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Re: Heteroskedasticity robust standard errors: Some practical considerations

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Hi Bruce,

Thanks for sharing.

I was interested in looking at what happened with "small" samples and heteroskedasticity in linear models.

I started playing with some simulations and found that the statement that HC3 was unambiguously best was not the case, specially when I added discrete covariates to my simulations.

I then explored asymptotic metaphors that described the situation I found best. The Cattaneo et al. paper fit the bill. I found its relation to the Chesher work interesting also. At the time, I had not seen your paper. I was aware of what Matt Webb and his coauthors are working on but the asymptotic metaphor did not seem as adequate as the other.

In particular, I wanted to emphasize the idea that a small number of observations per parameter is problematic, even if N is large. I am not making any specific recommendations as to which method is best. I wanted to share something I found with heteroskedasticity and "small" samples. I was particularly concerned with the idea that there was a threshold number of observations that determines when to use one method or another.


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