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How Large is Large? Preliminary and relative guidelines for interpreting partial correlations in economics

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  • Hristos Doucouliagos

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Abstract

An essential part of empirical economics research is the identification of the size of an empirical effect. Partial correlations offer a convenient statistically based measure of the strength of an economic relationship. A key question arises in their interpretation: When is a partial correlation large? This paper draws upon the observed distribution of 22,000 partial correlations from a diverse group of economics fields. The median absolute partial correlation from these fields is 0.173, which under Cohen’s (1988) conventional guidelines for zero order correlations is a small to moderate effect. The paper develops new guidelines for key qualitative categories (small, medium and large). According to the new guidelines, partial correlations that are larger than ± 0.33 can be deemed to be large. This is considerably different to Cohen’s guideline of ±0.50 for zero order correlations. Researchers and meta-analysts should exercise caution when applying Cohen’s guidelines to describe the importance of partial correlations in economics.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2011_5.pdf
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Bibliographic Info

Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2011_5.

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Date of creation: 04 Jul 2011
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Handle: RePEc:dkn:econwp:eco_2011_5

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Keywords: partial correlations; guidelines; empirical economics; meta-analysis;

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  1. Hristos Doucouliagos & Janto Haman & T.D. Stanley, 2012. "Pay for Performance and Corporate Governance Reform," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, Wiley Blackwell, vol. 51(3), pages 670-703, 07.
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  4. Hristos Doucouliagos & T.D. Stanley, 2008. "Theory Competition and Selectivity: Are All Economic Facts Greatly Exaggerated?," Economics Series 2008_06, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  5. McCloskey, Donald N, 1985. "The Loss Function Has Been Mislaid: The Rhetoric of Significance Tests," American Economic Review, American Economic Association, American Economic Association, vol. 75(2), pages 201-05, May.
  6. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(3), pages 739-792, September.
  7. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 15(3), pages 131-150, Summer.
  8. Hristos Doucouliagos & Martin Paldam, 2005. "Aid Effectiveness on Growth. A Meta Study," Economics Working Papers, School of Economics and Management, University of Aarhus 2005-13, School of Economics and Management, University of Aarhus.
  9. François Bellavance & Georges Dionne & Martin Lebeau, 2006. "The Value of a Statistical Life: a Meta-Analysis with a Mixed Effects Regression Model," Cahiers de recherche, CIRPEE 0646, CIRPEE.
  10. Lenth R. V., 2001. "Some Practical Guidelines for Effective Sample Size Determination," The American Statistician, American Statistical Association, American Statistical Association, vol. 55, pages 187-193, August.
  11. T.D. Stanley, 2006. "Meta-Regression Methods for Detecting and Estimating Empirical Effects in the Presence of Publication Selection," Economics Series 2006_20, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  12. Laura de Dominicis & Raymond J. G. M. Florax & Henri L. F. de Groot, 2008. "A Meta-Analysis On The Relationship Between Income Inequality And Economic Growth," Scottish Journal of Political Economy, Scottish Economic Society, Scottish Economic Society, vol. 55(5), pages 654-682, November.
  13. Chris Doucouliagos, 1995. "Worker participation and productivity in labor-managed and participatory capitalist firms: A meta-analysis," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 49(1), pages 58-77, October.
  14. Maria Abreu Henri L. F. de Groot & Raymond J. G. M. Florax, 2005. "A Meta-Analysis of β-Convergence: the Legendary 2%," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 19(3), pages 389-420, 07.
  15. Michael Weisbach, 2010. "Corporate Governance," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number weis10-1.
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Cited by:
  1. Alptekin, Aynur & Levine, Paul, 2010. "Military Expenditure and Economic Growth: A Meta-Analysis," MPRA Paper 28853, University Library of Munich, Germany.
  2. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Growth in Transition: A Meta-Analysis," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp1057, William Davidson Institute at the University of Michigan.
  3. Petra Valickova & Tomas Havranek & Roman Horvath, 2013. "Financial Development and Economic Growth: A Meta-Analysis," Working Papers, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) 331, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  4. Jan Babecky & Tomas Havranek, 2013. "Structural Reforms and Economic Growth: A Meta-Analysis," Working Papers, Czech National Bank, Research Department 2013/08, Czech National Bank, Research Department.
  5. Jan Babecky & Tomas Havranek, 2014. "Structural reforms and growth in transition," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 22(1), pages 13-42, 01.
  6. Iwasaki, Ichiro & Tokunaga, Masahiro, 2013. "Spillover versus Ownership: A Meta-Analysis of Transition Literature," RRC Working Paper Series, Russian Research Center, Institute of Economic Research, Hitotsubashi University 42, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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