Monday, May 23, 2011

Statistical Tests

There are 4 types of tests (all easy to construct in Excel).

We do two: Wald tests, and likelihood ratio tests.

All Wald tests are constructed by taking the difference between what we observe and what we hypothesize, and dividing that by a "ruler": the standard error. If the result is "big", we know we've found something.

Maximum likelihood tests are usually known at this level as F or chi-square tests.

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