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Econometrics and Decision Making: Effects of Presentation Mode

Author

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  • Robin Hogarth
  • Emre Soyer

Abstract

Much 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.

Suggested Citation

  • Robin Hogarth & Emre Soyer, 2010. "Econometrics and Decision Making: Effects of Presentation Mode," Working Papers 426, Barcelona Graduate School of Economics.
  • Handle: RePEc:bge:wpaper:426
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    File URL: http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/426.pdf
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    References listed on IDEAS

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    1. 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.
    2. Baltagi, Badi H., 2007. "Worldwide Econometrics Rankings: 1989 2005," Econometric Theory, Cambridge University Press, vol. 23(05), pages 952-1012, October.
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    Cited by:

    1. Arribas, Iván & Comeig, Irene & Urbano, Amparo & Vila, José, 2014. "Statistical formats to optimize evidence-based decision making: A behavioral approach," Journal of Business Research, Elsevier, vol. 67(5), pages 790-794.

    More about this item

    Keywords

    Regression analysis; Presentation formats; Probabilistic predictions; Graphs;

    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

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