Specification, Residuals and Contextual Effects

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Abstract
The controversy over contextual effects is reviewed from the standpoint of specification analysis. The uselessness of ad hoc calculations of "variance due to" is demonstrated, and more careful examinations of goodness of fit are advocated. In this regard, it is demonstrated that techniques involving the analysis of residuals can be powerful aids both to assessing the quality of parameter estimation and to allowing the data to reveal the unexpected. It is concluded that contextual effects are weak, but cannot be dismissed, and a new line of theorizing is advocated.

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