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Understanding and Teaching Within-Cluster Correlation in Complex Surveys

Humberto Barreto () and Manu Raghav ()

No 2013-02, Working Papers from DePauw University, Department of Economics and Management

Abstract: This econometrics pedagogy paper demonstrates the importance of using cluster standard errors with data generated from complex surveys. Simulation is used to show that both classic ordinary least squares and robust standard errors perform poorly in the presence of within-cluster correlated errors, while cluster standard errors are much better. We take advantage of Excel’s spreadsheet interface to produce clear, strong visuals of the data generation process and intuitively explain key results. Stata and R implementations are also provided. We conclude with suggestions for how to use these files in the classroom.

Keywords: complex survey; simulation; cluster sampling; estimation; survey regression (search for similar items in EconPapers)
JEL-codes: A2 A22 A23 C80 C81 C83 C87 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-ecm
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Published in Journal of Econometric Methods, Volume 2, Issue 1, March 2013, pages 101-112

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