In the quest for economic significance: Assessing variable importance through mean value decomposition
AbstractEconomic significance is frequently assessed through statistical hypothesis testing. This habitual use is, however, usually not matching with the implicit economical questions being addressed. In this paper we propose using mean value decomposition to assess economic significance. Unlike most previously suggested methods the proposed one is intuitive and simple to conduct. The technique is demonstrated and contrasted with hypothesis tests by an empirical example involving the income of Mexican children, which shows that the two inference approaches provide different and supplementary pieces of information.
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Bibliographic InfoPaper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 326.
Length: 16 pages
Date of creation: 11 Oct 2013
Date of revision:
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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
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Conditioning; Economic significance; Regression analysis; Mean Value Decomposition; Goodness-of-Fit;
Other versions of this item:
- H. E. T. Holgersson & T. Norman & S. Tavassoli, 2014. "In the quest for economic significance: assessing variable importance through mean value decomposition," Applied Economics Letters, Taylor & Francis Journals, vol. 21(8), pages 545-549, May.
- Holgersson, Thomas & Norman, Therese & Tavassoli, Sam, 2013. "In the quest for economic significance: Assessing variable importance through mean value decomposition," CITR Working Paper Series 2013/03, Center for Innovation and Technology Research, Blekinge Institute of Technology.
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
- I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
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