculture, Arts …etc.)
Potential Significant Variables:
Taxes
Innovative Industries
Startup Jobs
Urban Population