"Bright" ideas

April 20, 2009 in Economics

It's hard to believe FT Alphaville is taking this seriously, but they are: markets and sunspot cycles. Apparantly, as this very convincing graph shows, recessions correspond with the regular sunspot cycle:

As this plainly demonstrates, there is a perfect correlation with sunspots and recessions.  Except for that little recession in the 1930's, but that one doesn't count, right? And this isn't the first time that sunspots have been tied to the economic cycle - researchers have found an impact on the price of wheat.

What I see here is an overlay of two cyclical occurances, and a somewhat forced conclusion of causality based on their correlation (have we learned nothing?).  While the wheat price study is somewhat more convincing, is it such a stretch to think that maybe wheat prices and recessions are linked, and that the sunspots are a spurious correlation that really have nothing do to with either? That argument can be made with equally sound "analytics" (by which I mean looking at pictures).

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