103lect1hand - Introduction - I Econometrics Use of...

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Introduction - I • Econometrics – Use of statistical tools to analyze economic related data. • Econ 41 – primarily covers statistical analysis of a single variable • Econ 103 – analysis of relationships between two (or more) variables. • Main tool in Econ 103: Regression analysis Introduction - II Regression analysis is used to determine the effect of one variable (e.g. X ) on another variable (e.g. Y ). Graphical illustration. • It is definitely the statistical procedure of choice in formal economic research. • However, it is also used quite often in the real world, as a tool to use data to inform better decisions. • Many, many examples of this…. Introduction - III – Entrepreneur trying to learn the effect of price on demand for his/her product. – Marketer assessing the impact of product design decisions on sales. – Lender measuring the effect of credit scores on loan default. – Investment banker trying to learn how economic variables affect a particular industries profitability. – Education administrator learning how class size affects student achievement. – Lawyer establish some cause and effect using data. – Manager trying to assess relative productivity of his/her workers. – Stock broker learning how stocks covary for hedging purposes. – Development office determining the best design of donation solicitations. – Peace Corps workers trying to learn how to best distribute contraceptives or drugs
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Introduction - IV • Regression analysis is an extremely powerful tool that allows one to use data to answer questions like this and help you make important decisions. • Of course, it is not the only tool to make decisions, but it is one valuable input. Introduction - V • Regression analysis is “hard” in one sense (lots of mathematical theory involved), “easy” in another (input data press a button in STATA ). • Most of this course will involve focusing on the theory. Why? Introduction - VI • While very powerful, regression analysis has many caveats.
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This note was uploaded on 05/26/2008 for the course ECON 103 taught by Professor Sandrablack during the Spring '07 term at UCLA.

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103lect1hand - Introduction - I Econometrics Use of...

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