Eco No Metrics Flashcards

8/3/2019 Eco No Metrics Flashcards

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How a research agenda can be organized, i.e what is thebasis for a successful research project ?

A research agenda can be organized around fourquestions (we call these Frequently Asked Questions"FAQs", because they should be) :- the causal relationship of interest,- the experiment that could ideally be used to capture thecausal effect of interest.

- the identication strategy (Some research questions

cannot be answered by any experiment- and the mode of inference.

What is a causal relationship useful for ?

A causal relationship is useful for making predictionsabout the consequences of changing circumstances orpolicies; it tells us what would happen in alternative (orcounterfactual) worlds.

Could the experiment that would ideally be used tocapture the causaleffect of interest be hypothetical ?

Ideal experiments are most often hypothetical. Still,hypothetical experiments are worth contemplatingbecause they help us pick fruitful research topics. Thedescription of an ideal experiment also helps youformulate causal questions precisely.The mechanics ofan ideal experiment highlight the forces you'd like tomanipulate and the factors you'd like to hold constant.

What exactly does a Fundamentally UnidentifiedQuestion ( FUQ) look like ?

At first blush, questions about the causal effect of race orgender seems like good candidates because these thingsare hard to manipulate in isolation (imagine yourchromosomes were switched at birth).

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Give an example of a Fundamentally UnidentifieedQuestion (FUQ) ?

To assess the effects of delayed school entry on learning,we might randomly select some kids to start kindergartenat age 6, while others start at age 5, as is still typical. Weare interested in whether those held back learn more inschool, as evidenced by their elementary school testscores. The problem with this question - the effects ofstart age on first grade test scores - is that older kids tendto do better on tests, a pure maturation effect.Now, itmight seem we can fix this by holding age constant

instead of grade. Suppose we test those who started atage 6 in second grade and those who started at age 7 infirst grade so everybody is tested at age 7. But the firstgroup has spent more time in school; a fact that raisesachievement if school is worth anything. There is no way

Define the term identification strategy , one of the 4 FAQ

that are concerned with the nuts-and-bolts elementsproducing a specific econometrical study?

Angrist and Krueger (1999) used the term identificationstrategy to describe the manner in which a researcheruses observational data (i.e., data not generated by arandomized trial) to approximate a real experiment.Angrist and Krueger (1991) used the interaction between

compulsory attendance laws in American schools andstudents-season of birth as a natural experiment toestimate the effects of finishing high school on wages(season of birth affects the degree to which high schoolstudents are constrained by laws al lowing them to dropout on their birthdays).

Describe ideal vs natural experiments .

The juxtaposition of ideal and natural experiments has along history in econometrics. Here is our econometricsforefather, Trygve Haavelmo (1944), appealing for moreexplicit discussion of both kinds of experimentaldesigns:"A design of experiments is an essential appendixto any quantitative theory. And we usually have somesuch experiment in mind when we construct the theories,although-unfortunately-most economists do not describetheir design of experiments explicitly. If they did, theywould see that the experiments they have in mind maybe grouped into two different classes, namely, (1)experiments that we should like to make to see ifcertain real economic phenomena- when artificiallyisolated from "other infuences"- would verify certain

Discuss the mode of statistical inference,one of the 4 FAQthat are concerned with the nuts-and-bolts elementsproducing a specific econometrical study?

The fourth research FAQ borrows language from Rubin

(1991): what is your mode of statistical inference? Theanswer to this question describes the population to bestudied, the sample to be used, and the assumptionsmade when constructing standard errors.Sometimesinference is straightforward, as when you use Censusmicro-data samples to study the Americanpopulation.Often inference is more complex, however,especially with data that are clustered or grouped.Thelast chapter covers practical problems that arise onceyou've answered question number 4. Although inferenceissues are rarely very exciting, and often quite technical,the ultimate success of even a well-conceived andconceptually exciting project turns on the details of



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What is a "Selection bias " ?

Selection bias is a statistical bias in which there is an errorin choosing the individuals or groups to take part in ascientific study.It is sometimes referred to as the selectioneffect. The term "selection bias" most often refers to thedistortion of a statistical analysis, resulting from themethod of collecting samples. If the selection bias is not

taken into account then certain conclusions drawn maybe wrong.

What are the types of possible selection bias ?

There are many types of possible selection bias,including:1- Sampling bias : is systematic error due to anon-random sample of a population, causing somemembers of the population to be less likely to be includedthan others, resulting in a biased sample, defined as a

statistical sample of a population (or non-human factors)in which all participants are not equally balanced orobjectively represented2- Time interval: Early termination of a trial at a time whenits results support a desired conclusion.A trial may beterminated early at an extreme value (often for ethicalreasons), but the extreme value is likely to be reached bythe variable with the largest variance, even if all variables

Give an example explaining why random Assignmentsolves the selection problem ?

Paradoxically, studies based on non-experimentalcomparisons of participants and non-participants oftenshow that after training, the trainees

earn less than plausible comparison groups Here too,selection bias is a natural concern since subsidizedtraining programs are meant to servemen and women with low earnings potential. Notsurprisingly, therefore, simple comparisons of programparticipants with non-participants often show lowerearnings for the participants. In contrast, evidence fromrandomized evaluations of training programs generatemostly positive eects

Many studies of education production using

non-experimental data suggest there is little or no linkbetween class size and student learning. So perhapsschool systems can save money by hiring fewer teacherswith no consequent reduction in achievement.Theobserved relation between class size and studentachieve-ment should not be taken at face value, however, sinceweaker students are often deliberately grouped intosmaller classes. A randomized trial overcomes thisproblem by ensuring that we are comparing apples toapples, i.e., that the students assigned to classes ofdierent sizes are otherwise comparable. Results fromthe



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Discuss the credibility and feasability of randomized trials?

In many cases, such trialsare impractical. 4 In other cases, we would like ananswer sooner rather than later. Much of the researchwe do, therefore, attempts to exploit cheaper and morereadily available sources of variation. We hope tond natural or quasi-experiments that mimic a randomizedtrial by changing the variable of interest while

other factors are kept balanced. Can we always nd aconvincing natural experiment? Of course not.

What makes a regression causal ?

Without thebenet of random assignment, regression estimates may

or may not have a causal interpretation.When theregressor ofinterest is randomly assigned, the resulting estimateshavea causal interpretation. In most cases, however,regression is used with observational data.

Wha ie a conditional expectation function ?

Let y be an outcome and x be a vector of predictors.Then,

y = E [y | x] + e,where E [e | x] = 0:E [e | x] = E [y E [y | x] | x] = E [y | x] E [y | x] = 0.E [y | x] is the conditional expectation function and thegoal ofeconometrics is to estimate this function, that is, tounderstandhow y changes with x.

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Eco No Metrics Flashcards