Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/91645
Authors: 
Goedemé, Tim
van den Bosch, Karel
Salanauskaite, Lina
Verbis, Gerlinde
Year of Publication: 
2013
Series/Report no.: 
EUROMOD Working Paper EM18/13
Abstract: 
In the microsimulation literature, it is still uncommon to test the statistical significance of results. In this paper we argue that this situation is both undesirable and unnecessary. Provided the parameters used in the microsimulation are exogenous, as is often the case in static microsimulation of the first-order effects of policy changes, simple statistical tests can be sufficient. Moreover, standard routines have been developed which enable applied researchers to calculate the sampling variance of microsimulation results, while taking the sample design into account, even of relatively complex statistics such as relative poverty, inequality measures and indicators of polarization, with relative ease and a limited time investment. We stress that when comparing simulated and baseline variables, as well as when comparing two simulated variables, it is crucial to take account of the covariance between those variables. Due to this covariance, the mean difference between the variables can generally (though not always) be estimated with much greater precision than the means of the separate variables.
Subjects: 
Statistical inference
significance tests
microsimulation
covariance
t-test
EUROMOD
JEL: 
C15
C83
C88
I32
Document Type: 
Working Paper

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