Wednesday, May 12, 2010

STATA: Power calculations

There may be instances, while planning your study, that you need to determine what sample size will give you sufficient power to detect an effect. Formal power calculations are many times used in clinical trials, but this can also be used for econometric studies. For instance, I recently had to do a series of power calculations to determine if we needed to buy the Medicare 100% file, or if we had enough observations in the 5% file. Additionally, if you are at the start of a research project it may be helpful to know if the data that you have on hand is sufficient to detect your hypothesized effect.

In order to do a power calculation you will need four items:
alpha: 0.05 (probability of choosing the alternate hypothesis when the null is true)
power: 0.80 (this is 1 - beta, i.e. the probability of choosing the alternative hypothesis when true)
effect size: how large and effect do you hypothesize, the difference in effect between your treatment and control groups
variance

Once you have these you can use powercal in stata, which is an add on so you will have to download it, type:

search powercal

in stata

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