Benchmark error

Use of an inappropriate proxy for the true market portfolio.

Benchmark Error

The act of using the wrong benchmark when creating a market portfolio in the capital asset pricing model or a similar model. For example, when calculating a CAPM using European stocks, a benchmark error would involve using the Dow Jones Industrial Average (an American index) as the benchmark. A benchmark error can result in wildly incorrect calculations.

References in periodicals archive

The difference between the previously published sample-based estimate and the benchmark level is called the benchmark error or the benchmark revision.

CES assumes the total benchmark error accumulated at a steady rate since the prior year's March benchmarked employment, resulting in a linear application (or wedge) of that error to the prior April.

Benchmarking the Current Employment Statistics national estimates

The desegregation of benchmark error into the amounts stemming from three major sources: business births, deaths, and continuing units.

The statistics corner: update on the BLS sample redesign for the current employment statistics survey

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