IDEAS home Printed from https://ideas.repec.org/p/osf/metaar/d7sqr_v1.html
   My bibliography  Save this paper

The Need for Equivalence Testing in Economics

Author

Listed:
  • Fitzgerald, Jack

    (Vrije Universiteit Amsterdam)

Abstract

Equivalence testing can provide statistically significant evidence that economic relationships are practically negligible. I demonstrate its necessity in a large-scale reanalysis of estimates defending 135 null claims made in 81 recent articles from top economics journals. 36-63% of estimates defending the average null claim fail lenient equivalence tests. In a prediction platform survey, researchers accurately predict that equivalence testing failure rates will significantly exceed levels which they deem acceptable. Obtaining equivalence testing failure rates that these researchers deem acceptable requires arguing that nearly 75% of published estimates in economics are practically equal to zero. These results imply that Type II error rates are unacceptably high throughout economics, and that many null findings in economics reflect low power rather than truly negligible relationships. I provide economists with guidelines and commands in Stata and R for conducting credible equivalence testing and practical significance testing in future research.

Suggested Citation

  • Fitzgerald, Jack, 2025. "The Need for Equivalence Testing in Economics," MetaArXiv d7sqr_v1, Center for Open Science.
    • Handle: RePEc:osf:metaar:d7sqr_v1
    DOI: 10.31219/osf.io/d7sqr_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/67a36795720871d8a00c5d9b/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/d7sqr_v1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joseph Henrich & Steve J. Heine & Ara Norenzayan, 2010. "The Weirdest People in the World?," RatSWD Working Papers 139, German Data Forum (RatSWD).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:osf:osfxxx:fqmdu_v1 is not listed on IDEAS
    2. Sibilla Di Guida & Ido Erev & Davide Marchiori, 2014. "Cross Cultural Differences in Decisions from Experience: Evidence from Denmark, Israel and Taiwain," Working Papers ECARES ECARES 2014-16, ULB -- Universite Libre de Bruxelles.
    3. Hind Dib‐slamani & Gilles Grolleau & Naoufel Mzoughi, 2021. "Is theft considered less severe when the victim is a foreign company?," Post-Print hal-03340844, HAL.
    4. Shi, Yun & Cui, Xiangyu & Zhou, Xunyu, 2020. "Beta and Coskewness Pricing: Perspective from Probability Weighting," SocArXiv 5rqhv, Center for Open Science.
    5. Kyriaki Remoundou & Drichoutis Andreas & Phoebe Koundouri, 2010. "Warm glow in charitable auctions: Are the WEIRDos driving the results?," DEOS Working Papers 1028, Athens University of Economics and Business.
    6. Stephen L. Cheung & Agnieszka Tymula & Xueting Wang, 2022. "Present bias for monetary and dietary rewards," Experimental Economics, Springer;Economic Science Association, vol. 25(4), pages 1202-1233, September.
    7. Plante, Charles & Lassoued, Rim & Phillips, Peter W.B., 2017. "The Social Determinants of Cognitive Bias: The Effects of Low Capability on Decision Making in a Framing Experiment," SocArXiv u62cx, Center for Open Science.
    8. John A. List, 2024. "Optimally generate policy-based evidence before scaling," Nature, Nature, vol. 626(7999), pages 491-499, February.
    9. Nicolas Jacquemet & Adam Zylbersztejn, 2014. "What drives failure to maximize payoffs in the lab? A test of the inequality aversion hypothesis," Review of Economic Design, Springer;Society for Economic Design, vol. 18(4), pages 243-264, December.
    10. repec:osf:socarx:n49hv_v1 is not listed on IDEAS
    11. Dai, Zhixin & Zheng, Jiwei & Zizzo, Daniel John, 2024. "Theories of reasoning and focal point play with a matched non-student sample," China Economic Review, Elsevier, vol. 83(C).
    12. Jenny C Su & Chi-Yue Chiu & Wei-Fang Lin & Shigehiro Oishi, 2016. "Social Monitoring Matters for Deterring Social Deviance in Stable but Not Mobile Socio-Ecological Contexts," PLOS ONE, Public Library of Science, vol. 11(11), pages 1-13, November.
    13. repec:osf:osfxxx:nb7tg_v1 is not listed on IDEAS
    14. Goran Calic & Moren Lévesque & Anton Shevchenko, 2024. "On why women-owned businesses take more time to secure microloans," Small Business Economics, Springer, vol. 63(3), pages 917-938, October.
    15. Sirola, Nina, 2023. "Going beyond the call of duty under conditions of economic threat: Integrating life history and temporal dilemma perspectives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 179(C).
    16. Joshua Conrad Jackson & Marieke van Egmond & Virginia K Choi & Carol R Ember & Jamin Halberstadt & Jovana Balanovic & Inger N Basker & Klaus Boehnke & Noemi Buki & Ronald Fischer & Marta Fulop & Ashle, 2019. "Ecological and cultural factors underlying the global distribution of prejudice," PLOS ONE, Public Library of Science, vol. 14(9), pages 1-17, September.
    17. Cameron Harwick, 2023. "Money’s mutation of the modern moral mind: The Simmel hypothesis and the cultural evolution of WEIRDness," Journal of Evolutionary Economics, Springer, vol. 33(5), pages 1571-1592, November.
    18. Holli-Anne Passmore & Ying Yang & Sarena Sabine, 2022. "An Extended Replication Study of the Well-Being Intervention, the Noticing Nature Intervention (NNI)," Journal of Happiness Studies, Springer, vol. 23(6), pages 2663-2683, August.
    19. Chen, Daniel L. & Schonger, Martin & Wickens, Chris, 2016. "oTree—An open-source platform for laboratory, online, and field experiments," Journal of Behavioral and Experimental Finance, Elsevier, vol. 9(C), pages 88-97.
    20. Pamela Jakiela & Edward Miguel & Vera Velde, 2015. "You’ve earned it: estimating the impact of human capital on social preferences," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 385-407, September.
    21. Barmettler, Franziska & Fehr, Ernst & Zehnder, Christian, 2012. "Big experimenter is watching you! Anonymity and prosocial behavior in the laboratory," Games and Economic Behavior, Elsevier, vol. 75(1), pages 17-34.
    22. Nadav Klein & Igor Grossmann & Ayse K. Uskul & Alexandra A. Kraus & Nicholas Epley, 2015. "It pays to be nice, but not really nice: Asymmetric reputations from prosociality across 7 countries," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 10(4), pages 355-364, July.
    23. Epton, Tracy & Ghio, Daniela & Ballard, Lisa M. & Allen, Sarah F. & Kassianos, Angelos P. & Hewitt, Rachael & Swainston, Katherine & Fynn, Wendy Irene & Rowland, Vickie & Westbrook, Juliette & Jenkins, 2022. "Interventions to promote physical distancing behaviour during infectious disease pandemics or epidemics: A systematic review," Social Science & Medicine, Elsevier, vol. 303(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:metaar:d7sqr_v1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://osf.io/preprints/metaarxiv .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.