1. INTRODUCCIÓN 06-07 ECONOMETRÍA II (ADE)

2. BASICS I

3. BASIC PROBLEM I Endogeneity Circularity Egg and chicken Causality and correlation: two very different concepts!!

4. BASIC PROBLEM I Interpretation of any graph/table implies many assumptions. However, these assumptions are almost never explicit. Assumptions for the interpretation of the previous graph? Direction Omission

5. BASICS II 1936 US presidential election Sampling list: mail out ballot cards to residential telephone subscribers and owners of cars. Result of the poll: Landon (republican) will win with 57% of the vote over Roosevelt (democract).

6. BASICS II Outcome of the election: Roosevelt won with 62.5% of the votes (523 of the 531 electoral votes!!) What happened?

7. BASICS PROBLEM II Therapy of hormonal replacement for women with menopause. Does it work? Possible problem. Solution. Why did the result with observational data was wrong?

8. BASICS PROBLEM II Sample selection problem. Training courses for employees.

9. SOLUTION if possible Randomized experiment. Example. In medical science only randomized experiments are accepted. Tobacco litigation. Food and Drug administration. Many times experiments are NOT AVAILABLE AND ARE VERY EXPENSIVE. Look for other designs: “clever” regression and proper estimation procedures.

10. The NYT litigation Last year Morgan Stanley agreed to pay $54 millions for a sexual discrimination demand. Now Walmart. In the 70’s some women journalist at the NYT claimed that they were discriminated. Is a simple difference between the salary of men and women a good indicator of discrimination? Judge decision.

11. Regressions

12. IMPORTANT!! Statistical methods are never wrong! It is their application by clumsy, un- experienced or careless researchers that makes the results wrong. Remember: if you get the design /assumptions /data right the results will always be right.

13. OBJECTIVES Logical thinking using statistical facts. Proper interpretation of statistical results Posing hypothesis and checking their likelihood. Sources of data.