The Curious Attraction of Wagner's Law

Wagner's ‘law of increasing state activity’ has recently been subjected to intensive use of recondite econometric testing procedures. An examination of the relevant articles reveals ignorance both of Wagner's definition of ‘state activity’ and of his insistence that he was not engaged in prediction. Consequently, the omission of public enterprises contained in Wagner's definition leads to a model misspecification and the object of testing his hypothesiss remains obscure.