Jun 6, 2010

Statistical vs. Practical Significance

A lot of my statistics posts have talked about this thing called "statistical significance". To repeat for the millionth time (it's that important), when you say something is statistical significant it means that it is not likely that it occurred just by some random fluke.

Statistical significance isn't the only type of significance you should care about. Another type that is important is practical significance. Something is practically significant when you actually care about the results for some practical reason like cost, effort, etc.

Let's look at an example. Suppose we have some code and we want to make some changes. After we make our changes, we want to compare the new version against the old one for something, like performance, memory usage, etc. In this example we'll look at performance. The old version took on average 50ms to run and the new version 10ms. I'll omit the standard errors, just assume that if I say the result is statistically significant then the standard errors are small. Here are our four cases of significance:
PracticalNot Practical
StatisticalIn this one suppose our change is switching data structures in a render loop of a video game. The improvement of 40ms is huge, so it has a high practical significance.Suppose here the difference is a change in the processing time of a PHP script on a website. The result is 40ms faster, but does it really matter?
Not StatisticalSuppose we're back in the video game render loop. If there is no statistical difference between 50 and 10ms, then we have a huge problem - our standard errors are huge. It means some frames will render quickly while others will render slowly. This is a practically significant result.This could be a change to a cron job that runs every night at midnight. You make a small tweak that doesn't really have an effect on performance. There is no need to speed things up, so it doesn't actually matter whether the result is statistically significant or not (assuming that the standard errors are still reasonable, ie. not more than several hours).
Hopefully these examples illustrate the difference between statistical and practical significance. In short, statistical significance is mathematical - it comes from the data and from your confidence (how confident you want to be in your results). Practical significance is more subjective and is based on other factors like cost, requirements, etc. Neither one implies the other, there are situations when one or the other may exist but not both.

1 comment:

Claudio said...

In research, statistical significance could be almost achieved with hue samples. As you noted, other thing is practical significance of findings.
If a US$100.000/month cancer medicament gives an statistical significant extension of life of one day, worth the price?

A good article about it is:
Hubbard, R., & Armstrong, J.S. (2006). Why we Don't really know that statistical significance means: implications for Educators. Journal of Marketing Education, 28(2), 114-120.