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Economics 507: Statistics for Economists Fall 2012 MW 5:30 – 7:00 CGS 505 Th 6:30 – 8:00 CAS 313 Michael Rife Office Hours: TBD 360-281-9432 [email protected] TA: Yang Li Course Description: This is a master’s level course in statistics for economists. The purpose of the course is to gain an understanding of the uses and limitations of statistical methods to estimate states of nature that cannot be known with certainty (effects of a policy, income distribution, economic relationships, etc.) The first part of the course provides a foundation in probability and distribution theory. The second part of the course discusses random variables and the distributions of random variables. The third part of the course discusses statistical inference, e.g., hypothesis testing and confidence intervals. The final section of the course is an introduction to regression analysis. The topics covered in this course provide the foundation required to successfully complete the topics in EC 508: Econometrics. The course will consist of a balance between theoretical and practical applications. Comfort with and a working knowledge of algebra, differential and integral calculus is expected to successfully complete this course. At times some of the problems in the course will involve multiple integration and differentiation. The level of the course is to be slightly below the level of a master’s level course of mathematical statistics taught in a MS program in statistics. Selected materials will be posted on blackboard and may include answers to homework problems and solutions to exams after the assignments/exams are completed. Textbooks: Probability and Statistics, DeGroot and Schervish, 4th edition (required) There are several other useful textbooks in the field of mathematical statistics. If you have an interest in knowing what these texts are, please let me know. Grading: Homework (40%) Midterm (30%) Final (30%) (not comprehensive) Homework: A substantial amount of homework is assigned in this course because proficiency in mathematical statistics occurs with much practice. The homework for the chapter is due one week after the conclusion of the discussion of the topic in class. The problems to be submitted and graded will be all of the problems listed below except for the supplemental problems. The supplemental problems will be useful for the preparation of the mid-term and final exams. It is highly recommended that the student works on the homework problems while we are discussing the topic in class and not wait for the one week time period between the end of discussing the chapter and the due date of the homework. Working on the assignment while we are discussing the topic could lead to useful questions during the presentation of the topic. In addition, procrastination until the one week time period may lead to a lower grade on the homework assignment. Also, it is encouraged that students work together on the homework assignments because better learning of the material usually occurs through student discussion and interaction. However, while working together, please make sure that each individual does close to equal work over the semester. The grading of the assignments will be based on the ratio of the number of problems answered correctly divided by the total number of problems. Late assignments will be accepted but a one correct problem reduction will occur for each class period the assignment is late. Mid-term and Final Exam: The mid-term and final exams will be accomplished within the classroom. One piece of paper (8.5 inches by 11 inches) will be allowed to be used by the student. This piece of paper will only contain formulas but not any proofs that may be necessary to produce during the exam. The exams will be a combination of theoretical and applied questions. The midterm will occur approximately one week after the conclusion of the discussion of chapter 5. But, sufficient lead time will be given concerning the timing of the mid-term exam, e.g., two weeks. It appears that the Final Exam is scheduled for Tuesday, December 18th, from 6:00 to 8:00 PM pending approval from the Economics Department. Grade Scale: 10 point grading scale (after curving) Proposed Topics and Problems Assigned: Chapter 1: Introduction to Probability Sections 1.1 – 1.10 HW: 1.4: 6, 10, 11 (page 15-16) 1.5: 1, 4 – 8 (page 21) 1.6: 1, 2, 3, 8 (page 25) 1.7: 3 – 5, 7 – 10 (page 32) 1.8: 2 – 4, 10, 12, 14 – 16, 18 (page 41-2) 1.9: 2, 3, 8, 9 (page 45-6) 1.10: 1, 3, 7 (page 50-1) Supplemental Problems: 1 – 4, 6 – 11 (page 53-4) Chapter 2: Conditional Probability: Sections 2.1 – 2.3 HW: 2.1: 1, 2, 4, 6, 11 – 16 (page 65 -6) 2.2: 1, 4, 8, 10, 11, 16, 19, 23 (page 75) 2.3: 6 – 8, 13, 14 (page 84 – 86) Supplemental Problems: 3, 4, 6, 9, 11, 13, 18, 19, 23 – 25, 29, 32 Chapter 3: Random Variables and Distributions Sections 3.1 – 3.9 HW: 3.1: 3 – 5, 7 -9, 11 (page 100) 3.2: 3 – 5, 7, 8, 10 (page 106-7) 3.3: 5, 6, 14 (page 117) 3.4: 1, 2, 4, 10 (page 129) 3.5: 1, 4 -10, 13 (page 140 -1) 3.6: 7 – 10, 12 (page 151-2) 3.7: 1 – 3, 8 (page 166-7) 3.8: 1 – 3, 6 – 9, 11, 13 – 15 (page 174-5) 3.9: 4 – 14, 17 – 19, 21 Supplemental Problems: 2 – 7, 9 – 11, 14, 16, 17, 19 – 24, 26 Chapter 4: Expectation Sections 4.1 – 4.7 HW: 4.1: 1, 3 (page 216-7) 4.2: 8 – 11 (page 224-5) 4.3: 1, 4 – 6, 9 (page 234 – 5) 4.4: 1 – 5, 7, 8 – 14, 16 (page 240-1) 4.5: 2, 4, 7, 9, 11, 13, 14 (page 247-8) 4.6: 2 – 10, 13 – 15, 17, 18 (page 255 -6 ) 4.7: 2, 3, 8 -10, 12 – 16 (page 264) Supplemental Problems: 5, 7, 13, 15, 18 – 21, 23 -27 (page 272-3) Chapter 5: Special Distributions Sections 5.1, 5.2, 5.6, 5.7, 5.10 HW: 5.2: 5, 8 – 10, 13 (page 280-1) 5.6: 3, 5 – 11, 13 – 17, 19 – 23 (page 315-6) 5.7: 1, 4 – 7, 16 – 19, 21 (page 325 -6) 5.10: 3 – 6, 10 – 12 (page 343 – 4) Supplemental Problems: 2, 17, 24 – 26 (page 345 – 6) Chapter 6: Large Random Samples Sections 6.1 – 6.3 HW: 6.3: 2, 3, 5 – 8, 13, 17 (page 358 – 60) Supplemental Problems: 2 – 6, 8 – 11, 13, 14 (page 370-1) Chapter 7: Estimation Sections 7.1, 7.5 HW: 7.5: 1 – 3, 6, 7, 11 (page 425 – 6) Supplemental Problems: 10 (page 462) Chapter 8: Sampling Distributions of Estimation Sections 8.1 – 8.5, 8.7 HW: 8.1: 2 – 9 (page 468-9) 8.2: 1, 2, 9 – 13 (page 472-3) 8.3: 1, 4 – 7, 9 (page 479) 8.4: 1, 3, 6, 8 (page 484-5) 8.5: 1, 2, 4, 7, 8 (page 494) 8.7: 3, 4, 6, 10, 15 (page 512 – 3) Supplemental Problems: 1 – 5, 7 – 12 (page 11) Chapter 9: Testing Hypotheses Sections 9.1, 9.5 – 9.7 HW: 9.1: 1, 4, 6, 9, 11, 14 – 17, 19 9.5: 1, 4 – 6, 9, 10, 12-18 (page 585 – 7) 9.6: 4 – 7, 11, 12 (page 596 -7) 9.7: 1 – 5, 10 – 12, 14, 16, 18, 19 (page 604 – 5) Supplemental Problems: 2, 4 – 6, 15 (page 621 – 3) Chapter 11: Linear Statistical Models Sections 11.1 -11.3, 11.5 HW: 11.1: 1 – 3, 7, 10 (page 697 – 8) 11.2: 1 – 10, 12 – 18 (page 706 – 7) 11.3: 1 – 9, 11 – 13, 19, 20, 22 (page 727 – 9) 11.5: 1 -2, 7 – 16, 23 – 25 Supplemental Problems: 1 – 3, 18, 24 (page (783 – 5) Other Important Topics 1) It is recommended that you read both the first section and the business section of one of the local newspapers every day (Mondays are pretty good) and the Wall Street Journal on a regular basis. Current affairs may be discussed at your initiative. 2) Exams can only be made up in the case of family, medical, or work emergencies. 3) It is highly recommended that you show up for each class. Attendance will not be taken. However, it will be to your benefit to attend each class. • There may be extra credit questions on all exams based on extra material covered during the class. • There are helpful hints concerning the exams…..sometimes. 4) Statistics is an analytical field of study. Each day’s material is part of a building block. Regular attendance is crucial. For example, some believe they can pass the course just by showing up for the tests and the final. This is usually not true. 5) Do not hesitate to e-mail me or call me at work to answer questions or to notify me of an absence on the day of the exam. 6) University policy calls for severe sanctions for cheating or any other form of academic dishonesty. This policy will be enforced for all exams in the course. Knowledge of and following the CAS academic code of conduct is expected in this course. Copies of the Conduct Code are available in CAS 105. Working together on homework assignments is encouraged. 7) Students with disabilities will be accommodated. Please see me if you need specific resources for this class. 8) Actively participate. Being engaged with the learning process will make your experience more pleasant and will result in better grades. Try to control the “entertainment” wants that we all have. Sometimes the birth of an economic concept can be slow so exercise patience with the process. If you do have trouble focusing, please refrain from engaging your fellow students in conversation. This is most unfair to those who are focused and are trying to learn. If you are believed to be causing a disruption to the class, then you will be subject to an afterclass conversation and may not be given the benefit of the doubt is your grade is “borderline”.