st: Re: two-tailed test

[Kit Baum <baum@bc.edu>]

On Oct 23, 2004, at 2:33 AM, Eric wrote:

> (since you shouldn't really do two-tailed tests if you
> have a theory and if you don't have a theory, you shouldn't be doing at
> least social science--I'll let the hard sciences speak for themselves).
I don't know if Eric considers economics a social (antisocial?) or hard 
science, but I find this statement bordering on the ludicrous. Imagine 
a model

y = b0 + b1 x + b2 x^2 + e

From the standpoint of economic theory, there could be either a concave 
or convex relationship between y and x (that is, the second derivative 
is not signed by theory, depending on the shape of individuals' 
preferences). The data might be able to tell us that one of those cases 
exist, or they might be not sufficiently informative to reject the null 
b2 = 0. There is nothing wrong with a two-tailed test.

The ability to 'get one tailed tests automatically': is Stata 
automatically supposed to know which tail should be considered, or 
should it perform like 'ttest' and give you both? That IMHO would be 
more confusing for some people than their recalling the rule: if the 
test stat is on the wrong side of the inequality, don't reject; if it 
is on the right side, divide the pval by 2.

Kit Baum, Boston College Economics
http://ideas.repec.org/e/pba1.html

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