Understanding Practical and Statistical Significance

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How big is big enough to matter? How rare does an event have to be before we conclude that pure chance didn't cause it? …

How big is big enough to matter? How rare does an event have to be before we conclude that pure chance didn't cause it?

These are the two fundamental questions you have to ask yourself when reviewing your policies and practices for discrimination. These two questions are answered by practical and statistical significance, respectively. Statistical significance has a generally accepted rule of thumb that makes it relatively easy to determine if an event is rare enough to conclude that pure chance didn't cause it. Practical significance, on the other hand, has no generally accepted rule of thumb; practical significance is a question of judgment. This judgment is critical to assessing and managing the risk of employment discrimination litigation.

In this installment of The Proactive Employer Podcast, we talk about practical and statistical significance. We discuss the differences between the two concepts, and talk about why it's important to consider both practical and statistical significance when examining your policies and practices for discrimination.

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  • 1. THE PROACTIVE EMPLOYER PODCAST May 6, 2011Understanding Practical and Statistical Significance Sponsored by Thomas Econometrics www.thomasecon.com