Lecture+1+Introduction

Lecture+1+Introduction - ECON 123A, Fall 2011, Lecture 1...

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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-1 Welcome to ECON 123A What is econometrics ?
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-2 Lecture 1 1. INTRODUCTION The Origin of Econometrics Wassily Leontief: econometrics is “a special type of economic analysis in which the general theoretical approach - often formulated in explicitly mathematical terms - is combined frequently through the medium of intricate statistical procedures - with empirical measurement of economic phenomena.”
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-3 Why study Econometrics? C Unfortunately, it is rare in economics (and many other areas without labs!) to have experimental data. C Need to use nonexperimental , or observational , data to make inferences. C It is important to be able to apply economic theory to real world data.
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-4 Why study Econometrics? C An empirical analysis uses data to test a theory or to estimate a relationship. C A formal economic model can be tested. C Theory may be ambiguous as to the effect of some policy change – can use econometrics to evaluate the program.
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-5 The tools of this course are designed to answer quantitative economics questions. Here are some examples. C Does reducing class size improve Elementary School Education? C Is there racial discrimination in the market for home loans? C How much do cigarette taxes reduce smoking? C What will the rate of inflation be next year?
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-6 C Here are some more questions: B How does another year of education change earnings? B What is the effect on output growth of a 1 percentage point increase in interest rates by the Fed? B What is the effect on housing prices of environmental improvements? C Next is a bad question.
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-7 The Shuttle Disaster In the space shuttle Challenger disaster of January 28, 1986 the entire crew was lost because of an explosion shortly after takeoff. http://www.youtube.com/watch?v=_10T4UYpzV8
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ECON 123A, Fall 2011, Lecture 1 Dale J. Poirier 1-8 C The night before the flight there was extensive discussion whether the flight should be postponed. C These discussions are well documented, involved data, and appear to have included some dubious statistical analysis.
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2011, Lecture 1 Dale J. Poirier 1-9 C The space shuttle is launched by two solid rocket motors which are shipped in four pieces and assembled at the Kennedy Space Center. B These four pieces are connected by three field joints on each rocket. O-rings are used to seal the joint formed by the “tang segment” fitting into the “clevis segment.” B For redundancy, two O-rings (primary and secondary) are used. The O-rings measure 37.5 feet in diameter and are .28 inches thick. B
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This note was uploaded on 12/13/2011 for the course ECON 123a taught by Professor Staff during the Fall '08 term at UC Irvine.

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Lecture+1+Introduction - ECON 123A, Fall 2011, Lecture 1...

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