Empiricim in Economics Flashcards
The Principles of Economics
Optimisation
Equilibrium
Empiricism
What is Empiricism
Evidence-based analysis that allows us to understand what is happening in the world
What is the difference between experimental and observational
Experimental comes from a controlled experiment where as observational is recorded from real world events (GDP, Balance sheets)
Quantitive variables and the differences
Meaning in numerical form
- Continuous ( e.g time)
- Discrete, finite (No. of children)
Qualitative variables and the differences
Number not meaningful
- Numerical ( NI number)
- String (Gender, ethnicity)
Benefits of research questions
Used when variables can be measured, describes relationships
Population
Complete whole objects interested in
e.g all individuals in the UK in 2021
Negative of using population
Very expensive and very hard to collect
Sample
Data collection and processing for the whole population
- Needs to be random to avoid sampling bias
Types of sampling bias
- Survivorship bias
- Self-selection bias
Survivorship bias
Logical error of concentrating on individuals that survived some processes and overlooking those that did not
Self selection bias
People are allowed to decide entirely for themselves whether or not to participate
Parameter
Characteristics for whole population, often unknown, can infer about parameter from sample observations
Statistics
Summary of sample
Estimator
When statistics used to estimate population parameter
What is the analogy principle
To learn something about the population by studying a sample, it needs to be representive
- use hat to show
How to work out sample mean
1/n * sum of x
