BAS-110

Methods of Empirical Research

WS 2019/20
Ching-Hua Yeh
OUTLINE
• Course information
− schedule & location
− evaluation criteria

• Introduction to quantitative research methods

• *Recalls:
− treatment of data: standardizing variables & outliers
− hypothesis testing procedure
− t-tests
− basic statistics
− statistical distribution

• Introduction to ordinary least squares (OLS) method

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COURSE INFORMATION
• Qualitative research methods (by Ms Meyer)
− Methods of qualitative research (observation/ Interview/ content analysis)

− Quality of qualitative research

− Analysis of qualitative data with atlas.ti

• Quantitative research methods (by Yeh) (theoretical couses)

− Linear regression analysis (Ordinary Least Squares, OLS)
Theoretical courses (by Yeh)
− OLS (R²/ Significance of parameters/ t-test/ F-test/ standardized coefficients/ interpretation)

− OLS assumptions (testing of multicollinearity/ Heteroscedasticity/ Autocorrelation)

Lab courses (by Ms Macht)
− Dummy variable

− Logistic regression

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COURSE INFORMATION
• Quantitative research methods (Theoretical courses by Yeh)
− Introduction to quantitative empirical research

− Linear regression analysis (R²/ significance of parameters/ t-test/ F-test/ standardized coefficients/
interpretation)

− OLS assumptions (test of multicollinearity/ heteroscedasticity/ autocorrelation)

− Dummy variables and used in OLS

− Interaction terms used in OLS

− Introduction to logisitic regression

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COURSE INFORMATION
• Quantitative research methods (Lab courses by Ms Macht)
− Introduction to EXCEL and SPSS

− Data preparation for the analysis in EXCEL and SPSS

− Apply most of the methods taught in the lecture. In the lab course you will be working with realistic
examples

→Aim of this course:

To be able to conduct your own empirical research based on regression analysis

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SCHEDULE & LOCATION
Week Date Theoretical course Date Exercise courses
1 09 Oct. AFECO week 10 Oct. AFECO week
2 16 Oct. Yeh (@Nussallee 13) 17 Oct.
3 23 Oct. Yeh (@Nussallee 13) 24 Oct. Macht (@HRZ)
4 30 Oct. Yeh (@Nussallee 13) 31 Oct.
5 06 Nov. 07 Nov. Macht (@HRZ)
6 13 Nov. Yeh (@Nussallee 13) 14 Nov.
7 20 Nov. 21 Nov. Macht (@HRZ)
8 27 Nov. Yeh (@Nussallee 13) 28 Nov.
9 04 Dec. Academicus 05 Dec. Macht (@HRZ)
10 11 Dec. Yeh (@Nussallee 13) 12 Dec.
11 18 Dec. Yeh (@Nussallee 13) 19 Dec. Macht (@HRZ)
12 25 Dec. Holiday 26 Dec. Holiday
13 01 Jan. Holiday 02 Jan. Holiday
14 08 Jan. Yeh (@Nussallee 13) 09 Jan.
15 15 Jan 16 Jan. Macht (@HRZ)
16 22 Jan. 23 Jan.
17 29 Jan. Yeh (@Nussallee 13) 30 Jan. 6
COURSE INFORMATION
• Theoretical courses (Wed., 12:15 - 13:45) @Nussallee 13, HS XIII

16.10.19, 13.11.19, 18.12.19,

23.10.19, 27.11.19, 08.01.20,
30.10.19, 11.12.19, 29.01.20

• Lab courses (Thu., 14:00 - 15:30 ; 15:30 - 17:00) @HRZ, Kursraum1

*Please assign and remember the course group you belong to!
*You may bring your own laptop.

24.10.19, 05.12.19,
07.11.19, 19.12.19,
21.11.19, 16.01.20

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The first group is full occupied.
If you don’t find your name on the list, then you are automatically assigned into the second group (15:30-17:00)

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COURSE INFORMATION
• Quantitative research methods
− Theoretical courses (9 appointments: Wednesdays, 12:15 - 13:45 @Nussallee 13, HS XIII)
− Lab courses (6 appointments: Thursdays, 14:00 - 15:30; 15:30 - 17:00 @ HRZ, Room 1)

• Qualitative research methods

− Wednesday, @ Nussallee 13, HS XIII

• Ecampus: (BAS-110)
− Please make sure that you are registered in the course
− Lecture slides and lab course data
− Short dated changes etc. will be announced here

• Questions and feedback: chinghua.yeh@ilr.uni-bonn.de

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COURSE INFORMATION
• Grading information:
− Written examination (50%) → Quantitative methods
▪ max. 60 minutes for answering the questions (max. 100 points in total)

▪ you need 50 points to pass the written exam

− Assignment (50%) →Qualitative methods

▪ assignment is mandatory to take the exam and to pass the course!
▪ 1st submission deadline: 18 Nov.; final submission deadline: 13 Jan.

▪ presentations will be on 15 and 22 January

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QUANTITATIVE RESEARCH METHODS
We can consider the (quantitative) empirical research as consisting of four distinct phases:

1. Research design
− Research question/ research objective/ stating hypotheses
− Questionnaire design/ experimental setup
− Sample size/ choice of instruments…

2. Execution
− Data collection process via
▪ experimental lab, or
▪ survey

3. Data analysis
− is usually based on the acquired data and the hypotheses testing/ parametric models proposed

4. Interpretation
− To measure the parameters of the model
− To prove the validity of the model
− Is the accuracy of results sufficient to meet the criteria specified in the design phase?
− To decide whether or not the experiment has been successful
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 Statistical analysis strategy

Univariate techniques Multivariate techniques

Hypothesis testing
Dependence Independence
techniques techniques
Parametric tests Nonparametric tests
One Y Multiple Y Multiple Y & Xs
Two or more • ANOVA MANOVA SEM
One sample • Multiple
samples
T-test regression
• Conjoint Focus on Focus on
analysis variables objects/cases
Factor • Cluster analysis
Independent Paired analysis • MDS
samples samples
T-test T-test
ANOVA

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COURSE PREREQUISITES

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*RECALL: Z-SCORE
The standard score, or z-score, represents the number of standard
deviations a given value x falls from the mean

• To find the z-score for a given value, we can use the following formula:

𝑥−𝜇
𝑧=
𝜎

• It has a mean of 0 and a standard deviation of 1

• A z-score can be negative, positive, or zero

− If z is negative, the corresponding x-value is less than the group mean

− If z is positive, the corresponding x-value is greater than the group mean

− If the corresponding x-value is equal to the group mean 14

*RECALL: Z-SCORE
• A Z-score of 1.23 indicates that:
- it is greater than the group mean
- it is about 1.23 S.D. above the mean
- around 89.07% of the participants are
having the grade up to the grade of 87

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*RECALL: Z-SCORE
Finding areas under the standard normal curve

• We can find the area to the left of z-score using the z-table
→ So, 89.07% of the area under the curve falls up to z = 1.23

• Using the z-table to find the area to the right of z-score, and
then subtract the area from 1
→ 10.93% of the area under the curve falls to the right of z = 1.23

• Using the z-table to find the area between two z-scores, and
then subtract the smaller area from the larger area
→ 66.41% of the area under the curve falls between z = -0.75 and z = 1.23

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*RECALL: OUTLIERS
• An outlier is an extremely high or an extremely low value in the data
− can strongly affect the mean and standard deviation of a variable
− can have an effect on other statistics as well

• Detecting outliers you will need the following information:

− calcualte quartiles (Q1, Q3) and interquartile range (IQR = Q3 - Q1)
− calculate upper and lower boundaries
▪ Lower range limit =Q1 - (1.5 × IQR)

▪ Upper range limit =Q3 + (1.5 × IQR)

− an intuitive way: Boxplot

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*RECALL: OUTLIERS
A boxplot can be used to check for outliers:
Outliers

Upper limit =Q3+ (1.5 × IQR)

Q3

IQR Median

Q1
Lower limit =Q1- (1.5 × IQR) 18
*RECALL: HYPOTHESIS TESTING PROCEDURE
1. State the relevant null and alternative hypotheses as well as the level of
significance
- Set alpha (e.g. α=0.05)
- Set H0 and Ha

2. Choose and compute the relevant test statistic

3. Determination of the critical value from the respective table

4. Decision rules:
- e.g.
If test statistic > critical value, reject H0
If test statistic < critical value, fail to reject H0

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T-TESTS
• t-test is a parametric test based on the normal distribution, it is used to test
whether there is a difference between the two groups in the mean

• Why can’t we just calculate the “difference” from the scores?

Because we have to take the ‘variability’ into account!

difference between (group) means

𝑇=
sampling variability

• Assumptions:
– unknown variance of the population σ²
– population following a normal distribution
– or n > 30
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T-TESTS
There are types of t-test:
• One sample t-test:
– A single sample mean against a hypothesis
– tests whether a single sample mean is significantly different from an expected value.

• Paired-samples t-test:
– Two means within the same sample.
– tests the relationship between two associated samples, e.g. means obtained in two conditions within a single group of
participants

• Independent-samples t-test:
– Two sample means compared to each other
– tests the relationship between two independent samples

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ONE SAMPLE T-TEST
• One-sample t-test:
− A single sample mean against a hypothesis. Used to test whether the
population mean is different from a specified value.

▪ Null hypothesis H0 : 𝜇𝑚𝑒𝑎𝑛 = 𝜇𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑

▪ Alternative hypothesis HA : 𝜇𝑚𝑒𝑎𝑛 ≠ 𝜇𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑

− T-test statistics:

X −
T =
s/ n Std .Err. =
s
n

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22
PAIRED-SAMPLE T-TEST
• Paired-samples t-test:
− The paired samples t-test is used to compare the means of two dependent samples.

▪ Null hypothesis H0: 𝜇𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒𝑠 = 0

▪ Alternative hypothesis HA: 𝜇𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 ≠ 0

− T-test statistics:

d −0 σ 𝑑𝑖2 − 𝑛 × 𝑑 2
t= where 𝑆𝑑 =
sd / n 𝑛−1

With d.f. = n -1,

Where 𝑑ҧ is the mean of the differences and sd is the standard deviations of the differences.
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T-TESTS
• Independent samples t-test:
− Two sample means compared to each other

▪ Null hypothesis H0 : 𝑏𝐴 = 𝑏𝐵

▪ Alternative hypothesis HA : 𝑏𝐴 ≠ 𝑏𝐵

− T-test statistics:
( x1 − x2 )
t= (n1 − 1) S12 + (n2 − 1) S22
1 1 S =
2
sp ( +
2
) where p
n1 + n2 − 2
n1 n2

With degrees of freedom = n(1) + n(2) - 2

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MEASUREMENT SCALES OF VARIABLES
• Categorical variables contain a finite number of categories or distinct
groups, so the values can be:
− Nominal variables ( e.g. hair color for blonde/ black/ red)
− Dichotomous/Binary variables (e.g. yes or no)
− Ordinal variables (e.g., economic status for low/ median/ high…)

• Continuous variables can take on any value

− Interval variables, (e.g. temperature measure in Celsius for 11℃ to 20℃, 21℃ to 30℃,
31℃ to 40℃, 41℃ to 50℃, 51℃ to 60℃, 61℃ to 70℃, …)
− Ratio variables, (e.g. weight for 2 kgs, 4 kgs, 8 kgs…)

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*RECALL: BASIC STATISTICS
• How do we describe the characteristics of a set of data?
− Statistics (e.g. mean, standard deviation, variance, etc. )
− Graphical display (e.g. histogram, boxplots, etc.)

ID Height (cm) ID Height (cm)

1 141 11 170
2 152 12 176
3 151 13 173
4 158 14 184
5 164 15 180
6 160 16 184
7 161 17 182
8 165 18 192
9 175 19 190
10 174 20 201 26
*RECALL: BASIC STATISTICS
σ 𝒙𝒊
• Mean: the sum divided by the count. ഥ=
𝒙
𝒏
• Mode: a number that appears most often is the mode.

• Median: the middle of a sorted list of numbers

• Range: maximum value – minimum value

σ(𝒙−𝒙)𝟐
• (Sample) Standard deviation: a measure of how spread out data are. 𝒔 = 𝑽𝒂𝒓 =
𝒏−𝟏

𝟐 σ(𝒙−𝒙)𝟐
• (Sample) Variance: The average of the squared differences from the Mean. 𝑽𝒂𝒓 = 𝒔 =
𝒏−𝟏

σ(𝒙−𝒙)(𝒚−𝒚)
• (Sample) Covariance: a measure of the joint variability of two variables 𝒄𝒐𝒗 𝒙, 𝒚 =
𝒏−𝟏

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STATISTICS
ID Height (cm) ID Height (cm) • Mean: 𝑥ҧ =171.65
1 141 11 170
2 152 12 176 • Mode = 184
3 151 13 173
• Median: = 173.5
4 158 14 184
5 164 15 180 • Range: 60
6 160 16 184
7 161 17 182
σ(𝑥−𝑥)2
8 165 18 192 • Standard deviation: 𝑠 = 𝑉𝑎𝑟 = = 15.26
𝑛−1
9 175 19 190
10 174 20 201
σ(𝑥−𝑥)2
• Variance: 𝑉𝑎𝑟 = 𝑠 2 = = 232.87
𝑛−1

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GRAPHICAL DISPLAY
ID Height (cm) ID Height (cm) Height (cm) Freq.
1 141 11 170 140-149 1
2 152 12 176
3 151 13 173 150-159 3
4 158 14 184 160-169 4
5 164 15 180 170-179 5
6 160 16 184 180-189 4
7 161 17 182
8 165 18 192 190-199 3
9 175 19 190 200-209 1
10 174 20 201 (Total N=20)

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 GRAPHICAL DISPLAY
Height (cm) Freq.
140-149 1 6
150-159 3 5
160-169 4
4
170-179 5

Freq.
180-189 4 3
190-199 2
2
200-209 1
(Total N=20) 1

0
140-149 150-159 160-169 170-179 180-189 190-199 200-209

Height (cm) 30
*RECALL: STATISTICAL DISTRIBUTION
• Types of distributions
− Discrete (e.g. binomial distribution, Poisson distribution etc.)
− Continuous (e.g. normal distribution, exponential distribution etc.)

• When describing a distribution, we always include:

− Shape (e.g. symmetrical; skewed; uniform)
− Central tendency
− Spread (variability)

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*RECALL: STATISTICAL DISTRIBUTION
• Shape
− Symmetric vs. skewed Symmetric

• Central tendency
− Where most of the data located
− Mean, median, mode

Mode = mean = median 32

*RECALL: STATISTICAL DISTRIBUTION
• Shape
− Symmetric vs. skewed

Negative skew Positive skew

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Is the mean always the best measure of central tendency?
→ skew pulls the mean in the direction of the skew

Mode
Mode
Median

Median
Mean
Mean 34
*RECALL: STATISTICAL DISTRIBUTION
• Shape
− Symmetric vs. skewed

• Central tendency
− Where most of the data located
− Mean, median, mode

• Spread (Variability)
− How similar the values are
− Range, standard deviation, variance

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NORMAL DISTRIBUTION PROPERTIES
• Normal distribution (/ normal curve/ gaussian distribution)
• If a variable x data follows a normal distribution, then:
− it has continuous data
− its density curve is bell-shaped and perfectly symmetric,
− and characterized by its mean 𝜇 and standard deviation 𝜎, which denoted
by x ~𝑁(𝜇, 𝜎)
− mean = median = mode
− A mathematical theory, the Central Limit Theorem, allows us to determine
what scores in the distribution are between 𝜎, 2𝜎, and 3𝜎 from the mean
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*RECALL: NORMAL DISTRIBUTION
The height of the density curve at any point x is given by
the density function:

1 x− 2
1 − ( )
Y= f ( x) = e 2 
 2 , −∞ < 𝑥 < +∞

A normal curve with different

Constants: centers and spreads depending
=3.14159 on  and 
e=2.71828 37
*RECALL: NORMAL DISTRIBUTION
It is a probability function, therefore no matter what the values of  and
, must integrate to 1.

+ 1 x− 2
1 − ( )

− 2
 e 2  dx =1

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CENTRAL LIMIT THEOREM:
• Use the mean to describe the center and S.D. to describe spread of a normal distribution

• 68.25% of the scores are within one standard deviation of the mean

• 95.44% of the scores are within 2 standard deviation of the mean

• 99.72%(or most of the scores) are within 3 standard deviations of the mean

𝜇+𝜎
1 1 𝑥−𝜇 2
න • 𝑒 −2(𝜎
)
𝑑𝑥 = 0.6825
𝜎 2𝜋
𝜇−𝜎
68.25%
𝜇+2𝜎

SD SD න
1
𝜎 2𝜋
1 𝑥−𝜇 2
• 𝑒 −2( 𝜎
)
𝑑𝑥 = 0.9544
𝜇−2𝜎

95.44% 𝜇+3𝜎
1 1 𝑥−𝜇 2
න • 𝑒 −2( 𝜎
)
𝑑𝑥 = 0.9972
𝜎 2𝜋
99.72% 𝜇−3𝜎

-3𝜎 -2𝜎 -𝜎 0 𝜎 2𝜎 3𝜎 39
ASSESSING DISTRIBUTION SHAPE:
NORMAL DISTRIBUTION
• Graphical approach: Histograms

• Statistical approach:
− Checking value of skewness and kurtosis
(using rule of thumb ± 1.00 criterion. The further the value is from zero, the more likely it is that the data are
not normally distributed)

− Applying Shapiro-Wilk and/or the Kolmogorov-Smirnov tests

i. Null hypothesis H0: the distribution is normal in shape

ii. They compare the scores in the sample to a normally distributed set of scores with the same mean and
standard deviation

iii. Limitation: not suitable for large sample because it is very easy to get significant results for large sample

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HOW DO WE EXPLORE THE
RELATIONSHIP BETWEEN TWO
VARIABLES?
HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
ID Studying Grade (Y)
hours (X) (by points ranging from 0-100)

1 4.5 99
2 2 66
3 1.5 55
4 3.5 84
5 1 26
6 2.5 75
7 4 92
8 3 70
9 2.5 52
10 1.5 40
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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
1. Graphical method
2. Correlation
3. (Linear) Regression analysis

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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
1. Graphical method: using scatter diagram
− Scatter diagram pairs of bivariate observations (x, y) on the X-Y plane and provide an
initial exploration of the relationship between two variables

− The pattern of data is indicative of the type of relationship between the two variables:
▪ positive relationship
▪ negative relationship
▪ no relationship

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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
1. Graphical method: using scatter diagram
─ Plotting n pairs of observations (x1, y1), (x2, y2), …, (xn, yn).

X
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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
2. Correlation:
− So called bivariate correlation, Pearson‘s correlation, or
Pearson product-moment correlation
𝐶𝑜𝑣(𝑥, 𝑦)
− How to calculate the simple correlation coefficient (𝑟): 𝑟=
𝜎𝑥 𝜎𝑦
− Correlation (𝑟) is a measure of association between two continues variables: −1 ≤ 𝑟 ≤ 1

− 𝑟 is used to determine the nature and strength between two variables without being able
to infer causal relationships
o Positive sign of 𝑟 means the relation is direct
o Negative sign of 𝑟 means the relation is indirect and inverse
o 𝑟 = 0 represents no linear relationship between the two variables
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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
2. Correlation:

Cov ( x, y )
r= = 0.93
xy

→ Direct strong correlation

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HOW DO WE EXPLORE THE RELATIONSHIP
BETWEEN TWO VARIABLES?
2. Correlation:

−1 ≤ 𝑟 ≤ 1

strong intermediate weak weak intermediate strong

-1 -0.75 -0.25 0 0.25 0.75 1

Indirect Direct

Perfect negative no relation Perfect positive

correlation correlation
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SCATTER PLOTS OF DATA WITH VARIOUS
CORRELATION COEFFICIENTS

Y Y Y

X X X
r = -1 r = -0.6 r=0

Y Y Y

X X X
r = +1 r = +0.3 r=0 49
REFERENCES
• Verbeek (2012). A Guide to Modern Econometrics, Wiley. 4th ed.
• Backhaus K. et al. (2005). Multivariate Analysemethoden – Eine
• Mann, P. S. (2007). Introductory statistics. John Wiley & Sons.
• Gujarati, D. N. (2004). Basic Econometrics. 4th Ed. McGraw-Hill
• Studenmund, A.H. (2006). Using Econometrics. A practical guide, Pearson/Addison Wesley
Publisher. 6th ed.

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Feedback or questions: chinghua.yeh@ilr.uni-bonn.de
Next lecture: 23 Oct. 2018 51