In the quest for economic significance: Assessing variable importance through mean value decomposition

Thomas Holgersson, Therese Norman and Sam Tavassoli
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Therese Norman: CSIR, Blekinge Inst of Technology, Postal: Jönköping International Business School, Box 1026, 55 111 Sweden

No 2013/03, Working Papers from Blekinge Institute of Technology, Department of Industrial Economics

Abstract: Economic significance is frequently assessed through statistical hypothesis testing, which however, does not always correspond to the implicit economical questions being addressed. In this paper we propose using mean value decomposition to assess economic significance. Unlike most previously suggested methods the proposed one is intuitive and simple to conduct. The technique is demonstrated and contrasted with hypothesis tests by an empirical example involving the income of Mexican children, which shows that the two inference approaches provide different and supplementary pieces of information.

Keywords: Conditioning; Economic significance; Regression analysis; Mean Value Decomposition; Goodness-of-Fit (search for similar items in EconPapers)
JEL-codes: C51 C54 I32 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2013-12-03
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Related works:
Journal Article: In the quest for economic significance: assessing variable importance through mean value decomposition (2014)
Working Paper: In the quest for economic significance: Assessing variable importance through mean value decomposition (2013)
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