In the quest for economic significance: Assessing variable importance through mean value decomposition
(), Therese Norman and Sam Tavassoli
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.
Keywords: Conditioning; Economic significance; Regression analysis; Mean Value Decomposition; Goodness-of-Fit; (follow links to similar papers)
JEL-Codes: C51; C54; I32; (follow links to similar papers)
13 pages, December 3, 2013
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