Chapter 38: How Economists Use Data

data

factual information, often quantitative, that provides the basis for reasoning and discussion

econometrics

the subfield of economics that develops tools to analyze data

randomized controlled trial

an experiment in which a researcher randomly divides subjects into groups, treats the groups differently, and compares their outcomes

experimental data

data that come from a researcher running a randomized controlled trial

observational data

data that come from a researcher observing the world as it presents itself

confounding variable

an omitted variable that can mislead the researcher because it is related to the variables of interest

reverse causality

a situation in which a researcher confuses the direction of influence between two variables

cross-sectional data

data that present information about multiple subjects (such as people, firms, or nations) at a given time

time-series data

data that present information about a single subject (such as a person, firm, or nation) at various times

panel data

data that present information about multiple subjects (such as people, firms, or nations) at various times

parameters

the numerical values that govern the strength of the relationships among variables in a model

linear regression

a statistical model in which the dependent variable is linearly related to one or more independent variables plus a random residual

ordinary least squares

a statistical method for estimating parameter values by minimizing the sum of squared residuals

standard error

a measure of the uncertainty associated with a parameter estimate that results from sampling variation

multiple regression

a linear regression model with more than one independent variable