Rejection Odds and Rejection Ratios: A Proposal for Statistical Practice in Testing Hypotheses
37 Pages Posted: 13 Jan 2016
Date Written: December 1, 2015
Much of science is (rightly or wrongly) driven by hypothesis testing. Even in situations where the hypothesis testing paradigm is correct, the common practice of basing inferences solely on p-values has been under intense criticism for over 50 years. We propose, as an alternative, the use of the odds of a correct rejection of the null hypothesis to incorrect rejection. Both pre-experimental versions (involving the power and Type I error) and post-experimental versions (depending on the actual data) are considered. Implementations are provided that range from depending only on the p-value to consideration of full Bayesian analysis. A surprise is that all implementations — even the full Bayesian analysis — have complete frequentist justification. Versions of our proposal can be implemented that require only minor modifications to existing practices yet overcome some of their most severe shortcomings.
Keywords: hypothesis testing, p-value, power, Bayes factor
JEL Classification: C11, C12, C90
Suggested Citation: Suggested Citation