Introduction and Fundamentals
Why studying econometrics? How can we detect and navigate some common pitfalls commonly encountered when doing regression analyses?
This session aims to briefly motivate the importance of studying econometrics and discuss some fundamental hurdles we face in applied economic studies.
Summary
In this session, we first underline the pervasiveness of econometrics in applied research and therefore the usefulness of studying it. There are however many hurdles to obtaining accurate estimates, happening at various stages of the research process. These hurdles matter for our understanding of the world and may even affect policies. We thus discuss how to avoid them by learning our econometrics, deriving the maths or, what might be more fun, implementing some data visualization and running simulations. Finally we build an example of simulation for regression analysis by studying how omitting a variable may affect the conclusion of an analysis.
Session Outline
- Why this class?
- Logistics
- Hurdles to accurate estimates
- Research questions
- Avoiding hurdles
- Simulations: usefulness through the example of omitted variable bias
- Lecture summary
Materials
Exercise and simulation
During the lecture, we did a simple simulation exercise, exploring the drivers of omitted variable bias in a simple regression. You can find the document for this simulation here.
In addition, you have an assignment for next class.
Specific resources for this lecture
- More on good research questions:
- A fun website with examples of spurious correlations: https://tylervigen.com/