Teaching hypothesis testing with simulated distributions

O’Hara, Michael
Authors registered in the RePEc Author Service: Michael E. O'Hara

International Review of Economics Education, 2019, vol. 30, issue C, -

Abstract: I propose that econometrics instructors move away from the notion of critical values and tear out any remaining tables from the back of our textbooks. Instead, I propose that we teach students to test hypotheses by generating a simulated distribution of the test statistic under the null hypothesis using (psuedo-)random number generators. This is quick and easy to do using modern software packages, and provides students with a visual and intuitive understanding of sampling distributions and the logic behind hypothesis testing. I discuss what it is necessary to teach students to implement this approach, provide an example exercise, and discuss how to assess this understanding on exams when students do not have computer access.

Keywords: Simulation; Hypothesis testing; Undergraduate teaching (search for similar items in EconPapers)
JEL-codes: A20 A22 C15 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ireced:v:30:y:2019:i:c:13

DOI: 10.1016/j.iree.2018.05.005

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