ECO375H1 Lecture Notes - Lecture 1: Econometric Model, Ceteris Paribus, Econometrics
Document Summary
Research in social sciences pose unique challenges as we cannot conduct experiments in social sciences. Must make judgements on what assumptions are reasonable and so forth. Econometrics infers from data sample to wider population using economic models. Empirical analysis: use data to test theory and estimate relationship. First step is to formulate question of interest. Econometric model: form of function f(x) must be specified; is based off economic model. Crime = 0 + 1wagem + 2 other income + 3 freqarrest + u u represents error term/disturbance term. Cross-sectional data: sample taken at given point in time. Time series data: observations on a variable or several variables over time. More difficult to analyze because observations cannot be assumed to be independent across time. Pooled cross-section: combine two sets of cross-sectional data over time. A sample of households from 1990 and a sample from 1995. Panel/longitudinal data: time series for each cross-sectional member in a data set.
