Chap 1. Statistics and Data

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics


Statistics for EconomistStatistics for Economist

Chap 1. Statistics and DataChap 1. Statistics and Data

1.1. Why do we Study Why do we Study Statistics?Statistics?

2.2. DataData

3.3. VariablesVariables

4.4. Experimental StudyExperimental Study

5.5. Observational StudyObservational Study

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STATISTISTATISTICSCS

INDEX

1Why Why dodo we Study we Study

Statistics?Statistics?

2 Data

3 Variables

5 Observational Study

4Controlled Experiments

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1. Why Do we Study Statistics?

We use statistics in almost everywhere such as economics, business administration, law, medical science, humane studies and natural science. We live in statistics.

‘The specific advertisement raises the revenue?’‘A famous actor makes a larger audience share?’‘A sexism exists in labor market?’‘what is the effect of FDI on economic growth rate?’

…

The Value of Statistics

The Value of Statistics

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““Since you had only two daughters, this

Since you had only two daughters, this

time is for son. One more please…”

time is for son. One more please…” – a – a

husband’s mother -husband’s mother -

““A .3 hitter made three poor shows of batting,

A .3 hitter made three poor shows of batting,

so he is gonna make a hit.’

so he is gonna make a hit.’

- Game commentary –

- Game commentary –

Idiot Statistics (I)

Idiot Statistics (I)


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“ “They could make over 800% profitability

They could make over 800% profitability

just for 3 months, according to the

just for 3 months, according to the

fundamental investment principle.”

fundamental investment principle.”

- Appraisal for the first winner of the Mock Investment in

- Appraisal for the first winner of the Mock Investment in

Stocks Contest -Stocks Contest -

Idiot Statistics (II)

Idiot Statistics (II)


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“ “ Low relation in SAT score and GPA in

Low relation in SAT score and GPA in

college. So SAT score is not so helpful

college. So SAT score is not so helpful

for predicting the achievement in

for predicting the achievement in

college.”college.”

- th

e office of XX academic

- the office of XX academic

affairs - affairs -

Idiot Statistics (III)

Idiot Statistics (III)


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INDEX

1Why do we Study

Statistics?

2 DataData

3 Variables



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2. Data

Inference

Sampling

Sample

Statistic Population

Parameter

Relation between

Population and Sample

Relation between

Population and Sample

Statistics includes not only the descriptive statistics

but the inference statistics.

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Cross-Section Data- Different subjects are compared to one another at one point in time.

Time-Series Data- Changes of one subjects are compared to over time.

Longitudinal Data- Subjects are followed over time, and compared with themselves at different points in time.

Panel Data- Observations on multiple phenomena are

observed over multiple time periods

Kinds of DataKinds of Data

2. Data

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INDEX

1Why do we Study

Statistics?

2 Data

3 VariablesVariables



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3. Variables

Quantitative Variable : answered by giving a number

Ex) age, family size, family income

Qualitative Variable : not a number by itself, but become a random variable after coding to a number

Ex) marital status (single, married, widowed, divorced, separated), employment status

변수의 유형변수의 유형

QualitativeVariable

Quantitative Variable

Random Variable

Coding

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INDEX

1Why do we Study

Statistics?

2 Data

3 Variables


44Controlled Controlled ExperimentsExperiments

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4. Controlled Experiments

Randomized ControlAssignment to the treatment group or the control groupWhat if make groups w.r.t the relevant variables; family

income, personality, or social habits?Toss a coin!

Double blindnessThe subjects did not know whether they got the treatme

nt of the placebo, and neither did those who evaluated the responses.

Principles of Experimental Studies

Principles of Experimental Studies

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Treatment GroupTreatment Group(vaccine)(vaccine)

No consentNo consent

Consent of parentsConsent of parents

1st grade

2nd grade

3rd grade

Control GroupControl Group

Are subjects assigned to treatment of control at Are subjects assigned to treatment of control at random? No! random? No! Is double blindness considered? No!Is double blindness considered? No!

National Foundation for Infantile Paralysis Experiment

National Foundation for Infantile Paralysis Experiment


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Only the children consented by parents are assigned Only the children consented by parents are assigned to treatment or control at randomto treatment or control at random After controlling grades, placebo makes double blindAfter controlling grades, placebo makes double blind

Treatment groupTreatment group(vaccine)(vaccine)

Control groupControl group(placebo)(placebo)

No consentNo consent(exclusion)(exclusion)

Random assignmentRandom assignment

Children consented to vaccination

No consented children

Randomized double blind experiment

Randomized double blind experiment


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Sample size rate Sample size rate

Treatment 200,745 28 Grade 2(vaccine) 221,998 25

Control 201,229 71 Grade 1&3(control)725,173 54

No concent 338,778 46 Grade 2(no concent) 123,605 44

source: J.M.Tanner, et al., Statistics , 3rd ed., Wadworth & Brooks, p.12, Table1.

Randomized controlled double blind Not randomized controlled

Size of groups and rate of polio cases per 100,000 in each group

Without randomized control, ‘consent of parents’ is a confounding factor. It offsets the positive effect of vaccine partly.

The Salk Vaccine Field Trial

The Salk Vaccine Field Trial


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Is it meaningful to compare before and after Is it meaningful to compare before and after having a specific for growth? having a specific for growth? Does a specific for growth affect slow-growing kids Does a specific for growth affect slow-growing kids to grow?to grow?

exclusionexclusion

Slow-growing kids

Fast-growing kids

Treatment groupTreatment group(specific for growth)(specific for growth)

Control group Control group ??????

A specific for growth model

A specific for growth model


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Random assignment to control or treatment Random assignment to control or treatment among slow-growing kids among slow-growing kids Placebo effectPlacebo effect

Treatment groupTreatment group(a specific for growth)(a specific for growth)

Control groupControl group(placebo)(placebo)

exclusionexclusion

Random assignmentRandom assignment

Slow-growing kids

Fast-growing kids

Revised model– a specific for growth

Revised model– a specific for growth


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INDEX

1Why do we Study

Statistics?

2 Data

3 Variables


5 Observational StudyObservational Study

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5. Observational Study

In an observational study it is the subjects who assign themselves to the different groups: the investigators just watch what happens

Ex ) Studies on the effects of smoking

Nobody is going to smoke for ten years just to please a statistician. The investigators compare smokers with nonsmokers to determine the effect of smoking.

Observational Study VS Controlled Experiments

Observational Study VS Controlled Experiments

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If the treatment group is different from the control group with respect to other factors, their effects are confounded with the effect of the treatment.

Confounding FactorConfounding Factor


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To control for confounding factors, make comparisons separately for smaller and more homogeneous groups.

Ex) simple comparison between smokers’ and nonsmokers’ mortality: men are more likely than women to have heart disease

Male smokers toto male nonsmokersfemale smokers to to female nonsmokers

Male smokers toto nonsmokers at same ageFemale smokers to to nonsmokers at same

age

Control for Confounding factors

Control for Confounding factors


CompareCompareseparatelyseparately

CompareCompareseparatelyseparately

Older people have different smoking habits, and are more at risk for lung cancer

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The successes of several groups seem to be

reversed when the groups are combined.

We need to control for the confounding factors.

Simpson’s paradoxSimpson’s paradox


Chap 1. Statistics and Data

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