Working Paper

A Frequent Misuse of Significance Tests

Thomas Mayer
CESifo, Munich, 2001

CESifo Working Paper No. 549

Economists sometimes interpret the failure of a significance test to disconfirm a hypothesis as evidence that this hypothesis is valid. Six examples of this are cited from recent journals. But this is a misinterpretation of what significance tests show. While in general it is correct that every failure to disconfirm a hypothesis adds to its credibility, the term "disconfirm" is defined differently for this purpose than it is in the context of significance tests.

Keywords: Significance tests, t values, t coefficients, confirmation