ABSTRACT
During the past twenty years or so several economists (e.g. Barro and Sala-iMartin, 1992, 2004) have attempted to check whether there is a tendency for national levels of per capita incomes to converge over time. These studies stressed the fact that countries with high levels of per capita GDP at the beginning of the period of observation tended to have lower rates of growth of per capita income than countries which initially had low levels of per capita GDP. Such a tendency towards convergence has been called ‘regression towards the mean’, a term first used by Francis Galton (1886). 1 Since he was the first to emphasize the phenomenon of regression towards the mean, people have since then used the expression of ‘Galton’s fallacy’. Friedman (1992), Quah (1993) and Bliss (1999) used also the term of ‘Galton’s fallacy’ when stressing issues that arise in the literature on convergence.
