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Sound and Fury: McCloskey and Significance Testing in Economics

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Author Info
Kevin D. Hoover (University of California, Davis)
Mark V. Siegler (California State University, Sacramento)

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Abstract

For about twenty years, Deidre McCloskey has campaigned to convince the economics profession that it is hopelessly confused about statistical significance. She argues that many practices associated with significance testing are bad science and that most economists routinely employ these bad practices: “Though to a child they look like science, with all that really hard math, no science is being done in these and 96 percent of the best empirical economics. . .” (McCloskey 1999). McCloskey’s charges are analyzed and rejected. That statistical significance is not economic significance is a jejune and uncontroversial claim, and there is no convincing evidence that economists systematically mistake the two. Other elements of McCloskey’s analysis of statistical significance are shown to be ill-founded, and her criticisms of practices of economists are found to be based in inaccurate readings and tendentious interpretations of their work. Properly used, significance tests are a valuable tool for assessing signal strength, for assisting in model specification, and for determining causal structure.

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Publisher Info
Paper provided by EconWPA in its series Econometrics with number 0511018.

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Length: 53 pages
Date of creation: 29 Nov 2005
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Handle: RePEc:wpa:wuwpem:0511018

Note: Type of Document - pdf; pages: 53
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Related research
Keywords: statistical significance; economic significance; significance testing; regression analysis; econometric methodology; Deirdre McCloskey; Neyman-Pearson testing;

Other versions of this item:

Find related papers by JEL classification:
C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - General
C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Hypothesis Testing
B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ziliak, Stephen T. & McCloskey, Deirdre N., 2004. "Size matters: the standard error of regressions in the American Economic Review," The Journal of Socio-Economics, Elsevier, vol. 33(5), pages 527-546, November. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  3. McCloskey, Donald N, 1985. "The Loss Function Has Been Mislaid: The Rhetoric of Significance Tests," American Economic Review, American Economic Association, vol. 75(2), pages 201-05, May. [Downloadable!] (restricted)
  4. Elliott, Graham & Granger, Clive W.J., 2004. "Evaluating significance: comments on "size matters"," The Journal of Socio-Economics, Elsevier, vol. 33(5), pages 547-550, November. [Downloadable!] (restricted)
  5. Krolzig, Hans-Martin & Hendry, David F., 2001. "Computer automation of general-to-specific model selection procedures," Journal of Economic Dynamics and Control, Elsevier, vol. 25(6-7), pages 831-866, June. [Downloadable!] (restricted)
    Other versions:
  6. Gigerenzer, Gerd, 2004. "Mindless statistics," The Journal of Socio-Economics, Elsevier, vol. 33(5), pages 587-606, November. [Downloadable!] (restricted)
  7. Deirdre N. McCloskey, 1999. "Other Things Equal: Cassandra's Open Letter to Her Economist Colleagues," Eastern Economic Journal, Eastern Economic Association, vol. 25(3), pages 357-363, Summer. [Downloadable!]
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  10. Kevin D. Hoover & Stephen J. Perez, 1999. "Data mining reconsidered: encompassing and the general-to-specific approach to specification search," Econometrics Journal, Royal Economic Society, vol. 2(2), pages 167-191.
    Other versions:
  11. Lovell, Michael C, 1983. "Data Mining," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 1-12, February. [Downloadable!] (restricted)
  12. McCloskey, Donald N, 1983. "The Rhetoric of Economics," Journal of Economic Literature, American Economic Association, vol. 21(2), pages 481-517, June. [Downloadable!] (restricted)
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  19. Hendry, David F, 1980. "Econometrics-Alchemy or Science?," Economica, London School of Economics and Political Science, vol. 47(188), pages 387-406, November. [Downloadable!] (restricted)
  20. Ziliak, Stephen T. & McCloskey, Deirdre N., 2004. "Significance redux," The Journal of Socio-Economics, Elsevier, vol. 33(5), pages 665-675, November. [Downloadable!] (restricted)
  21. Gary S. Becker & Michael Grossman & Kevin M. Murphy & Gary S. Becker, Michael Grossman, Kevin M. Murphy, 1994. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  22. Kevin D. Hoover & Stephen J. Perez, 2004. "Truth and Robustness in Cross-country Growth Regressions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(5), pages 765-798, December. [Downloadable!] (restricted)
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  23. Hoover, Kevin D., 2004. "Lost Causes," Journal of the History of Economic Thought, Cambridge University Press, vol. 26(02), pages 149-164, June. [Downloadable!]
  24. Spanos, Aris, 1995. "On theory testing in econometrics : Modeling with nonexperimental data," Journal of Econometrics, Elsevier, vol. 67(1), pages 189-226, May. [Downloadable!] (restricted)
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  27. Keuzenkamp, Hugo A. & Magnus, Jan R., 1995. "On tests and significance in econometrics," Journal of Econometrics, Elsevier, vol. 67(1), pages 5-24, May. [Downloadable!] (restricted)
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  29. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-63, September. [Downloadable!] (restricted)
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  30. Blank, Rebecca M, 1991. "The Effects of Double-Blind versus Single-Blind Reviewing: Experimental Evidence from The American Economic Review," American Economic Review, American Economic Association, vol. 81(5), pages 1041-67, December. [Downloadable!] (restricted)
  31. Woodbury, Stephen A & Spiegelman, Robert G, 1987. "Bonuses to Workers and Employers to Reduce Unemployment: Randomized Trials in Illinois," American Economic Review, American Economic Association, vol. 77(4), pages 513-30, September. [Downloadable!] (restricted)
  32. Summers, Lawrence H, 1991. " The Scientific Illusion in Empirical Macroeconomics," Scandinavian Journal of Economics, Blackwell Publishing, vol. 93(2), pages 129-48.
  33. David F. Hendry & Hans-Martin Krolzig, 1999. "Improving on 'Data mining reconsidered' by K.D. Hoover and S.J. Perez," Econometrics Journal, Royal Economic Society, vol. 2(2), pages 202-219.
    Other versions:
  34. Deirdre N. McCloskey, 1997. "Other Things Equal: Aunt Deirdre's Letter to a Graduate Student," Eastern Economic Journal, Eastern Economic Association, vol. 23(2), pages 241-244, Spring. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tom Engsted, 2009. "Statistical vs. Economic Significance in Economics and Econometrics: Further comments on McCloskey & Ziliak," CREATES Research Papers 2009-17, School of Economics and Management, University of Aarhus. [Downloadable!]
  2. Mayer, Thomas, 2006. "The Empirical Significance of Econometric Models," Working Papers 06-20, University of California at Davis, Department of Economics. [Downloadable!]
  3. Meszaros, Sandor, 2008. "Theory testing (hypothesis testing) in agricultural economics," Studies in Agricultural Economics, Research Institute for Agricultural Economics, issue 107, March. [Downloadable!]
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