Lecture 2_Part2

# Lecture 2_Part2 - Characteristics of Probability...

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SUNY at Albany - Department of Economics Eco 320 • Economic Statistics Characteristics of Probability Distributions II Variance and Others

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1. Variance and Standard Deviation A. Variance ( σ 2 ) of a random variable is a measure of dispersion or how the x ’s are spread -out around its mean. If r.v. X takes the same value, the variance will be zero. • The more volatile or more widely spread around the mean the x’s, the larger the variance. SUNY at Albany - Department of Economics Eco 320 • Economic Statistics   variable) random s (continuou ) ( ) ( ) var( variable) random (discrete ) ( ) ( ) var( ) ( ) var( 2 2 2 2 x x x x x x dx x f x X x f x X X E X
1. Variance and Standard Deviation (cont’d) SUNY at Albany - Department of Economics Eco 320 • Economic Statistics 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 0.2 X f(X) var(b) = ?

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1. Variance and Standard Deviation (cont’d) SUNY at Albany - Department of Economics Eco 320 • Economic Statistics 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18 0.2 X f(X) var(b) = 0
1. Variance and Standard Deviation (cont’d) SUNY at Albany - Department of Economics Eco 320 • Economic Statistics 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 -6 -3 0 3 6 X f(X) E(X) σ 2 = 1 σ 2 = 4

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[Example] Variance Working Table SUNY at Albany - Department of Economics
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## This note was uploaded on 02/08/2012 for the course ECON 320 taught by Professor Chan during the Spring '11 term at SUNY Albany.

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Lecture 2_Part2 - Characteristics of Probability...

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