# Economics 391: Economics and Business Statistics, fall 2012

Instructor: Prof. Jeremy A. Sandford

Office hour: TR 3-4pm, 335L B&E, or by appointment

Lecture:
9:30-10:45am TH, BE 206

Exam dates:
Tuesday, September 25 and Thursday, October 25, in class

Final exam
date: Tuesday, December 11, 8am-10am

**Required texts**: Keller, Statistics, South-Western College Pub

Homework 1, answers

Homework 2, answers

Homework 3, answers

Homework 4, answers

Homework 5, not collected
(final exam prep)

# Schedule

**Thursday, August 23:** Basic probability

reading: Keller, chapter 6

reading: The probability of injustice, *The Economist*,
1/22/2004

**Tuesday, August 28:** Conditional probability, random
variables, mean and variance, binomial distribution

reading: Keller, chapters 6-7

reading: LA Times article on mammogram
guidelines (referenced in class in discussion about false positives and
conditional probabilitites)

**Thursday, August 30:** Binomial, Poisson, and uniform random
variables, probability calculations in Excel

reading: Keller, chapters 7-8

**Tuesday, September 4:** Exponential and normal random
variables

reading: Keller, chapter 8

reading: What fraction of
7-footers are in the NBA

**Thursday, September 6:** Standardizing normal random
variables, using normal probability tables

reading: Keller, chapter 8

**Tuesday, September 11:** Sampling distributions

reading: Keller, chapter 9

**Thursday, September 13:** Sampling distributions of means and
propostions, several example problems

reading: Keller, chapter 9

**Tuesday, September 18:** Estimation, confidence intervals for
means

reading: Keller, chapter 10

**Thursday, September 20:** Exam review

**Tuesday, September 25:** **Midterm 1 (with
answers)**

grade distribution

**Thursday, September 27:** Hypothesis tests, type I and type
II error

reading: Keller, chapter 11

**Tuesday, October 2:** Introduction to hypothesis tests,
type I and type II errors

reading: Keller, chapter 11

**Thursday, October 4:** Two-tailed hypothesis tests, p-values

reading: Keller, chapter 11

**Tuesday, October 9:** Calculating the probability of type II
error, example problems

reading: Keller, chapter 11

**Thursday, October 11:** Introduction to regression analysis

reading: Keller, chapter 16

**Tuesday, October 16:** T-distribution, examples of regression
in Excel

reading: Keller, chapter 16

ANES2008 data set

GSS2008 data set

**Thursday, October 18:** Multiple regression, example of
getting and using iPums data

reading: Keller, chapter 17

**Tuesday, October 23:** Midterm II review

**Thursday, October 25:** Midterm II (with answers)

grade distribution

**Tuesday, October 30:** Multiple regression: correlation versus
causation, the importance of control variables

reading:
Levitt, S. (2003) "Prison conditions, captial punishment, and
deterrence", *American Law and Economics review*, 5.2, pp. 318-343

Keller, chapter 17

**Thursday, November 1:** Multiple regression:
multicollinearity, dummy variables and non-linear relationships

reading: Keller, chapter 18

**Tuesday, November 6:** No class (election day)

**Thursday, November 8:** data versus hunches in the 2012
election, the relationship between college football games and crime

reading: College Football Games and Crime, Journal of Sports
Economics, vol 10, no. 1, 2009

**Tuesday, November 13:** Discrimination on *Weakest Link*

reading: Testing theories of discrimination: Evidence from Weakest
Link, Steven Levitt, 2004, *Journal of Law and Economics*

**Thursday, November 15:** Simpsons's paradox, lying with
statistics

reading: (Dis)aggregation and
Simpson's paradox

Examples of dubious statistical
claims

Momentous spring at the 2156 Olympics?, Tatem et al.,
*Nature* **431** (525), September 30, 2004,

**Tuesday, November 20:** No class

**Thursday, November 22:** No class

**Tuesday, November 27:** Lying with statistics

reading: slides from class,
with explanations

**Thursday, November 29:** Capital asset pricing model (CAPM)

reading: Sandholm and Saranti,
Chapter 3, The Capital Asset Pricing Model

Two assets spreadsheet

Three assets spreadsheet

**Tuesday, December 4:** Capital asset pricing model (CAPM)

reading: Sandholm and Saranti,
Chapter 3, The Capital Asset Pricing Model

Two assets spreadsheet

Three assets spreadsheet

**Thursday, December 6:** Capital asset pricing model (CAPM)

reading: Sandholm and Saranti,
Chapter 3, The Capital Asset Pricing Model

Two assets spreadsheet

Three assets spreadsheet

Three risky assets and one
safe asset

**Tuesday, December 11, 8am:** Final exam