On the use of panel research designs and random effects models to investigate static and dynamic theories of criminal offending

There is a long-standing debate in criminology about the relative impact of static versus dynamic factors on criminal behavior. Researchers interested in estimating the impact of dynamic factors like prior offending or associ ation with delinquent peers on criminal offending must control for static f actors like intelligence, family background, or self-control, which could p lausibly be correlated with criminal offending and the dynamic factor itsel f. Unfortunately, as a practical matter, it is not possible to observe all of these static factors. Statisticians and econometricians have shown that it is possible to identify the collective effect of static factors even tho ugh they cannot be observed. To achieve this objective, however, it is nece ssary to account for stable, unobserved individual characteristics through the use of "fixed-effect" or "random-effect" estimation. Criminologists oft en use random-effect estimators in these situations. We describe some of th e assumptions that are necessary to develop valid inferences when time-vary ing covariates are used. Then, we use simulation evidence and an empirical application to show that bias can result when they are violated.