Do covariates explain why these groups differ? The choice of reference group can reverse conclusions in the Oaxaca-Blinder decomposition
arXiv:2603.29972v2 Announce Type: replace-cross Abstract: Scientists often want to explain why an outcome is different in two groups. For instance, differences in patient mortality rates across two hospitals could be due to differences in the patients themselves (covariates) or differences in medical care (outcomes given covariates). The Oaxaca--Blinder decomposition (OBD) is a standard tool to tease apart these factors. It is well known that the OBD requires choosing one of the groups as a reference, and the numerical answer can vary with the reference. To the best of our knowledge, there has
This academic paper was published on arXiv, representing a routine release of scholarly work in statistical methodology.
This paper is primarily relevant to researchers and practitioners deeply involved in econometric and statistical decomposition methods, not the general strategic reader.
It highlights a methodological consideration in the Oaxaca-Blinder decomposition, which may refine future academic studies but does not alter any real-world systems or strategic landscapes.
Researchers using Oaxaca-Blinder decomposition might adopt more robust methods or sensitivity analyses.
Improved methodological rigor in academic studies using this specific statistical tool.
Potentially more accurate conclusions in highly specialized economic or social science research that rely on this decomposition.
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