In the quest for economic significance: Assessing variable importance through mean value decomposition
Economic significance is frequently assessed through statistical hypothesis testing, which however, does not always correspond to the implicit economical questions being addressed. In this paper we propose using mean value decomposition to assess economic significance. Unlike most previously suggested methods the proposed one is intuitive and simple to conduct. The technique is demonstrated and contrasted with hypothesis tests by an empirical example involving the income of Mexican children, which shows that the two inference approaches provide different and supplementary pieces of information.
|Date of creation:||03 Dec 2013|
|Contact details of provider:|| Postal: Department of Industrial Economics, Blekinge Inst of Technology, 371 79 Karlskrona, Sweden|
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- 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.
- Luigi Fabbris, 1980. "Measures of predictor variable importance in multiple regression: An additional suggestion," Quality & Quantity: International Journal of Methodology, Springer, vol. 14(6), pages 787-792, December.
- Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
- Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
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