Stars, Wars, and Development

50 Pages Posted: 17 May 2019 Last revised: 23 Sep 2019

See all articles by Olivier Sterck

Olivier Sterck

University of Oxford - Department of International Development; University of Oxford - Centre for the Study of African Economies (CSAE)

Date Written: May 10, 2019

Abstract

As part of the credibility revolution in applied economics, researchers need to turn away from significance thresholds and stars, and instead focus on economic importance. Yet, existing measures of importance in regression analysis have fundamental flaws. Using an axiomatic approach, I develop two new measures, which decompose the variance of the dependent variable into contributions associated with each regressor. I demonstrate the relevance and complementarity of the two measures in two cases studies. The first shows that the statistically significant relationship between genetic distance and inter-state wars is economically irrelevant. The second identifies the most important factors of long-term development.

Keywords: Importance, Statistical Significance, Wars, Genetic Distance, Long-run Growth

JEL Classification: B4, C18, O4

Suggested Citation

Sterck, Olivier, Stars, Wars, and Development (May 10, 2019). Available at SSRN: https://ssrn.com/abstract=3386218 or http://dx.doi.org/10.2139/ssrn.3386218

Olivier Sterck (Contact Author)

University of Oxford - Department of International Development ( email )

3 Mansfield Road
Oxford, OX1 3TB
United Kingdom

University of Oxford - Centre for the Study of African Economies (CSAE) ( email )

Oxford OX1 3UL
United Kingdom

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