ECN 201 – Economic Data
Analysis
Michael S. Lawlor
Dept of Economics
Wake Forest University
1st Day of Class - Overview
• Required Class for Econ. Majors/Minors
• Satisfies data analysis requirement for
HPA
• Intro To Econ – ECN 150 – only
prerequisite
Course Material
• No text
• All readings posted on the website or
handed out in class
• Website should become familiar to
students
– http://www.wfu.edu/~lawlor/econ201.html
– Become familiar with it
Grading
• Quiz grade: 10%
• Participation 10%
• Data Project 1: 40%
• Data Project 2: 40%
Quizzes and Participation
• Quizzes Possible on any day, except where
noted on schedule
• Graded quickly and returned quickly
• 1 of 3 usual grades:
– 95: Evidence of having read reading and
understanding it correctly
– 85: Evidence of having read reading, but
misunderstood something
– 50: Evidence of not having done reading
– 0: Absent (note even without having done the reading
there is an incentive to come to class)
Quizzes, contd.
• Quizzes will be recorded throughout the
semester, lowest grade thrown out
• Homework averaged in (see unit #4)
• 3 motivations for quizzes (all with students
learning in mind)
– 1: Reward conscientious attention to material
– 2: Emphasize 1 or 2 main points of reading
– 3: Provide daily feedback to the instructor.
• Remember no tests
Quiz and participation in class
• Attendance crucial
– Class and quizzes cannot be made up
– Will go over all software in class
• Other than this, participation in class also
encouraged by participation grade
• Both are gifts to the conscientious student
– Designed with student in mind
Projects
• Economic Applications of Publicly Available Data
• Detailed and exact
• Graded on neat, clear presentation and
accuracy
• Note due dates and late penalty (with one day of
grace)
• 1st on OECD Health Data (cross sectional), 2nd
on History of U.S. Consumption to today (time
series)
Economic Data Analysis
• Economics wants to explain social
phenomena and be applicable
– Requires knowledge of history, politics,
institutions, economic theory and DATA
– “Data:” etymology from the Latin, dare, to give
(singular datum, plural data)
Nature of Economic Data
– Generally not handed to us, or experimental,
but takes time, money and effort to collect and
disseminate
• By some computer assisted bureaucracy, now
– Economic data, more or less accurately,
measure some economic phenomenon
– Are a given in the sense that, once obtained,
they cannot be altered
• In this sense, serve as our knowledge of
economic reality
Three Levels of Economic Data
Analysis
• 1. May provide initial background
information
• example: the health insurance market
• 2. Added to introspection, logic,
mathematics, creativity and prior theory,
provide the basis of “theory”
• 3. Form the basis for testing economic
“theory” against data
• Formally this is econometric model specification
and testing, we will show less formal tests
Summary and Review
• Stage One – Data Exploration
• Stage Two – Theoretical Statement of
Economic Behavior
• at the least informal and implicitly
• at the most formal, by explicit and
falsifiable hypothesis statements
• Stage Three - A Formal statistical test of
these statements
•
- Hypothesis testing
This course is interested in #1 and
(the beginning) of #3
• We will explore data, and learn techniques
and software tools for displaying and
analyzing data at the first stage
– We will call it “Data Exploration”
• We will analyze a part of macroeconomic
theory (the “consumption function”) to
begin to see how economic theory is
empirically implemented at the 3rd stage
Fit with economic curriculum
• Will give a taste for the “realistic”
application of what you learn in 205, 206,
207
• Will improve your papers in electives
• Will complement, and make relevant to
economics, Math 109 (required)
• For students that really enjoy this material,
a more formal treatment is 215,
econometrics
Software
• No prior knowledge of any software
required
• Hands-on instruction on your laptop of all
software used: GRETL and Excel
• Main program GRETL was written by a
Professor in our Econ. Dept. (Prof.
Cottrell).
– Is free to the user and continuously updated
Data: The A priori and Empirical
• Handout from website
• A priori: means “prior to experience”
• Known by the exercise of reason alone, without
requiring sensory or experimental input
• In contrast, Empirical: means “pertaining
to or founded upon, experiment or
experience”
Is this a clear-cut dichotomy?
• Can distinguish the ideas in our minds and
the proof necessary to make them true
– For a priori: a process of reasoning that can
be done internally
• With logic or mathematics perhaps
– For empirical: need some evidence of past
examples
Some statements are pure
examples of each…
• Two plus two equals four
• The car that just went by was red
• There can be no such thing as a round
triangle
• There can be no such thing as a blue
swan
Some statements are compounded
of the two ideas…
• The earth is 93 million miles from the sun
– It is clearly an empirical statement, but the
measurement may depend on the truth of
much logical and mathematical deduction
from a priori ideas
• The boiling point of water at sea level is
100 degrees Celsius
– Same, think of how the Celsius scale is set up
Economic Propositions are of both
kinds
• Consumers can generally be regarded as
rational
– Clearly taken by most economists as an a
priori assumption
– To the extent it has been questioned by
behavioral economists, it is considered an
“anomaly”
• Monopoly is detrimental to the pace of
technical progress in an industry – both
First Quiz: An exercise
• From the field of microeconomics, identify
one proposition that seems clearly a priori
• And one that seems clearly empirical
• Write them down in the form of 2
statements.
Special Focus – Fall 2008
• Credit Crisis and Subprime Mortgage
Mess
• Will connect to last project on the
“consumption function”
– Will see how savings and consumption
behavior changed since 1990
Special Author and Speaker
• John Duca, Economist and V.P for
Research – The Federal Reserve Bank of
Dallas
• We will read two of his papers
• He will give a public talk (mandatory for
this class) on Oct. 15 at 4:00, in
Annenberg Forum, Carswell Hall
• Mark you calendar now