I. Introduction (Lecture 1)
A. Econometrics – brief definition.
B. Econometrics – body of knowledge,
methods.
C. Applied Research – what we do with it.
Some Key Terms:
Econometrics
Dependent variable
Independent variable
Population parameter
Disturbance
Time-series data
Cross-section data
Pooled Data or Panel Data
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PRS Grading
• Survey/Participation questions: Full credit for
participating with reasonable answers. Hitting
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• Graded questions: Full credit for correct
answers; half credit for incorrect, but sensible
answers. These questions appear in a box.
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Term Project
• Outline and requirements on website.
• Have you chosen a partner?
• Make a decision on your data. We have:
– Samples of Amherst home prices.
– Individual labor data: cross-sectional data by state
on wages and hours supplied.
– Other possibilities list on website.
Introductory Econometrics is
a writing course.
• Reinforce learning – write lecture
summaries.
• Reinforce lab exercises – write
summaries.
• Practice spelling. It matters!
• Term Project – we grade your writing and
analyses.
Random Variables
Distributions
Descriptive Measures
Estimation
Sampling Distributions
Today
II. Statistical and Notational Preliminaries
A. Elements of Statistical Theory
1. Prerequisites
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B. Elements of Statistical Theory
Variable takes on different values.
Values occur by chance.
1. Prerequisites
Random Variable:
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•
Distributions:
• Possible values of a random variable and their
frequencies or relative frequencies.
• R.V.s take on different values by chance.
Distribution shows each value’s chance.
• Population Distributions:
Lessons from Lab
• Amherst home prices – sales price is random.
• We observed the distribution of sales prices
for 2006. A population distribution – all single
family homes sold in 2006.
• Organized/summarized: Array, Grouped Data
Table; Histogram.
• Summary measures:
– Min, Q1, Q2, Q3, Max; IQR.
– Mean; St. Deviation.
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Sale Price ($)
$100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000
to
to
to
to
to
to
to
to
to
$200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000
Distribution of Amherst Single Family Home Prices,
2006.
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
Suppose a random sample of 12 people is taken,
asking how many children each of them had, the
results are as follows:
0, 4, 1, 3, 5, 0, 1, 2, 2, 3, 8, 3.
What measure of center would you use to
describe these data?
• What three things do we want to know
about a distribution?
Descriptive Measures:
Relative Frequency
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Estimation
You want a “best guess” about a population
parameter, say, μ.
How?
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•
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Sample statistic:
Estimate:
Estimator:
Population Parameters:
More details/definitions:
•
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