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Understanding and Teaching Within-Cluster Correlation in Complex Surveys

Author

Listed:
  • Humberto Barreto

    (Department of Economics and Management, DePauw University)

  • Manu Raghav

    (Department of Economics and Management, DePauw University)

Abstract

This econometrics pedagogy paper demonstrates the importance of using cluster standard errors with data generated from complex surveys. Simulation is used to show that both classic ordinary least squares and robust standard errors perform poorly in the presence of within-cluster correlated errors, while cluster standard errors are much better. We take advantage of Excel’s spreadsheet interface to produce clear, strong visuals of the data generation process and intuitively explain key results. Stata and R implementations are also provided. We conclude with suggestions for how to use these files in the classroom.

Suggested Citation

  • Humberto Barreto & Manu Raghav, 2013. "Understanding and Teaching Within-Cluster Correlation in Complex Surveys," Working Papers 2013-02, DePauw University, School of Business and Leadership and Department of Economics and Management.
    • Handle: RePEc:dew:wpaper:2013-02
    as

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    File URL: https://www.depauw.edu/learn/dew/wpaper/workingpapers/DePauw2013-02-Barreto-Raghav-Within-Cluster-Correlation-Paper.pdf
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    References listed on IDEAS

    as
    1. Barreto Humberto & Raghav Manu, 2013. "Understanding and teaching unequal probability of selection," Journal of Econometric Methods, De Gruyter, vol. 2(1), pages 101-112, July.
    2. Barreto,Humberto & Howland,Frank, 2006. "Introductory Econometrics," Cambridge Books, Cambridge University Press, number 9780521843195.
    3. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
    4. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    complex survey; simulation; cluster sampling; estimation; survey regression;
    All these keywords.

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • A23 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Graduate
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • C87 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Econometric Software

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