ECON101 Lecture Notes - Lecture 2: Scatter Plot, Natural Experiment

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Million Tadesse

Document Summary

Identify linear and nonlinear relationships and relationships that have a maximum and a minimum. Define and calculate the slope of a line. Scatter diagrams: plots the value of one variable against the value of another variable for a number of different values of each variable. A model is a description of some aspect of the world. Includes only those features that are needed for the purpose at hand. The success of a model is judged by its ability to predict the future. Economists use various methods to disentangle cause and effect: natural experiment, statistical investigation and randomized control experiment. Example: to study the effect of college degree on wages. An economist may use or design a randomized control experiment as follows. Select 1000 high school students who cannot afford college but would attend college (if it were free) Randomly place 500 of them into a treatment group where they had all their college expenses paid.