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# ECON 221- 001

## Statistics for Economists

Liton Chakraborty
February 16, 2015

## Formula Sheet for Midterm Exam

Winter 2015
I.
BASIC STATISTICS
x , the sample mean, is an estimate of x

1
xi
n

s x2

## (or just s ), the sample variance, is an estimate of

x2

2
x

n 1

The sample standard deviation, sx is the square root of the sample variance:

sx

n 1

2
i

nx 2

n 1

The Standard Error of the Mean or S.E.M. is an estimate of the standard deviation of x :
Standard Error of the Mean = S .E.M . s /
Sample coefficient of variation (CV):

Empirical Rule:
1

s
CV
x

100%

## contains about 68% of the values in the population or the sample

contains about 95% of the values in the population or the sample
contains about 99.7% of the values in the population or the sample

## The sample covariance:

n

Cov (x , y) s xy
Sample correlation coefficient:

II.

(x
i 1

x)(yi y)
n 1

Cov (x , y)
sX sY

BASIC PROBABILITY
Probability of A or B:

P ( A or B ) P ( A) P ( B ) P ( A and B )

## If A and B are Mutually Exclusive:

P ( A or B ) P ( A) P ( B )

P( A and B)
P( A B)
P( B)

P( A B) P( A)

## If A and B are Independent:

P( A and B) P( A B) P( B)

P( A and B) P( A) P( B)

## ECON 221- 001

Statistics for Economists

Liton Chakraborty
February 16, 2015

Bayes' Theorem

P( Bi A)

P( A Bi ) P ( Bi )
P( A B1 ) P( B1 ) P( A B2 ) P( B2 ) ... P( A Bk ) P( Bk )

## The odds in favor of A are:

odds

P(A)
P(A)

1 - P(A) P(A)

III.
PROBABILITY DISTRIBUTIONS
Mean and variance of a discrete random variable:
N

E ( X ) X i P( X i )

i 1

i 1

## Jointly distributed random variables X and Y

The conditional mean is
The conditional variance is

Y

2
Y| X

Y

x

x

A.

Pr( n )

## The probability of seeing n events is:

n e

n!
The variance of a Poisson is equal to the mean, so the standard deviation is the square root of the mean, .
B.

Pr( x)

## The probability of a given x is:

n!
p x (1 p ) n x
x!n x !

The mean of a binomial is np and the variance is np(1-p). If n is large and p is small, the binomial is
approximated by a Poisson with np .
C.

Pr( x )

## The pdf for the normal distribution looks like this:

2

e ( x )

/ 2 2

Where and are the mean and variance as usual. A Poisson distribution can be approximated by a normal
distribution of the same mean and variance if is large. A binomial can be approximated by a normal
distribution if np and n(1-p) are both large.
The standard normal variate, z, :

z=

X -

## ECON 221- 001

Statistics for Economists

D.

Liton Chakraborty
February 16, 2015

## The mean of a uniform distribution is:

The variance:
Where,

E.

(b - a) 2
12

a = minimum value of x;

ab
2
b = maximum value of x

## The exponential random variable T (t>0) has a probability density function

f(t) e t

for t > 0

The cumulative distribution function (the probability that an arrival time is less than some specified time t) is:

IV.

RULES ON EXPECTATIONS:
E[X+] = E[X]+ when both and are constants.
E[XY] = E[X]E[Y] if X and Y are statistically independent.
var(X + ) = 2var(X)
var(X) = E[ X2 ] if E[X ] = 0
var(X Y) = 2var(X) + 2var(Y) - 2 cov(X,Y)

Good luck!!!