Econ103fall10lec2

Econ103fall10lec2 - Introduction Definitions Estimation...

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Unformatted text preview: Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Econ 103, UCLA, Fall 2010 Introduction to Econometrics Lecture 2: Review of Statistics Sarolta Lacz September 28, 2010 Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Introduction Steps of empirical analysis: 1 Formulate the question of interest 2 Obtain data 3 Estimate the parameter(s) of interest 4 Conduct statistical inference Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Outline Definitions - population, random sampling Estimation Unbiased estimator Consistent estimator Central Limit Theorem Hypothesis testing How to do hypothesis testing Small vs. large samples p-values 2-sided and 1-sided tests Confidence intervals Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Definitions/1 Statistics can be used to study economic variables, e.g. yearly wages of adults in the US. Population : group of interest, e.g. all adults in the US Y : random variable of interest, e.g. yearly wage for a randomly selected adult Population Distribution of Y : describes how Y varies (or is distributed) across the population. Typically we do not observe the whole population, only a subset of it, a sample . Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Definitions/2 Random Sample : values of Y for a set of n randomly chosen adults from the population. ( Y 1 ,...,Y n ) is a random sample of size n . It also means that each individual of the population gets to be part of the sample with the same probability. Y i and Y j represent two observations in the sample, which are themselves random variables. Since Y i and Y j are values of Y , they have the same distribution as Y . In particular, E ( Y i ) = E ( Y j ) = Y V ar ( Y i ) = V ar ( Y j ) = 2 Y Because of random sampling, any two different observations in the sample are independent. Y i and Y j are independently and identically distributed (i.i.d.) . Introduction Definitions Estimation Hypothesis Testing Confidence Intervals The importance of random sampling Before the 1936 Presidential elections, a poll conducted over the phone was published, indicating that Alf M. Landon would defeat D. Roosevelt by 57% to 43% . The election was indeed a landslide. But Roosevelt won 59% to 41%. Introduction Definitions Estimation Hypothesis Testing Confidence Intervals Estimation/1 Problem: we typically dont observe the moments of the population distribution, e.g. we dont know Y , mean wages in the US....
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This note was uploaded on 10/13/2010 for the course ECON 101 taught by Professor Buddin during the Spring '08 term at UCLA.

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Econ103fall10lec2 - Introduction Definitions Estimation...

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