Econometrics and decision making: Effects of presentation mode
AbstractMuch 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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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1204.
Date of creation: Feb 2010
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Regression analysis; presentation formats; probabilistic predictions; graphs.; leex;
Find related papers by JEL classification:
- C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
- C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- Y10 - Miscellaneous Categories - - Data: Tables and Charts - - - Data: Tables and Charts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-04-04 (All new papers)
- NEP-CBE-2010-04-04 (Cognitive & Behavioural Economics)
- NEP-ECM-2010-04-04 (Econometrics)
- NEP-HPE-2010-04-04 (History & Philosophy of Economics)
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