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Aggregated vs. disaggregated data in regression analysis: implications for inference

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  • Thomas A. Garrett

Abstract

This note demonstrates why regression coefficients and their statistical significance differ across degrees of data aggregation. Given the frequent use of aggregated data to explain individual behavior, data aggregation can result in misleading conclusions regarding the economic behavior of individuals.

Suggested Citation

  • Thomas A. Garrett, 2002. "Aggregated vs. disaggregated data in regression analysis: implications for inference," Working Papers 2002-024, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2002-024
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    References listed on IDEAS

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    1. Goodfriend, Marvin, 1992. "Information-Aggregation Bias," American Economic Review, American Economic Association, vol. 82(3), pages 508-519, June.
    2. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
    3. Mittelhammer, Ronald C. & Shi, Hongqi & Wahl, Thomas I., 1996. "Accounting For Aggregation Bias In Almost Ideal Demand Systems," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(2), pages 1-16, December.
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    5. Robert E. Hall, 1987. "Consumption," NBER Working Papers 2265, National Bureau of Economic Research, Inc.
    6. George C. Davis, 1997. "Product Aggregation Bias as a Specification Error in Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 100-109.
    7. Cherry, Todd L. & List, John A., 2002. "Aggregation bias in the economic model of crime," Economics Letters, Elsevier, vol. 75(1), pages 81-86, March.
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    Cited by:

    1. von Cramon-Taubadel, Stephan & Loy, Jens-Peter & Meyer, Jochen, 2006. "Data Aggregation and Vertical Price Transmission: An Experiment with German Food Prices," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25291, International Association of Agricultural Economists.
    2. Thomas A. Garrett & Gary A. Wagner, 2009. "Red Ink in the Rearview Mirror: Local Fiscal Conditions and the Issuance of Traffic Tickets," Journal of Law and Economics, University of Chicago Press, vol. 52(1), pages 71-90, February.
    3. Michael McMahon & Gabriel Sterne & Jamie Thompson, 2005. "The role of ICT in the global investment cycle," Bank of England working papers 257, Bank of England.
    4. IWAMOTO Koichiro, 2011. "Food Consumption Expenditure and Habit Formation: Evidence from Japanese Household Panel Data," ESRI Discussion paper series 264, Economic and Social Research Institute (ESRI).
    5. Stephan von Cramon-Taubadel & Jens-Peter Loy & Jochen Meyer, 2006. "The impact of cross-sectional data aggregation on the measurement of vertical price transmission: An experiment with German food prices," Agribusiness, John Wiley & Sons, Ltd., vol. 22(4), pages 505-522.

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    Econometrics; Regression analysis;

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