Lady Justice v. Cult of Statistical Significance: Oomph-Less Science and the New Rule of Law

Forthcoming, Oxford Handbook on Professional Economic Ethics (Oxford University Press, 2014), edited by G. DeMartino and D.N. McCloskey

25 Pages Posted: 22 Jul 2014

See all articles by Stephen Ziliak

Stephen Ziliak

Roosevelt University

Deirdre Nansen McCloskey

University of Illinois at Chicago - Department of Economics

Date Written: July 17, 2014

Abstract

We have an ethical problem in economics and other sciences using null hypothesis statistical significance testing without a loss function — a test that avoids asking, How Big is a Big Loss or Gain? Statistical significance is not equivalent to economic significance, nor to medical, clinical, nor any other kind of scientific significance — those functions of gain and loss. The mistake in the falsely made equation is evident when one reflects that the estimated payoff from a lottery is not the same object as the odds of winning that lottery. Yet a widespread failure to make the distinction between an estimate of human consequence and an estimate of its probability — between the meaning of an estimated average and the random variance around it — is killing people in medicine and impoverishing people in economics (Ziliak and McCloskey 2008). The ethical problem created by a test of statistical significance is made worse by the method’s blatant illogic at the foundational level, a fact that is unacknowledged by the bulk of decision makers depending upon it. Several changes to the scientific paper — and a recent decision by the Supreme Court of the United States — could help.

Keywords: ethics, statistical significance, oomph, Matrixx v. Siracusano, Fisher, Gosset

JEL Classification: C10, C12, C13, B23, A13

Suggested Citation

Ziliak, Stephen and McCloskey, Deirdre N., Lady Justice v. Cult of Statistical Significance: Oomph-Less Science and the New Rule of Law (July 17, 2014). Forthcoming, Oxford Handbook on Professional Economic Ethics (Oxford University Press, 2014), edited by G. DeMartino and D.N. McCloskey. Available at SSRN: https://ssrn.com/abstract=2467674

Stephen Ziliak (Contact Author)

Roosevelt University ( email )

Chicago, IL 60605
United States

HOME PAGE: http://sites.roosevelt.edu/sziliak

Deirdre N. McCloskey

University of Illinois at Chicago - Department of Economics ( email )

725 University Hall (UH)
Chicago, IL 60607-7121
United States

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