How to decompose the R²?: A comment on Henderson et al. (2018)

Olivier Sterck

No 2018-01, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Henderson et al. (2018) assessed the economic importance of 24 geographic variables in determining the worldwide spatial distribution of economic activity, as proxied by night lights. In this short piece, I first show that the method they used to measure the economic importance of effects – the Shapley value – is flawed, implying that some their results are misleading. Second, I use an axiomatic approach to build a new method for assessing the economic importance of effects, which corrects for the identified flaws. Finally, I revisit the conclusions of Henderson et al. (2018) in light of the new method.

Keywords: Economic importance; Shapley values; Development; Physical geography; Agriculture (search for similar items in EconPapers)
JEL-codes: B4 C18 O13 R12 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-gth and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2018-01

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