Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics for Economist Chap 1. Statistics and Data 1.Why do we Study Statistics? 2.Data 3.Variables 4.Experimental Study 5.Observational Study

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 2/23 INDEX 1 Why do we Study Statistics? 2 Data 3 Variables 5 Observational Study 4 Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 3/23 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

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 4/23 “ Since you had only two daughters, this time is for son. One more please …” – a husband ’ s mother - “ A.3 hitter made three poor shows of batting, so he is gonna make a hit. ’ - Game commentary – Idiot Statistics (I) 1. Why Do we Study Statistics?

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 5/23 “ They could make over 800% profitability just for 3 months, according to the fundamental investment principle. ” “ They could make over 800% profitability just for 3 months, according to the fundamental investment principle. ” - Appraisal for the first winner of the Mock Investment in Stocks Contest - Idiot Statistics (II) 1. Why Do we Study Statistics?

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 6/23 “ Low relation in SAT score and GPA in college. So SAT score is not so helpful for predicting the achievement in college. ” “ Low relation in SAT score and GPA in college. So SAT score is not so helpful for predicting the achievement in college. ” - the office of XX academic affairs - - the office of XX academic affairs - Idiot Statistics (III) 1.Why Do we Study Statistics?

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 7/23 INDEX 1 Why do we Study Statistics? 2 Data 3 Variables 5 Observational Study 4 Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 8/23 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.

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 9/23  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 Data 2. Data

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 10/23 INDEX 1 Why do we Study Statistics? 2 Data 3 Variables 5 Observational Study 4 Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 11/23 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 유형 Qualitative Variable Quantitative Variable Random Variable Coding

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 12/23 INDEX 1 Why do we Study Statistics? 2 Data 3 Variables 5 Observational Study 4 Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 13/23 4. Controlled Experiments  Randomized Control  Assignment to the treatment group or the control group  What if make groups w.r.t the relevant variables; family income, personality, or social habits?  Toss a coin!  Double blindness  The subjects did not know whether they got the treatment of the placebo, and neither did those who evaluated the responses. Principles of Experimental Studies

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 14/23 Treatment Group (vaccine) No consent Consent of parents 1 st grade 2 nd grade 3 rd grade Control Group  Are subjects assigned to treatment of control at random? No!  Is double blindness considered? No! National Foundation for Infantile Paralysis Experiment 4. Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 15/23  Only the children consented by parents are assigned to treatment or control at random  After controlling grades, placebo makes double blind Treatment group (vaccine) Control group (placebo) No consent (exclusion) Random assignment Children consented to vaccination No consented children Randomized double blind experiment 4. Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 16/23 Sample size rateSample size rate Treatment200,74528Grade 2(vaccine) 221,99825 Control201,22971Grade 1&3(control) 725,17354 No concent 338,77846Grade 2(no concent) 123,60544 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 4. Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 17/23  Is it meaningful to compare before and after having a specific for growth?  Does a specific for growth affect slow-growing kids to grow? exclusion exclusion Slow-growing kids Fast-growing kids Treatment group (specific for growth) Control group ??? A specific for growth model 4. Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 18/23  Random assignment to control or treatment among slow-growing kids  Placebo effect Treatment group (a specific for growth) Control group (placebo) exclusion Random assignment Slow-growing kids Fast-growing kids Revised model – a specific for growth 4. Controlled Experiments

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 19/23 INDEX 1 Why do we Study Statistics? 2 Data 3 Variables 4 Controlled Experiments 5 Observational Study

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 20/23 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

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 21/23 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 Factor 5. Observational Study

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 22/23 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 to Male smokers to male nonsmokers to female smokers to female nonsmokers to Male smokers to nonsmokers at same age to Female smokers to nonsmokers at same age Control for Confounding factors 5. Observational Study Compareseparately Compareseparately Older people have different smoking habits, and are more at risk for lung cancer

Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics Statistics & Econometrics STATISTICS 23/23 The successes of several groups seem to be reversed when the groups are combined. We need to control for the confounding factors. Simpson ’ s paradox 5. Observational Study