True / False Questions
1. Practical significance is the sign of a correlation coefficient.
2. Validity refers to the relationship between predictor and criterion scores.
3. A useful predictor is one where the sign of the relationship is consistent with the logic or theory behind the predictor.
4. Statistical significance is stated as a probability and indicates a given predictor's chances of yielding similar validity coefficients with different sets of applicants.
5. A significance level of p<0.05 means that there are fewer than 5 chances in 100 of concluding there is a relationship in the population of job applicants, when in fact, there is not.
6. In general, the greater the correlation of a given predictor with other predictors of a criterion, the more useful the predictor will be.
7. The usefulness of a predictor is determined by the value it adds to the prediction of job success above and beyond the forecasting powers of other available predictors.
8. There are no cases in which a predictor has high validity and high adverse impact.
9. All other things being equal, if a selection specialist must decide between two predictors, the one that causes the least adverse impact would be the best choice.
10. Utility refers to the expected gains to be derived from using a predictor.
11. The selection ratio is the number of people hired divided by the number of applicants, and it is desirable that this ratio be high.
12. It is desirable that the denominator of a selection ratio be small.
13. The base rate is the number of hirees divided by the number of employees.
14. When deciding whether or not to use a new predictor, the validity coefficient, the base rate, and the selection ratio should be considered in combination, not independently.
15. The most fundamental concern regarding utility analysis is that it lacks realism.
16. If you are using the "economic gains formula," and you have just increased the validity of your selection procedures with no change in cost, your economic gain value should increase.
17. The most difficult factor in the economic gain formula to estimate is "cost per applicant".
18. Utility analysis models do not take factors like EEO/AA concerns into account.
19. Research suggests that managers prefer the results of utility analysis to the presentation of simple validity coefficients.
20. Utility decreases as the number of valid predictors used in the selection process increases.