A Cost and Benefit Evaluation of Surface Transport Regulation: Appendix II

by Council on Wage and Price Stability on January 13, 1977
by Council on Wage and Price Stability


As discussed in the text, significant statistical problems were found with the Bureau’s data and analysis. A detailed examination of those problems, based on the authors’ analysis of the Bureau’s data, is presented in this appendix. In addition, we present various estimations utilizing different formulations of the data in order to show the sensitivity of the results to changes in assumptions.

The most severe problem with the Bureau’s analysis is that of  multicollinearity. The problem may also have been present in the earlier analysis of Moore (1972 and 1975) and of Morton (1969), although Morton tested for it and claims it was not (1969, p. 51). The correlation matrix of the independent variables in the Bureau’s analysis is shown below in Table A.





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