Star Wars: The Empirics Strike Back
Paris School of Economics (PSE); London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Institute for the Study of Labor (IZA)
Paris School of Economics (PSE)
French National Center for Scientific Research (CNRS) - Research Group in Quantitative Saving (GREQAM); Aix-Marseille University
CREI and Universitat Pompeu Fabra
June 18, 2012
Paris School of Economics Working Paper No. 2012-29
Journals favor rejections of the null hypothesis. This selection upon results may distort the behavior of researchers. Using 50,000 tests published between 2005 and 2011 in the AER, JPE and QJE, we identify a residual in the distribution of tests that cannot be explained by selection. The distribution of p-values exhibits a camel shape with abundant p-values above .25, a valley between .25 and .10 and a bump slightly under .05. Missing tests are those which would have been accepted but close to being rejected (p-values between .25 and .10). We show that this pattern corresponds to a shift in the distribution of p-values: between 10% and 20% of marginally rejected tests are misallocated. Our interpretation is that researchers might be tempted to inflate the value of their tests by choosing the specification that provides the highest statistics. Note that Inflation is larger in articles where stars are used in order to highlight statistical significance and lower in articles with theoretical models.
Number of Pages in PDF File: 38
Keywords: Hypothesis testing, distorting incentives, selection bias, research in economics
JEL Classification: A11, B41, C13, C44working papers series
Date posted: June 23, 2012
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