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∙Consider the job training grant application. Usingclscrap, the changein the log of the scrap rate, we estimated the mean policy effect to beabout−.374. Crudely, this means an average fall in the scrap rate ofabout 37.4% – a very large economic effect.97
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∙We also found that, even with a small number of observations, we cansoundly rejectH0:≥0 againstH1:0 at the 1% significancelevel.∙But suppose the estimated sample average had been−.040 withn1,600 andS.637 (the same estimate obtained withn19). Thismeans a standard error of .637/40≈.016. Thetstatistic is thent−.040/.016−2.50, which is still a very strong rejection ofH0.But the estimated policy effect is much smaller – roughly 4% ratherthan 37%.98