Journal
JOURNAL OF APPLIED STATISTICS
Volume 39, Issue 6, Pages 1279-1293Publisher
TAYLOR & FRANCIS LTD
DOI: 10.1080/02664763.2011.644530
Keywords
GAMLSS; BCPE distribution; Pareto-Levy-Mandelbrot distribution; P-splines; model selection in GAMLSS
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This paper illustrates the power of modern statistical modelling in understanding processes characterised by data that are skewed and have heavy tails. Our particular substantive problem concerns film box-office revenues. We are able to show that traditional modelling techniques based on the Pareto-Levy-Mandelbrot distribution led to what is actually a poorly supported conclusion that these data have infinite variance. This in turn led to the dominant paradigm of the movie business that 'nobody knows anything' and hence that box-office revenues cannot be predicted. Using the Box-Cox power exponential distribution within the generalized additive models for location, scale and shape framework, we are able to model box-office revenues and develop probabilistic statements about revenues.
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