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Is precise econometrics an illusion?

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  • G. M. Peter Swann

Abstract

Many empirical economists say that the teaching of econometrics is unbalanced, and students are not well-prepared for the serious problems they will encounter with real data. Here, the author considers the problem of noisy data, which is present in most econometric studies, but receives far too little attention. Most econometric studies are done in a world of low signal-to-noise ratios, and educated common sense suggests that we cannot expect precise results in such an environment. Sensitivity analysis shows that the apparent precision of reported econometric results is generally an illusion, because it is highly dependent on error term independence assumptions.1,2

Suggested Citation

  • G. M. Peter Swann, 2019. "Is precise econometrics an illusion?," The Journal of Economic Education, Taylor & Francis Journals, vol. 50(4), pages 343-355, October.
    • Handle: RePEc:taf:jeduce:v:50:y:2019:i:4:p:343-355
    DOI: 10.1080/00220485.2019.1654956
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    Cited by:

    1. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    2. Idris Djouahra, 2022. "Conceptual understanding of linear regression among economics students at the university center of Tipaza, Algeria," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 8(2), pages 66-83, December.

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