The Goldilocks Principle: Avoiding Pitfalls in Interpretation of Regression Coefficients

15 Pages Posted: 1 Jul 2008

See all articles by Jane E. Miller

Jane E. Miller

Rutgers, The State University of New Jersey - Institute for Health, Health Care Policy and Aging Research

Date Written: June 2008

Abstract

Regression coefficients estimate the effect of a one-unit increase in the independent variable X on the dependent variable Y. Although a one-unit increase is mathematically convenient, it is an arbitrary choice for interpreting the substantive significance of a coefficient. Depending on the type of variable and its level and distribution, a one-unit increase is too big for some independent variables, too small for others, and just right for yet others. This paper discusses theoretical and empirical criteria for choosing the right size contrast for each Xi to convey the size and shape of its relationship with Y. Transformation of variables and model specification are also considered. Example sentences are used to illustrate how to interpret coefficients in the context of the research question and data.

JEL Classification: A23, C10

Suggested Citation

Miller, Jane E., The Goldilocks Principle: Avoiding Pitfalls in Interpretation of Regression Coefficients (June 2008). Available at SSRN: https://ssrn.com/abstract=1153573 or http://dx.doi.org/10.2139/ssrn.1153573

Jane E. Miller (Contact Author)

Rutgers, The State University of New Jersey - Institute for Health, Health Care Policy and Aging Research ( email )

30 College Avenue
New Brunswick, NJ 08901
United States

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