The Hausman test helps choose between fixed effects and random effects models from "summary" of Introduction to Econometrics by Christopher Dougherty
The Hausman test is a statistical test used in econometrics to determine whether a fixed effects model or a random effects model is more appropriate for a particular dataset. Fixed effects models assume that each individual in the dataset has a unique intercept that is constant over time, while random effects models assume that the intercepts are randomly distributed across individuals. To conduct the Hausman test, researchers estimate both a fixed effects model and a random effects model using the same dataset. The test then compares the estimated coefficients from each model to see if they are significantly different. If the coefficients are significantly different, this suggests that the random effects model is inconsistent and ...
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