A nonlinear approach to testing the unit root null hypothesis : an application to international health expenditures

In this article, we examine the unit root null hypothesis for per capita total Health Expenditures (HEs), per capita private HEs and per capita public HEs for 29 Organization for Economic Co-operation and Development (OECD) countries. The novelty of our work is that we use a new nonlinear unit root test that allows for one structural break in the data series. We find that for around 45% of the countries, we are able to reject the unit root hypothesis for each of the three HE series. Moreover, using Monte Carlo simulations, we show that our proposed unit root model has better size and power properties than the widely used Augmented Dickey–Fuller (ADF) and Lagrange Multiplier (LM) type tests.

Energy consumption at the state level: the unit root null hypothesis from Australia

In this paper, our goal is to examine the unit root null hypothesis in energy consumption for Australian states and territory. We consider sectoral energy consumption for Australia and its six states and one territory using time series data for the period 1973-2007. This is the first study that does this. Generally, except for some cases in South Australia, we find strong support that shocks to energy consumption have a temporary effect on energy consumption in Australia. © 2009 Elsevier Ltd. All rights reserved.

Can Peto's paradox be used as the null hypothesis to identify the role of evolution in natural resistance to cancer? A critical review

BACKGROUND: Carcinogenesis affects not only humans but almost all metazoan species. Understanding the rules driving the occurrence of cancers in the wild is currently expected to provide crucial insights into identifying how some species may have evolved efficient cancer resistance mechanisms. Recently the absence of correlation across species between cancer prevalence and body size (coined as Peto's paradox) has attracted a lot of attention. Indeed, the disparity between this null hypothesis, where every cell is assumed to have an identical probability to undergo malignant transformation, and empirical observations is particularly important to understand, due to the fact that it could facilitate the identification of animal species that are more resistant to carcinogenesis than expected. Moreover it would open up ways to identify the selective pressures that may be involved in cancer resistance. However, Peto's paradox relies on several questionable assumptions, complicating the interpretation of the divergence between expected and observed cancer incidences. DISCUSSIONS: Here we review and challenge the different hypotheses on which this paradox relies on with the aim of identifying how this null hypothesis could be better estimated in order to provide a standard protocol to study the deviation between theoretical/theoretically predicted and observed cancer incidence. We show that due to the disproportion and restricted nature of available data on animal cancers, applying Peto's hypotheses at species level could result in erroneous conclusions, and actually assume the existence of a paradox. Instead of using species level comparisons, we propose an organ level approach to be a more accurate test of Peto's assumptions. SUMMARY: The accuracy of Peto's paradox assumptions are rarely valid and/or quantifiable, suggesting the need to reconsider the use of Peto's paradox as a null hypothesis in identifying the influence of natural selection on cancer resistance mechanisms.

Statistical hypothesis testing and common misinterpretations: should we abandon p-value in forensic science applications?

Many people regard the concept of hypothesis testing as fundamental to inferential statistics. Various schools of thought, in particular frequentist and Bayesian, have promoted radically different solutions for taking a decision about the plausibility of competing hypotheses. Comprehensive philosophical comparisons about their advantages and drawbacks are widely available and continue to span over large debates in the literature. More recently, controversial discussion was initiated by an editorial decision of a scientific journal [1] to refuse any paper submitted for publication containing null hypothesis testing procedures. Since the large majority of papers published in forensic journals propose the evaluation of statistical evidence based on the so called p-values, it is of interest to expose the discussion of this journal's decision within the forensic science community. This paper aims to provide forensic science researchers with a primer on the main concepts and their implications for making informed methodological choices.

Is the efficient market hypothesis day-of-the-week dependent? Evidence from the banking sector

In this article, we propose a new hypothesis: that the efficient market hypothesis is day-of-the-week-dependent. We apply the test to firms belonging to the banking sector and listed on the NYSE. We find significant evidence that the efficient market hypothesis is day-of-the-week-dependent. Overall, for only 62% of firms, the unit root null hypothesis is rejected on all the five trading days. We also discover that when investors do not account for unit root properties in devising trading strategies, they obtain spurious profits.

A panel CUSUM test of the null of cointegration

This paper proposes a simple residual-based panel CUSUM test of the null hypothesis of cointegration. The test has a limiting normal distribution that is free of nuisance parameters, it is robust to heteroskedasticity and it allows for mixtures of cointegrated and spurious alternatives. Our Monte Carlo results suggest that the test has small-size distortions and reasonable power. In our empirical application to international R&D spillovers, we present evidence suggesting that total factor productivity is heterogeneously cointegrated with foreign and domestic R&D capital stocks. © Blackwell Publishing Ltd, 2005.

Hypothesis testing and earthquake prediction.

Requirements for testing include advance specification of the conditional rate density (probability per unit time, area, and magnitude) or, alternatively, probabilities for specified intervals of time, space, and magnitude. Here I consider testing fully specified hypotheses, with no parameter adjustments or arbitrary decisions allowed during the test period. Because it may take decades to validate prediction methods, it is worthwhile to formulate testable hypotheses carefully in advance. Earthquake prediction generally implies that the probability will be temporarily higher than normal. Such a statement requires knowledge of "normal behavior"--that is, it requires a null hypothesis. Hypotheses can be tested in three ways: (i) by comparing the number of actual earth-quakes to the number predicted, (ii) by comparing the likelihood score of actual earthquakes to the predicted distribution, and (iii) by comparing the likelihood ratio to that of a null hypothesis. The first two tests are purely self-consistency tests, while the third is a direct comparison of two hypotheses. Predictions made without a statement of probability are very difficult to test, and any test must be based on the ratio of earthquakes in and out of the forecast regions.

Conducting statistical tests of hypotheses : five common misconceptions found in transportation research

Most statistical methods use hypothesis testing. Analysis of variance, regression, discrete choice models, contingency tables, and other analysis methods commonly used in transportation research share hypothesis testing as the means of making inferences about the population of interest. Despite the fact that hypothesis testing has been a cornerstone of empirical research for many years, various aspects of hypothesis tests commonly are incorrectly applied, misinterpreted, and ignored—by novices and expert researchers alike. On initial glance, hypothesis testing appears straightforward: develop the null and alternative hypotheses, compute the test statistic to compare to a standard distribution, estimate the probability of rejecting the null hypothesis, and then make claims about the importance of the finding. This is an oversimplification of the process of hypothesis testing. Hypothesis testing as applied in empirical research is examined here. The reader is assumed to have a basic knowledge of the role of hypothesis testing in various statistical methods. Through the use of an example, the mechanics of hypothesis testing is first reviewed. Then, five precautions surrounding the use and interpretation of hypothesis tests are developed; examples of each are provided to demonstrate how errors are made, and solutions are identified so similar errors can be avoided. Remedies are provided for common errors, and conclusions are drawn on how to use the results of this paper to improve the conduct of empirical research in transportation.

An analysis of holding cost impact on housing affordability in relation to midsized Greenfield residential property developments in South East Queensland

The position of housing demand and supply is not consistent. The Australian situation counters the experience demonstrated in many other parts of the world in the aftermath of the Global Financial Crisis, with residential housing prices proving particularly resilient. A seemingly inexorable housing demand remains a critical issue affecting the socio-economic landscape. Underpinned by high levels of population growth fuelled by immigration, and further buoyed by sustained historically low interest rates, increasing income levels, and increased government assistance for first home buyers, this strong housing demand level ensures problems related to housing affordability continue almost unabated. A significant, but less visible factor impacting housing affordability relates to holding costs. Although only one contributor in the housing affordability matrix, the nature and extent of holding cost impact requires elucidation: for example, the computation and methodology behind the calculation of holding costs varies widely - and in some instances completely ignored. In addition, ambiguity exists in terms of the inclusion of various elements that comprise holding costs, thereby affecting the assessment of their relative contribution. Such anomalies may be explained by considering that assessment is conducted over time in an ever-changing environment. A strong relationship with opportunity cost - in turn dependant inter alia upon prevailing inflation and / or interest rates - adds further complexity. By extending research in the general area of housing affordability, this thesis seeks to provide a detailed investigation of those elements related to holding costs specifically in the context of midsized (i.e. between 15-200 lots) greenfield residential property developments in South East Queensland. With the dimensions of holding costs and their influence over housing affordability determined, the null hypothesis H0 that holding costs are not passed on can be addressed. Arriving at these conclusions involves the development of robust economic and econometric models which seek to clarify the componentry impacts of holding cost elements. An explanatory sequential design research methodology has been adopted, whereby the compilation and analysis of quantitative data and the development of an economic model is informed by the subsequent collection and analysis of primarily qualitative data derived from surveying development related organisations. Ultimately, there are significant policy implications in relation to the framework used in Australian jurisdictions that promote, retain, or otherwise maximise, the opportunities for affordable housing.

Measuring voluntary dietary change in response to exercise : a focus on dietary fat

Traditional treatments for weight management have focussed on prescribed dietary restriction or regular exercise, or a combination of both. However recidivism for such prescribed treatments remains high, particularly among the overweight and obese. The aim of this thesis was to investigate voluntary dietary changes in the presence of prescribed mixed-mode exercise, conducted over 16 weeks. With the implementation of a single lifestyle change (exercise) it was postulated that the onerous burden of concomitant dietary and exercise compliance would be reduced, leading to voluntary lifestyle changes in such areas as diet. In addition, the failure of exercise as a single weight loss treatment has been reported to be due to compensatory energy intakes, although much of the evidence is from acute exercise studies, necessitating investigation of compensatory intakes during a long-term exercise intervention. Following 16 weeks of moderate intensity exercise, 30 overweight and obese (BMI≥25.00 kg.m-2) men and women showed small but statistically significant decreases in mean dietary fat intakes, without compensatory increases in other macronutrient or total energy intakes. Indeed total energy intakes were significantly lower for men and women following the exercise intervention, due to the decreases in dietary fat intakes. There was a risk that acceptance of the statistical validity of the small changes to dietary fat intakes may have constituted a Type 1 error, with false rejection of the Null hypothesis. Oro-sensory perceptions to changes in fat loads were therefore investigated to determine whether the measured dietary fat changes were detectable by the human palate. The ability to detect small changes in dietary fat provides sensory feedback for self-initiated dietary changes, but lean and overweight participants were unable to distinguish changes to fat loads of similar magnitudes to that measured in the exercise intervention study. Accuracy of the dietary measurement instrument was improved with the effects of random error (day-to-day variability) minimised with the use of a statistically validated 8-day, multiple-pass, 24 hour dietary recall instrument. However systematic error (underreporting) may have masked the magnitude of dietary change, particularly the reduction in dietary fat intakes. A purported biomarker (plasma Apolipoprotein A-IV) (apoA-IV) was subsequently investigated, to monitor systematic error in self-reported dietary intakes. Changes in plasma apoA-IV concentrations were directly correlated with increased and decreased changes to dietary fat intakes, suggesting that this objective marker may be a useful tool to improve the accuracy of dietary measurement in overweight and obese populations, who are susceptible to dietary underreporting.

A smooth transition logit model of the effects of deregulation in the electricity market

This paper introduces the smooth transition logit (STL) model that is designed to detect and model situations in which there is structural change in the behaviour underlying the latent index from which the binary dependent variable is constructed. The maximum likelihood estimators of the parameters of the model are derived along with their asymptotic properties, together with a Lagrange multiplier test of the null hypothesis of linearity in the underlying latent index. The development of the STL model is motivated by the desire to assess the impact of deregulation in the Queensland electricity market and ascertain whether increased competition has resulted in significant changes in the behaviour of the spot price of electricity, specifically with respect to the occurrence of periodic abnormally high prices. The model allows the timing of any change to be endogenously determined and also market participants' behaviour to change gradually over time. The main results provide clear evidence in support of a structural change in the nature of price events, and the endogenously determined timing of the change is consistent with the process of deregulation in Queensland.

From inferential statistics to climate knowledge

Climate variability and change are risk factors for climate sensitive activities such as agriculture. Managing these risks requires "climate knowledge", i.e. a sound understanding of causes and consequences of climate variability and knowledge of potential management options that are suitable in light of the climatic risks posed. Often such information about prognostic variables (e.g. yield, rainfall, run-off) is provided in probabilistic terms (e.g. via cumulative distribution functions, CDF), whereby the quantitative assessments of these alternative management options is based on such CDFs. Sound statistical approaches are needed in order to assess whether difference between such CDFs are intrinsic features of systems dynamics or chance events (i.e. quantifying evidences against an appropriate null hypothesis). Statistical procedures that rely on such a hypothesis testing framework are referred to as "inferential statistics" in contrast to descriptive statistics (e.g. mean, median, variance of population samples, skill scores). Here we report on the extension of some of the existing inferential techniques that provides more relevant and adequate information for decision making under uncertainty.

Patterns in the distribution and abundance of female eastern king prawns, Melicertus plebejus (Hess, 1865), capable of spawning and reproductive potential in waters off

Linear mixed models were used to test the null hypothesis that there were no differences between seasons and locations in the reproductive potential of female eastern king prawns, Melicertus plebejus along the east coast of Australia. Three samples were collected in each season between autumn 1991 and winter 1992 (inclusive). Females capable of spawning were found at all locations but proportions were greater in lower than higher latitudes. Females capable of spawning were not found at the southern (highest latitude) most location in all seasons. There was a significant interaction in reproductive potential between seasons and locations suggesting that patterns among seasons differed between locations and vice versa. Reproductive potential was greatest amongst the northern (lower latitudes) most locations and was greatest in autumn at these locations. Seasonal patterns were less pronounced further south (higher latitudes). The length composition of females in catches differed between locations with more larger prawns found in samples from northern locations. The challenge that remains is to quantify the oceanic sources of larvae that contribute to recruitment in each nursery area and the estuarine sources of juveniles that contribute adults back to the effective spawning stock. Maintaining the effective spawning stock and important nursery areas are crucial to the sustainability of this resource.

Scalloped Hammerhead microsatellite genotypes (eight loci) representing five regions on Australia's east coast and one location in central Indonesia.

Biodiversity of sharks in the tropical Indo-Pacific is high, but species-specific information to assist sustainable resource exploitation is scarce. The null hypothesis of population genetic homogeneity was tested for scalloped hammerhead shark (Sphyrna lewini, n=244) and the milkshark (Rhizoprionodon acutus, n=209) from northern and eastern Australia, using nuclear (S. lewini, eight microsatellite loci; R. acutus, six loci) and mitochondrial gene markers (873 base pairs of NADH dehydrogenase subunit 4). We were unable to reject genetic homogeneity for S. lewini, which was as expected based on previous studies of this species. Less expected were similar results for R. acutus, which is more benthic and less vagile than S. lewini. These features are probably driving the genetic break found between Australian and central Indonesian R. acutus (F-statistics; mtDNA, 0.751 to 0.903; microsatellite loci, 0.038 to 0.047). Our results support the spatially-homogeneous management plan for shark species in Queensland, but caution is advised for species yet to be studied.

Milkshark (Rhizoprionodon acutus) microsatellite genotype data (six loci) from samples collected from five locations in eastern Australia and central Indonesia.

Biodiversity of sharks in the tropical Indo-Pacific is high, but species-specific information to assist sustainable resource exploitation is scarce. The null hypothesis of population genetic homogeneity was tested for scalloped hammerhead shark (Sphyrna lewini, n=244) and the milkshark (Rhizoprionodon acutus, n=209) from northern and eastern Australia, using nuclear (S. lewini, eight microsatellite loci; R. acutus, six loci) and mitochondrial gene markers (873 base pairs of NADH dehydrogenase subunit 4). We were unable to reject genetic homogeneity for S. lewini, which was as expected based on previous studies of this species. Less expected were similar results for R. acutus, which is more benthic and less vagile than S. lewini. These features are probably driving the genetic break found between Australian and central Indonesian R. acutus (F-statistics; mtDNA, 0.751 to 0.903; microsatellite loci, 0.038 to 0.047). Our results support the spatially-homogeneous management plan for shark species in Queensland, but caution is advised for species yet to be studied.