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Archive of posts filed under the Economics category.

Data-dependent prior as an approximation to hierarchical model

Andy Solow writes: I have a question about Bayesian statistics. Why is it wrong to use the same data to formulate the prior and to update it to the posterior? I am having a hard time coming up with – or finding in the literature – a formal reason. I asked him to elaborate and […]

Actually, I’d just do full Bayes

Dave Clark writes: I was hoping for your opinion on a topic related to hierarchical models. I am an actuary and have generally worked with the concept of hierarchical models in the context of credibility theory. The text by Bühlmann and Gisler (A Course in Credibility Theory; Springer) sets up the mixed models under the […]

How should statisticians and economists think about recreational gambling?

Recreational gambling is a lot like recreational drinking, in that it is pleasant, and it can be abused, and the very aspects that make it pleasant are related to what makes it so destructive when abused. Also, both industries make a lot of money, so there’s a continuing tug of war between those who sell […]

Stan – The Bayesian Data Scientist’s Best Friend

My friend Juuso Parkkinen has interesting Stan related blog, which is worth following. The above cool animation is from today’s post discussing the updated results of using Stan to model apartment prices in Finland. Few weeks ago Juuso also blogged about a probabilistic programming seminar in Finland with a title Stan – The Bayesian Data […]

I was wrong

A few years ago I noted a report of a new journal with a title that, to my amusement, seemed to reflect a Rat-Pack-era sensibility. I wrote: Coase and Wang’s new journal might be great, but I bet it won’t be called “Man and the Economy.” But, as the image above shows, I was wrong.

Fundamental difficulty of inference for a ratio when the denominator could be positive or negative

I happened to come across this post from 2011, which in turn is based on thoughts of mine from about 1993. It’s important and most of you probably haven’t seen it, so here it is again: Ratio estimates are common in statistics. In survey sampling, the ratio estimate is when you use y/x to estimate […]

Postdoc opportunity with Sophia Rabe-Hesketh and me in Berkeley!

Sophia writes: Mark Wilson, Zach Pardos and I are looking for a postdoc to work with us on a range of projects related to educational assessment and statistical modeling, such as Bayesian modeling in Stan (joint with Andrew Gelman). See here for more details. We will accept applications until February 26. The position is for […]

Empirical violation of Arrow’s theorem!

Regular blog readers know about Arrow’s theorem, which is that any result can be published no more than five times. Well . . . I happened to be checking out Retraction Watch the other day and came across this: “Exactly the same clinical study” published six times Here’s the retraction notice in the journal Inflammation: […]

“Why IT Fumbles Analytics Projects”

Someone pointed me to this Harvard Business Review article by Donald Marchand and Joe Peppard, “Why IT Fumbles Analytics,” which begins as follows: In their quest to extract insights from the massive amounts of data now available from internal and external sources, many companies are spending heavily on IT tools and hiring data scientists. Yet […]

2 new reasons not to trust published p-values: You won’t believe what this rogue economist has to say.

Political scientist Anselm Rink points me to this paper by economist Alwyn Young which is entitled, “Channelling Fisher: Randomization Tests and the Statistical Insignificance of Seemingly Significant Experimental Results,” and begins, I [Young] follow R.A. Fisher’s The Design of Experiments, using randomization statistical inference to test the null hypothesis of no treatment effect in a […]

My namesake doesn’t seem to understand the principles of decision analysis

It says “Never miss another deadline.” But if you really could never miss your deadlines, you’d just set your deadlines earlier, no? It’s statics vs. dynamics all over again. That said, this advice seems reasonable: The author has also developed a foolproof method of structuring your writing, so that you make effective use of your […]

MTA sucks

They had a sign on the wall promoting this Easy Pay express metrocard that would auto-refill and I was like, cool, so when I got to the ofc I looked it up, found the sign-up page, gave my information and chose the EasyPayXpress PayPerRide Plan, clicked on lu et endendu or whatever they call it, […]

“Earlier you had waxed nostalgic for the days when people sent you bad graphs . . .”

Nadia Hassan writes: Earlier you had waxed nostalgic for the days when people sent you bad graphs. This [from Javier Zarracina] is not a stand-out on that front, but it is far from ideal: A lot of buzz in recent years about data journalism or quantitative journalism. There is a lot of issues to be […]

Vitamin pill shocker: “A complex web of vested interests promote calcium and vitamin D for osteoporosis, despite lack of evidence”

Paul Alper points us to this scary news article by Susan Perry: Calcium and vitamin D supplements have been shown repeatedly to have no beneficial effect on preventing or treating osteoporosis . . . In fact, the evidence has not only demonstrated that calcium and vitamin D supplements do not reduce the risk of bone […]

Citation shocker: “The lifecycle of scholarly articles across fields of economic research”

David Backus writes: Check esp fig 2 here. He was pointing me to a post by Sebastian Galiani, Ramiro Galvez, and Maria Victoria Anauati called The lifecycle of scholarly articles across fields of economic research. And here’s fig 2: And, as usual, I duck all the interesting questions and move toward triviality: This should be […]

There are 6 ways to get fired from Johnson & Johnson: (1) theft, (2) sexual harassment, (3) running an experiment without a control group, (4) keeping a gambling addict away from the casino, (5) chapter 11 bankruptcy proceedings, and (6) not covering up records of side effects of a drug you’re marketing to kids

Paul Alper writes: Gorsky, it seems to me, dwarfs the villains you often write about. Here’s the background, from New York Times columnist Nicholas Kristof: Risperdal is a billion-dollar antipsychotic medicine with real benefits — and a few unfortunate side effects. It can cause strokes among the elderly. And it can cause boys to grow […]

You’ll never guess how we answer this question: “Am I doing myself a disservice by being too idealistic in a corporate environment?”

A student writes: I’m an undergrad, going into my 4th year. Over the course of my Business-Economics major and Gerontology minor, I’ve developed a burning interest in modeling and analysis and a smoldering distrust of most everything else in the field. I’m just finishing a summer internship I’ve spent the summer in the new Predictive […]

Death of a statistician

It’s not often that one of our profession earns an obituary in the New York Times: Lawrence R. Herkimer, who elevated cheerleading into an aspirational goal for generations of youths and a highly successful business for himself, organizing camps for would-be cheerleaders and selling the clothing and gear they would need, died on Wednesday in […]

A Replication in Economics: Does “Genetic Distance” to the US Predict Development?

Douglas Campbell writes: A new study finding that more than half of psychology studies failed to replicate is a very positive step forward for social science. Could a similar study be undertaken in economics, and what would it find? Most empirical economics research is non-experimental, and thus I suspect that most studies would replicate in the sense […]

Bayesian decision analysis for the drug-approval process (NSFW)

Bill Jefferys points me to a paper, “Is the FDA Too Conservative or Too Aggressive?: A Bayesian Decision Analysis of Clinical Trial Design,” by Vahid Montazerhodjat and Andrew Lo. Here’s the abstract: Implicit in the drug-approval process is a trade-off between Type I and Type II error. We propose using Bayesian decision analysis (BDA) to […]