01:220:322 Lecture Notes - Lecture 3: Marginal Distribution, Joint Probability Distribution, Conditional Probability Distribution
Document Summary
In economics we are usually interested in building models that explain behavior from individuals based on their individual characteristics. For example, we may be interested in knowing why an individual drawn at random earns the salary that they do. There are many reasons why people earn different wages, even if they are very similar. Examples of individual characteristics that many researcher find important are (cid:1) Gender, education, on the job experience, race, membership of a union, age, region where you live. Before we draw our individual the salary that they earn plus their individual characteristics are unknown to us. What is the probability that the person we draw earns ,000 a year and is a woman? (cid:1) (cid:1) These questions are all quite different. (cid:1) The first question involves asking about the joint probability that we draw a woman who earns ,000 a year. (cid:1)
