Testing the Statistical Significance of Microsimulation Results: A Plea

Tim Goedemé, Karel Van den Bosch (kvdb@plan.be), Lina Salanauskaite (lina.salanauskaite@uantwerpen.be) and Gerlinde Verbist (gerlinde.verbist@uantwerpen.be)
Additional contact information
Karel Van den Bosch: Belgian Federal Planning Bureau, Herman Deleeck Centre for Social Policy, University of Antwerp
Lina Salanauskaite: Herman Deleeck Centre for Social Policy, University of Antwerp
Gerlinde Verbist: Herman Deleeck Centre for Social Policy, University of Antwerp

International Journal of Microsimulation, 2013, vol. 6, issue 3, 50-77

Abstract: In the microsimulation literature, it is still uncommon to test the statistical significance of results. In this article we argue that this situation is both undesirable and unnecessary. Provided the parameters used in the microsimulation are exogenous, as is often the case in static microsimulation of the first-order effects of policy changes, simple statistical tests can be sufficient. Moreover, standard routines have been developed which enable applied researchers to calculate the sampling variance of microsimulation results, while taking the sample design into account, even of relatively complex statistics such as relative poverty, inequality measures and indicators of polarization, with relative ease and a limited time investment. We stress that when comparing simulated and baseline variables, as well as when comparing two simulated variables, it is crucial to take account of the covariance between those variables. Due to this covariance, the mean difference between the variables can generally (though not always) be estimated with much greater precision than the means of the separate variables.

Keywords: Microsimulation; statistical inference; EUROMOD. (search for similar items in EconPapers)
JEL-codes: C6 D31 I32 I38 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.microsimulation.org/IJM/V6_3/4_IJM_6_3_2013_goedeme.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ijm:journl:v:6:y:2013:i:3:p:50-77

Access Statistics for this article

International Journal of Microsimulation is currently edited by Matteo Richiardi

More articles in International Journal of Microsimulation from International Microsimulation Association
Bibliographic data for series maintained by Jinjing Li (jinjing.li@canberra.edu.au).