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Econometrics and decision making: Effects of presentation mode

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Abstract

Much of empirical economics involves regression analysis. However, does the presentation of results affect economists’ ability to make inferences for decision making purposes? In a survey, 257 academic economists were asked to make probabilistic inferences on the basis of the outputs of a regression analysis presented in a standard format. Questions concerned the distribution of the dependent variable conditional on known values of the independent variable. However, many respondents underestimated uncertainty by failing to take into account the standard deviation of the estimated residuals. The addition of graphs did not substantially improve inferences. On the other hand, when only graphs were provided (i.e., with no statistics), respondents were substantially more accurate. We discuss implications for improving practice in reporting results of regression analyses.

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  • Robin Hogarth & Emre Soyer, 2010. "Econometrics and decision making: Effects of presentation mode," Economics Working Papers 1204, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1204
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    1. Arribas, Iván & Comeig, Irene & Urbano, Amparo & Vila, José, 2014. "Statistical formats to optimize evidence-based decision making: A behavioral approach," Journal of Business Research, Elsevier, vol. 67(5), pages 790-794.

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    More about this item

    Keywords

    Regression analysis; presentation formats; probabilistic predictions; graphs.; leex;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • Y10 - Miscellaneous Categories - - Data: Tables and Charts - - - Data: Tables and Charts

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