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The acceptable R-square in empirical modelling for social science research

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  • Ozili, Peterson K

Abstract

This commentary article examines the acceptable R-square in social science empirical modelling with particular focus on why a low R-square model is acceptable in empirical social science research. The paper shows that a low R-square model is not necessarily bad. This is because the goal of most social science research modelling is not to predict human behaviour. Rather, the goal is often to assess whether specific predictors or explanatory variables have a significant effect on the dependent variable. Therefore, a low R-square of at least 0.1 (or 10 percent) is acceptable on the condition that some or most of the predictors or explanatory variables are statistically significant. If this condition is not met, the low R-square model cannot be accepted. A high R-square model is also acceptable provided that there is no spurious causation in the model and there is no multi-collinearity among the explanatory variables.

Suggested Citation

  • Ozili, Peterson K, 2023. "The acceptable R-square in empirical modelling for social science research," MPRA Paper 115769, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115769
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    References listed on IDEAS

    as
    1. Colin Cameron, A. & Windmeijer, Frank A. G., 1997. "An R-squared measure of goodness of fit for some common nonlinear regression models," Journal of Econometrics, Elsevier, vol. 77(2), pages 329-342, April.
    2. Curt Hagquist & Magnus Stenbeck, 1998. "Goodness of Fit in Regression Analysis – R 2 and G 2 Reconsidered," Quality & Quantity: International Journal of Methodology, Springer, vol. 32(3), pages 229-245, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    R-square; low R-square; social science; research; empirical model; modelling; regression.;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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