Wednesday , November 6 2024
Home / Lars P. Syll / Sloppy regression interpretations

Sloppy regression interpretations

Summary:
In most econometrics textbooks the authors give an interpretation of a linear regression such as Y = a + bX, saying that a one-unit increase in X (years of education) will cause a b unit increase in Y (wages). Dealing with time-series regressions this may well be OK. The problem is that this ‘dynamic’ interpretation of b is standardly also given as the ‘explanation’ of the slope coefficient for cross-sectional data. But in that case, the only increase that can generally come in question is in the value of X (years of education) when going from individual to another individual in the population. If we are interested — as we usually are — in saying something about the dynamics of an individual’s wages and education, we have to look elsewhere (unless we assume cross-unit and

Topics:
Lars Pålsson Syll considers the following as important:

This could be interesting, too:

Lars Pålsson Syll writes What statistics teachers get wrong!

Lars Pålsson Syll writes Statistical uncertainty

Lars Pålsson Syll writes The dangers of using pernicious fictions in statistics

Lars Pålsson Syll writes Interpreting confidence intervals

Sloppy regression interpretationsIn most econometrics textbooks the authors give an interpretation of a linear regression such as

Y = a + bX,

saying that a one-unit increase in X (years of education) will cause a b unit increase in Y (wages).

Dealing with time-series regressions this may well be OK. The problem is that this ‘dynamic’ interpretation of b is standardly also given as the ‘explanation’ of the slope coefficient for cross-sectional data. But in that case, the only increase that can generally come in question is in the value of X (years of education) when going from individual to another individual in the population. If we are interested — as we usually are — in saying something about the dynamics of an individual’s wages and education, we have to look elsewhere (unless we assume cross-unit and cross-time invariance, which, of course, would be utterly ridiculous from a perspective of relevance and realism).

Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

Leave a Reply

Your email address will not be published. Required fields are marked *