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Understanding and Teaching Within-Cluster Correlation in Complex Surveys


Author Info

  • Humberto Barreto

    (Department of Economics and Management, DePauw University)

  • Manu Raghav

    (Department of Economics and Management, DePauw University)


This econometrics pedagogy paper demonstrates the importance of using cluster standard errors with data generated from complex surveys. Simulation is used to show that both classic ordinary least squares and robust standard errors perform poorly in the presence of within-cluster correlated errors, while cluster standard errors are much better. We take advantage of Excel’s spreadsheet interface to produce clear, strong visuals of the data generation process and intuitively explain key results. Stata and R implementations are also provided. We conclude with suggestions for how to use these files in the classroom.

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Bibliographic Info

Paper provided by DePauw University, Department of Economics and Management in its series Working Papers with number 2013-02.

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Date of creation: Jul 2013
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Publication status: Published in Journal of Econometric Methods, Volume 2, Issue 1, March 2013, pages 101-112
Handle: RePEc:dew:wpaper:2013-02

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Keywords: complex survey; simulation; cluster sampling; estimation; survey regression;

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  1. Raghav, Manu & Barreto, Humberto, 2011. "Understanding and teaching unequal probability of selection," MPRA Paper 32334, University Library of Munich, Germany.
  2. Barreto,Humberto & Howland,Frank, 2006. "Introductory Econometrics," Cambridge Books, Cambridge University Press, number 9780521843195.
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