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Common Statistical Errors and Mistakes: Valuation and Reliability
Item No. taj_F13_statistical
16 pages, PDF Download
Feature article originally published in The Appraisal Journal Fall 2013 issue.
This article looks at common statistical errors valuers may encounter in appraisal practice.
The article challenges a fundamental assumption of traditional appraisal practice, the use of samples in valuation. It is no longer necessary to use samples where complete, electronically-delivered data sets are available. This legacy error stems from inertia within the profession and the lack of clarity in problem identification. The article offers a suggested approach for the use of statistics in appraisal practice based on the two-fold nature of the appraisal analytical process. The article also addresses the deeper error of use of complex inferential sample statistics when simple descriptive population parameters will do. A related issue concerns the application of common sense in a discipline where results can often be counterintuitive. An important case example is provided. Finally, other lesser statistical mistakes are described.
George Dell, MAI, SRA
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