Session 9 - Chapter 6

Question 1

What is the first step to do the difference between correlation and causality ?

Answer 1

We define as the determining function,since it comprises the part of the outcome that we can explicitly determine Ui can only be inferred by solving Yi– fi (X1i, X2i, …, Xki)

Question 2

What is the second step to make a difference between correlation and causality ?

Answer 2

Data-generating process as a framework for modeling causality

1. The reasoning established to measure an average treatment effect using sample means easily maps to this framework
2. Easily extends into modeling causality for multi-level treatments and multiple-treatments

Question 3

What is a causal relationship ?

Answer 3

causal relationship between two variables clearly implies co-movement. If X casually impacts Y, then when X changes, we expect a change in Y. However, variables often move together even when there is no casual relationship between them.

Question 4

What is a partial correlation ?

Answer 4

Partial correlation between two variables is their correlation after holding one or more other variables fixed.

Question 5

What does a causality imply ?

Answer 5

Causalityimplies that a change in one variable or variables causes a change in another
• Data analysis attempting to measure causality generally involves an attempt to measure the determining function within the data-generating process

Question 6

What does a correlation imply ?

Answer 6

Correlation implies that variables move together
• Data analysis attempting to measure correlation is not concerned about the data-generating process and determining function, it uses standard statistical formulas (sample correlation, partial correlation) to assess how variables move together

Question 7

What does AvgPrice mean ?

What does AvgHHSiz mean ?

Answer 7

AvgPrice = Average Price
AvgHHSiz = Average Size of Households of Customers at that Grocery Store.

Question 8

The part of the outcome that we can explicitly determine, fi (X1i, X2i, …, Xki), is known as the:

Answer 8

determining function.

Question 9

What is unconditional correlation ?

Answer 9

Unconditional correlation is the standard measure of correlation between two variables X and Y

Question 10

What is a partial correlation ?

Answer 10

Partial correlation between X and Y is a measure of the relationship between these two variables, holding at least one other variable fixed

Question 11

What is a semi-partial correlation ?

Answer 11

Semi-partial correlation between X and Y is a measure of the relationship between these two variables, holding at least one other variable fixed for only X or Y

Question 12

What is a consistent estimator ?

Answer 12

Consistent estimator is an estimator whose realized value gets close to its corresponding population parameter as the sample size gets large.

Question 13

What do we need to know to conduct hypothesis testing ?

Answer 13

In order to conduct hypothesis testing or building confidence intervals for the population parameters of a regression equation, we need to know the distribution of the estimators
Each estimator becomes very close to its corresponding population parameters for a large sample
For a large sample, these estimators are normally distributed

Question 14

What is homoscedasticity ?

Answer 14

This consistency of variance is called homoscedasticity

Question 15

What does Error term represent ?

Answer 15

Error term represents unobserved factors that determine the outcome