Introduction to statistical methods in economics

Lectures: 2 sessions / week, 1.5 hours / session

Recitations: 1 session / week, 1 hour / session

This course will provide a solid foundation in probability and statistics for economists and other social scientists. We will emphasize topics needed for further study of econometrics and provide basic preparation for 14.32. Topics include elements of probability theory, sampling theory, statistical estimation, and hypothesis testing.

No prior preparation in probability in statistics is required, but familiarity with basic algebra and calculus (single and multi-variable) is assumed. Calculus at the level of 18.01 Calculus and 18.02 Calculus is sufficient.

Larsen, R., and M. Marx. Introduction to Mathematical Statistics and Its Applications. 4th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2005. ISBN: 9780131867932.

Alternatively, you may consider one of the following textbooks which are good, but somewhat more difficult:

DeGroot, M., and M. Schervish. Probability and Statistics. 3rd ed. Reading, MA: Addison-Wesley, 2001. ISBN: 9780201524888.

Lindgren, B. Statistical Theory. 4th ed. New York, NY: Chapman and Hall, 1993. ISBN: 9780412041815.

Lindgren doesn't offer much intuition, but it's a nice reference.

In addition, I'll now list a few well-written popular science books on probability and statistical topics - reading any of those is of course optional and won't help you much in terms of doing well on problem sets or exams, but it's always a good habit to get a wider perspective and develop less formal intuitions on any subject you are studying.

Ekeland, I. The Broken Dice and Other Mathematical Tales of Chance. Chicago, IL: University of Chicago Press, 1996. ISBN: 9780226199924.

Huff, D., and I. Geis. How to Lie With Statistics. New York, NY: W.W. Norton, 1993. ISBN: 9780393310726.

Stigler, S. The History of Statistics: The Measurement of Uncertainty before 1900. Cambridge, MA: Belknap Press of Harvard University Press, 1990. ISBN: 9780674403413.

———. Statistics on the Table: The History of Statistical Concepts and Methods. Cambridge, MA: Harvard University Press, 2002. ISBN: 9780674009790.

Taleb, N. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. 2nd ed. New York, NY: Random House, 2008. ISBN: 9781400067930.

The problem sets will typically be handed out on Tuesday and due the following Tuesday. You are expected to complete the problem sets on your own and without consulting old problem set solutions - it will clearly be in your interest to understand all of the material on them. If you fail to turn in more than two problem sets, you can't get a course grade better than D. The overall problem set score for the class will be calculated based on your seven best problem set grades, so you can miss out on one problem set without affecting your grade.

The exams are non-cumulative, with the first two offered in-class and the third offered during final exam week. The exams will be closed book unless otherwise indicated.

Regular attendance at the recitation is strongly recommended, as the TA will discuss problem sets, clarify lecture material, and provide other useful guidance.

Problem sets are designed to help you learn how to apply the material presented in lectures and recitations. You are permitted to discuss course material, including homework, with other students in the class. However, you must turn in your own individual solutions to each set of homework problems. Discussion with others is intended to clarify ideas, concepts, and technical questions, not to derive group homework set solutions. Identical homework set answers (especially when the steps used to derive answers are not shown or when questions of interpretation are involved) violate this policy and may receive no credit. Also, you are expected to complete the problem sets without consulting old problem set solutions.

Handwritten solutions are fine, as long as they are legible and neat. Please remember: if we can't read it, we can't grade it.

In fairness to students who complete assignments on time, late homework sets will not be accepted. You may turn in assignments during the lecture on the day they are due. After the lecture, assignments may be placed in a designated box. Do not leave assignments in the instructors' offices or mailboxes. Because late homework will not be accepted you will be allowed to drop your lowest homework score. You can also e-mail your answers before the deadline, for alternative submissions you should ask the instructors for permission beforehand.

Taking all three exams is a requirement of the course. Missing an exam without a valid excuse will result in a failing grade for the entire course.

To be considered valid, an excuse must be proffered prior to the exam that is to be missed, if at all possible, the excuse must be in writing, and it must be verifiable. These criteria are necessary but not sufficient, however. We reserve the right to deem an excuse meeting the above criteria invalid. Any medical excuse must be accompanied by a dated note from the MIT Medical Center. Regardless of the reason for missing the exam, you must get advanced clearance from the Dean of Student Support Services.

An oral make-up exam will be given in the event of a valid excuse.

All requests for regrades must be submitted in writing within one week of the exam being handed back. The entire exam will be regraded; it is therefore possible that a regrade could result in a lower score.

Cheating or academic dishonesty in any form will not be tolerated and will result in swift punitive action. This includes but is not restricted to copying information from other students' exams, communicating with other students during exams, failing to follow the rules of the exams regarding notes, calculators, etc., altering an exam for the purpose of a regrade, and producing fraudulent written excuses. Any student found to have cheated or behaved unethically or dishonestly will be given a grade of F on the exam involved and referred to the appropriate disciplinary committees within MIT for further action.

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