ECON 104 Lecture Notes - Lecture 2: Confidence Interval, Time Series, Scatter Plot
Document Summary
Economic theory doesn"t really tell you how much of an increase in price will create decrease in demand, so numbers aren"t present in the theory. Helps us quantify effects, reduce class size by 1 test score will increase by 5 points. When we construct theories, we are making lots of assumptions about how theory will work. Test theories to determine whether they are correct. Focus more on estimating causal effects, less on forecasting using time series data. Focus on applications - how to come up with complicated formulas and why the formulas work. Data set consists of observations from 420 school districts, we will know the district student number avg and student-teacher ratio. Table tells us how variable is distributed but doesn"t tell us the connection between the two. Looking at scatterplot of the data, each dot is one district.
