Introduction-1 - PAM 3100: Multiple Regression Analysis...

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PAM 3100: Multiple Regression Analysis Fall 2010 Michael Lovenheim Cornell University mfl55@cornell.edu
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What is Econometrics? It is the process of making statistical inferences about the world to better understand how humans behave. Regression techniques are very useful tools in analyzing how people respond to policies and incentives. Multivariate regression is the principle tool of policy analysts.
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Why Study Econometrics? To gain knowledge about the world, particularly social processes. Evaluate policy interventions (e.g. will raising cigarette taxes reduce smoking?) Explain events that happened (e.g. why have college completion rates declined?) Try and predict what will happen tomorrow (e.g. how will health care reform affect medical expenditures?) A rigorous way to think about the world and about statistical evidence.
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Why Are Regression Techniques Necessary? In the hard sciences, it usually is possible to design an experiment. Randomization into treatment and control: Simply compare difference in mean outcomes across groups. Control group tells you what treatment group would have looked like absent the treatment (i.e., the “counterfactual outcome.”) Example: Drug trials.
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Why Are Regression Techniques Necessary? In social science, randomized trials are often impossible or morally undesirable: Does smoking cause low birthweight? Does education increase wages?
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This note was uploaded on 01/30/2012 for the course PAM 3100 at Cornell University (Engineering School).

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Introduction-1 - PAM 3100: Multiple Regression Analysis...

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