Statistical significance vs. practical significance
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Why is statistical significance not necessarily of practical important difference to a business decision? Give an example and explain. Why do statisticians play only a limited role in deciding whether statistical significance requires a business action?
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Solution Summary
This solution is a 300 word example of a business decision where practical significance outweighs statistical significance.
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When we make a statistical decision, it is based only on statistical significance. For example, suppose pharmaceutical company is considering the replacement of their current cholesterol lowering drug with a new one. The statisticians collect and analyze data and report the following back to management. The statistical conclusion is, "With 95% confidence (the .05 level of statistical significance), we can conclude that the average cholesterol lowering capacity ...
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