Econ 10; Error & Types of Error

What is the Error formula?

y_i = ŷ + ϵ

What does y_i mean?

your observed outcome

What does ŷ mean?

your prediction

What is formula for ŷ?

â + B̂ * (x)

What doe â mean?

the intercept

what does B̂ mean?

the slope

How may systemic sources of Error are there?

6

Sampling error occurs:

any time our sample data does not represent the population we’re trying to represent

All polls suffer from which type of error?

Sampling error

What is the solution to Sampling Error?

Simple Random Sampling with replacement

What is the solution to Measurement Error?

anonymize collective data

Soulution for Measurement Error (social science)

rounding

Solution for Measurement Error (physical science) drift in measures

better instrumentation

Randomization Error

anytime the treatment and the control differ from each other in any way other than the treatment

For Randomization Error, error can occur before, during, or after

True

What is the solution to Randomization Error?

Double blind test

Types of Modeling / Perceptual Error

Reverse Casualty, Omitted Variable, & Spurious Correlation

Reverse Casualty

Using the model in the wrong way. Not the way it was meant to be use

Example of Reverse Casualty

college application scandal ($ gives you a place at the table)

Omitted Variable

a third variable that affects both x and y, but is left out of the model

Example of Omitted Variable

A study ignores the number of hours worked when comparing income level and level of education

Spurious Correlation

when data moves together, but not causally

Examples of Spurious Correlation

Vaccines cause Autism

Solution for all types of Modeling / Perceptual Error

Peer Review

Random Error

small positive or negative variation in the data

Solution for Random Error

Get more data