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Exercise

Interpreting Effect Sizes

The head of marketing at Bizer, Inc. is trying to decide whether to include a new cholesterol medicine's average treatment effect in the company's advertisements for that medicine. He knows that on average, the medicine reduces cholesterol in respondents by about 1mg/dL and knows that the effect is statistically different from zero. However, he's not sure whether that number is large or small; that is, whether the medicine's average treatment effect is worth advertising.

If cholesterol is highly variable in the population (about 70% of the population has cholesterol between 160mg/dL and 240mg/dL), does an average treatment effect of 1mg/dL seem relatively small or relatively large? In other words, when an average treatment effect is substantially smaller than the standard error of the mean for a parameter, how would we typically interpret the size of that average treatment effect?

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50 XP
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