A model of multiple hypothesis testing

Davide Viviano, Kaspar Wüthrich and Paul Niehaus

Papers from arXiv.org

Abstract: Multiple hypothesis testing practices vary widely, without consensus on which are appropriate when. This paper provides an economic foundation for these practices designed to capture leading examples, such as regulatory approval on the basis of clinical trials. MHT adjustments are appropriate in our framework to the extent that research costs are invariant to the number of hypotheses. Control of average size, as for example via a Bonferroni correction, emerges in the limit case where all costs are fixed; in the opposite limit, where costs vary in proportion to the hypothesis count, no correction is needed. We illustrate implications by calculating explicit critical values using data on actual costs in the drug approval process and in program evaluation research; these suggest that some MHT adjustment is warranted in these applications, but not as much as implied by standard practice.

Date: 2021-04, Revised 2026-02
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (6)

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