Beyond the Stars

Olivier Sterck

No 2016-31-2, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: It is frequent to hear in economic seminars or read in academic papers that an effect is economically significant or economically important. Yet, the economic literature is vague on what economic importance means and how it should be measured. In this paper, I show that existing measures of economic importance are flawed and misused. Using an axiomatic approach, I derive a new method to assess the economic importance of each variable in linear regressions. The new measure is interpreted as the percentage contribution of each explanatory variable to deviations in the dependent variable. As an illustration, the method is applied to the study of the causes of long-run economic development.

Keywords: Regression; Economic importance; Effect size; Standardized beta coefficients; Long-run growth (search for similar items in EconPapers)
JEL-codes: B4 C18 O10 O47 Z13 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ecm and nep-hpe
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Citations: View citations in EconPapers (3)

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Journal Article: BEYOND THE STARS (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2016-31-2

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