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Econometrics and Decision Making: Effects of Presentation Mode

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  • Robin Hogarth
  • Emre Soyer
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    Abstract

    Much of empirical economics involves regression analysis. However, does the presentation of results affect economists ability to make inferences for decision making purposes? In a survey, 257 academic economists were asked to make probabilistic inferences on the basis of the outputs of a regression analysis presented in a standard format. Questions concerned the distribution of the dependent variable conditional on known values of the independent variable. However, many respondents underestimated uncertainty by failing to take into account the standard deviation of the estimated residuals. The addition of graphs did not substantially improve inferences. On the other hand, when only graphs were provided (i.e., with no statistics), respondents were substantially more accurate. We discuss implications for improving practice in reporting results of regression analyses.

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    File URL: http://research.barcelonagse.eu/tmp/working_papers/426.pdf
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    Bibliographic Info

    Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 426.

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    Date of creation: Feb 2010
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    Handle: RePEc:bge:wpaper:426

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    Related research

    Keywords: Regression analysis; Presentation formats; Probabilistic predictions; Graphs;

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    1. Baltagi, Badi H., 2007. "Worldwide Econometrics Rankings: 1989 2005," Econometric Theory, Cambridge University Press, vol. 23(05), pages 952-1012, October.
    2. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
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    Cited by:
    1. Iván Arribas & Irene Comeig & Amparo Urbano Salvador & Jose E. Vila, 2013. "Statistical formats to optimize evidence-based decision making: a behavioral approach," Discussion Papers in Economic Behaviour 0513, University of Valencia, ERI-CES.

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