1st- Class notes on conditional expectation functions

E(YIX):

Conditional expectation Funciton or CEF,

Expected Value of Y given X

Y=

Dependent Variable (response variable)

-Responds based on X

-Depends on model

X=

Independent Variable (explanatory variable)

Is determenly independent of Y

2 reasons to estimate the Conditional Expectation Function: 

1. To predict the value of Y (forecasting)

Ex: What’s causing Autism? 

1. To measure relationships between variables (statistical inference)

Help:

As long as x is related to Y, E(YIX) is a better predictor of Y than just E(Y)