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In the quest for economic significance: Assessing variable importance through mean value decomposition

Author

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  • Holgersson, Thomas

    (CSIR, Blekinge Inst of Technology)

  • Norman, Therese

    (CSIR, Blekinge Inst of Technology)

  • Tavassoli, Sam

    (CSIR, Blekinge Inst of Technology)

Abstract

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.

Suggested Citation

  • Holgersson, Thomas & Norman, Therese & Tavassoli, Sam, 2013. "In the quest for economic significance: Assessing variable importance through mean value decomposition," Working Papers 2013/03, Blekinge Institute of Technology, Department of Industrial Economics.
    • Handle: RePEc:hhs:bthcsi:2013-003
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    2. Duqi, Andi & Jaafar, Aziz & Warsame, Mohammed H., 2020. "Payout policy and ownership structure: The case of Islamic and conventional banks," The British Accounting Review, Elsevier, vol. 52(1).
    3. Anastasia Sherubneva, 2025. "Impact of COVID-19 on outputs of small and medium enterprises in Russia: A spatial view," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 79, pages 121-143.

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    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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