ABSTRACT
Economic efficiency demands accurate assessment of individual ability for selection purposes. This study investigates Classical Test Theory (CTT) and Item Response Theory (IRT) for estimating true ability and ranking individuals. Two Monte Carlo simulations and real data analyses were conducted. Results suggest a slight advantage for IRT, but ability estimates from both methods were highly correlated (r=0.95), indicating similar outcomes. The Logistic two-parameter IRT model emerged as the most reliable and rigorous approach.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Ethical approval
Not applicable, as this study does not directly involve human beings.
Data availability statement
This study utilizes simulated data with a disclosed data generation process in the methodology section. The real data used in this investigation is confidential and cannot be revealed.
Author’s contribution
Javed Iqbal: Conceptualization, Supervision, Data Collection, Methodology, Coding, First Draft
Tanweer Ul Islam: Literature Review, Data Cleaning, Coding, Estimation, Analysis, Final Draft
Additional information
Notes on contributors
Javed Iqbal
Javed Iqbal is a joint director in the State Bank of Pakistan in the Statistics division. His areas of interest are Econometrics, Data aggregation or decomposition, and Machine learning.
Tanweer Ul Islam
Tanweer Ul Islam is a professor in the School of Social Sciences and Humanities at the National University of Sciences and Technology, Islamabad where he has been a faculty member since 2008. Tanweer received his Ph.D. from the International Islamic University, Islamabad. His research interests lie in applied time series, simulation, normality testing and development economics.