ECON 3210 Lecture Notes - Lecture 14: Squared Deviations From The Mean, Random Variable, Thought Experiment

• School: York University
• Department: Economics
• Course: ECON 3210
• Professor: Uros Petronijevic

Document Summary

The expectation is a measure of central tendency and the sample mean is an estimate of it. As a measure of variability, its customary to look at squared deviations around the mean. The squaring ensures that positive and negative values do not cancel out. E(cid:894)yi(cid:895)(cid:895)(cid:1006)= e(cid:894)yi (cid:895)(cid:1006)= e(cid:894)yi(cid:895)(cid:1006) (cid:1006) = (cid:1006) y. The variance is a population concept like the expectation. Like the expectation, it is also a fixed number in the population. The sample variance is an estimator of the population variance. It is calculated based on the following rule: *va(cid:396)ia(cid:374)(cid:272)e of (cid:373)ath s(cid:272)o(cid:396)e (cid:395)ui su(cid:373) (cid:373)ath di va(cid:396)ia(cid:374)(cid:272)e is (cid:396)(cid:894)sd(cid:895) (cid:1006) va(cid:396)ia(cid:374)(cid:272)e is (cid:1006)(cid:1006)(cid:1011)(cid:1009). (cid:1004)(cid:1012)(cid:1011)(cid:1011) di va(cid:396)ia(cid:374)(cid:272)e is r(var) variance is 2275. 0877. The sample variance is a statistic that one should document. We"(cid:396)e (cid:396)eally i(cid:374)te(cid:396)ested i(cid:374) is the (cid:448)a(cid:396)ia(cid:374)(cid:272)e of y, ou(cid:396) esti(cid:373)ate of the populatio(cid:374) (cid:373)ea(cid:374). Of course, given one sample, we only have one number and its variance is zero.