Beware of ‘Good’ Outliers and Overoptimistic Conclusions*

B-Tier
Journal: Oxford Bulletin of Economics and Statistics
Year: 2009
Volume: 71
Issue: 3
Pages: 437-452

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The main goal of this paper is to warn practitioners of the danger of neglecting outliers in regression analysis, in particular, good leverage points (i.e. points lying close to the regression hyperplane but outlying in the x‐dimension). While the types of outliers which do influence regression estimates (vertical outliers and bad leverage points) have been extensively investigated, good leverage points have been largely ignored, probably because they do not affect the estimated regression parameters. However, their effect on inference is far from negligible. We propose a step‐by‐step procedure to identify and treat all types of outliers. The paper of Persson and Tabellini [American Economic Review (2004) Vol. 94, pp. 25–46] linking the degree of proportionality of an electoral system to the size of government is discussed to illustrate how the choice of a measure and the existence of atypical observations may substantially influence results.

Technical Details

RePEc Handle
repec:bla:obuest:v:71:y:2009:i:3:p:437-452
Journal Field
General
Author Count
3
Added to Database
2026-01-25