Sheep

As you can see the number of sheep in Iceland has rapidly declined during the last 25 years or so. This is of course a very discerning development in light of the historical evidence about the sheep’s importance for Icelandic autonomy. But the reason for this reduction might not be the most palpable one. Through various observations of different time series datasets I have tried to find an explanation for this phenomenon. I seem to have narrowed it down to the increase in VHS movie rentals in Iceland during the same period. I know this might come as quite the surprise but the figures don’t lie. Quite startlingly the correlation between these two variables has the very high negative value of rho = -0,89 closing in on being perfectly negative. I have even made a couple of regressions on the econometric model Sheep(q,t) = autonomous quantity(q,t) + B(VHS-Rentals(q,t)), made inferences on the estimated parameter and it seems to hold up quite well. With an estimated parameter value of B = –0,11(VHS-Rentals) the results explicitly imply that for each additional thousand VHS-movies rented, the quantity of sheep declines by roughly 110. Let me further clarify. Each time you rent a movie you are in fact endangering the existence of one of Iceland’s most revered national symbols. According to my model (with R^2 = 0,79), sheep are, everything else being equal, only 6,5 milj. VHS-rentals away from distinction at every point in time.

The reason for this connection is puzzling. My best guess is that very few movies feature sheep and they are therefore going out of fashion. Further evidence for this explanation is a comparative look at dog ownership. Dogs are frequent stars of movies and dog ownership has quite convincingly increased in later years. I haven’t found any supporting literature concerning this specific explanation, although I have found some theories about why the sheep is loosing ground in Iceland. None, however, provide any probable or convincing arguments citing lower demand, declining market prices and lower government subsidies.

There is however no reason to panic. Further research into the matter has revealed that the decline in sheep has been leveling out recently as the number of VHS rentals has been dropping a number of years in a row. (VHS-Rentals in thousands)

I can assure all readers that all empirical evidence put forward here is genuine. Data can be confirmed at the website www.hagstofan.is . Raw data and regressions will be handed over at a request. Further information about the Icelandic sheep is available at Wikipeia