01-2 STAT 2010-11 introduction-POSTED SLIDES

# 01-2 STAT 2010-11 introduction-POSTED SLIDES - INTRODUCTION...

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INTRODUCTION Dr. V.R. Bencivenga Economic Statistics Economics 329 2010-11 INTRODUCTION Outline I. Conceptual framework of statistics Topics of the course II. Nature of economic data Discrete vs. continuous variables Objectives: Descriptive statistics vs. statistical inference Data-generating process Randomness Objectives: Unit of observation, variable Classifying variables

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2 INTRODUCTION III. Introduction to sampling 1. Vitamins and number of colds 2. Polio and the Salk vaccine 3. Landon vs. Roosevelt in 1936 4. Bombers in WWII and positioning armor 5. Determinants of growth IV. Illustrating a biased sample with the linear probability model V. Labor market dynamics Objectives: What population do we want to sample? Does the sample represent the population? Objectives: More on sampling
3 INTRODUCTION I. CONCEPTUAL FRAMEWORK OF STATISTICS

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4 INTRODUCTION Statistics is the field of mathematics dealing with collection, presentation, and interpretation of data. Statistical methods are used in basic research in the physical sciences and social sciences, and to make business decisions. Examples of questions statistical methods may answer
5 INTRODUCTION Economics Does access to microfinance raise families’ incomes, in poor countries ? Do higher marginal tax rates reduce labor supply? Does a large government budget deficit reduce growth of real GDP? Business What are forecasts of interest rates, the US dollar-euro exchange rate, real GDP, etc.? Banks use forecasts to manage risk. How can wind speeds at possible sites of wind farms be estimated? Investors require good estimates before committing funds. What data should a company collect for reliable and cost-effective quality- control? Sociology Do harsher sentences lower crime rates? Psychology Does higher income make people happier? Science What do rising temperatures, shrinking ice packs, and shifting habitats tell us about climate change and global warming?

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6 INTRODUCTION There are two broad groups of statistical methods: Descriptive statistics are methods to summarize data. Methods of statistical inference let us learn about the process generating the data.
7 INTRODUCTION Methods of descriptive statistics help us portray data, so key features and patterns emerge. Examples of features we may want to de scribe … Earnings of 25-year olds What are typical earnings? Are most 25- year olds’ earnings similar, or are earnings of different people “all over the place?” Do those with below-average earnings approximately balance those with above-average earnings? Or are most people near the center, with a small number of “high earners?” What level of earnings cuts off the top 10%? Are high earnings associated with more education? How much do average earnings increase with each year of education?

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8 INTRODUCTION Methods of statistical inference help us learn about the data-generating process (DGP).
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01-2 STAT 2010-11 introduction-POSTED SLIDES - INTRODUCTION...

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