A Statistical Method for Empirical Testing of Competing Theories

Empirical testing of competing theories lies at the heart of social science research. We demonstrate that a well-known class of statistical models, called finite mixture models, provides an effective way of rival theory testing. In the proposed framework, each observation is assumed to be generated either from a statistical model implied by one of the competing theories or more generally from a weighted combination of multiple statistical models under consideration. Researchers can then estimate the probability that a specific observation is consistent with each rival theory. By modeling this probability with covariates, one can also explore the conditions under which a particular theory applies. We discuss a principled way to identify a list of observations that are statistically significantly consistent with each theory and propose measures of the overall performance of each competing theory. We illustrate the relative advantages of our method over existing methods through empirical and simulation studies.