On the Measurement of Importance

35 Pages Posted: 17 May 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

When cost-benefit analysis is infeasible, many empirical papers use standardized beta coefficients, Shapley values, or partial R² to demonstrate that their relationship of interest is important. I show that these measures of importance are flawed, and therefore propose two new approaches to measure importance. While the ceteris paribus approach captures the independent effect of a regressor on the dependent variable, the non-ceteris paribus approach explicitly considers whether this effect is reinforcing or going against the effects of other correlated variables. I apply these complementary methods to assess the importance of the determinants of long-run growth. I find that legal origins, malaria ecology, and distance to coast are the three most important factors explaining contemporary development, ceteris paribus. Religion, genetic diversity, and slave trade intensity are also relatively important. In comparison, ruggedness, the share of the population of European descent, and the timing of the Neolithic transition appear to be unimportant. The effects of malaria ecology, of the slave trade, and of the share of the population of European descent are mutually reinforcing.

Keywords: Importance, Effect size, Regression, Long-run growth

JEL Classification: B4, C18, O4

Suggested Citation

Sterck, Olivier, On the Measurement of Importance (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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