Statistical Significance and Actual Significance

45 Pages Posted: 20 Mar 2023

Date Written: March 18, 2023


I replace each variable, except for each indicator or time variable, by the standard cumulative Gaussian probability of its Z-score ((variable minus mean)/standard deviation)). Therefore, all regression coefficients are systematic, objective, and comparable. For structural systems, the full association of two variables is measured by the total derivative, my method makes full associations comparable as well. I systematically define a full or partial association to be actually significant positive (negative) at level l if the relevant derivative is greater than l (less than -l). I apply these methods to estimate a seven-equation structural system of market efficiency of fixed income securities.

Keywords: Normalization of Variables; Cumulative Gaussian Probability; Actual Significance; Total Association; Fixed Income Securities; Market Efficiency.

JEL Classification: C13; C14; C18; G14; G12; C58; C33; C36.

Suggested Citation

Bhattacharya, Rajeev, Statistical Significance and Actual Significance (March 18, 2023). Available at SSRN: or

Rajeev Bhattacharya (Contact Author)

Washington Finance and Economics ( email )

United States


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