Statistical Significance Revisited

Maike Tormählen, Galiya Klinkova and Michael Grabinski
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Maike Tormählen: Department of Information Management, Neu-Ulm University, Wileystr. 1, 89231 Neu-Ulm, Germany
Galiya Klinkova: Department of Business and Economics, Neu-Ulm University, Wileystr. 1, 89231 Neu-Ulm, Germany
Michael Grabinski: Department of Business and Economics, Neu-Ulm University, Wileystr. 1, 89231 Neu-Ulm, Germany

Mathematics, 2021, vol. 9, issue 9, 1-16

Abstract: Statistical significance measures the reliability of a result obtained from a random experiment. We investigate the number of repetitions needed for a statistical result to have a certain significance. In the first step, we consider binomially distributed variables in the example of medication testing with fixed placebo efficacy, asking how many experiments are needed in order to achieve a significance of 95%. In the next step, we take the probability distribution of the placebo efficacy into account, which to the best of our knowledge has not been done so far. Depending on the specifics, we show that in order to obtain identical significance, it may be necessary to perform twice as many experiments than in a setting where the placebo distribution is neglected. We proceed by considering more general probability distributions and close with comments on some erroneous assumptions on probability distributions which lead, for instance, to a trivial explanation of the fat tail.

Keywords: statistical significance; confidence; medication tests; central limit theorem; fat tail (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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