Department of Economics

GC UNIVERSITY LAHORE

Program B.Sc. Hons Economics

Course Title Introduction to Statistical Methods in Economics
Course Code ECON 2204
Year II
Semester IV
Course Duration One Semester (16 weeks of study)
Credit Hours 03
Course Instructors Dr. Jamshaid Ur Rehman/Adnan Habib

Detail of New Course Contents

A. Course Description
This introductory course in statistics is a foundational course for the core econometrics course in
economics and other electives that require a solid understanding of statistical methods. The course starts by
looking at data, organizing variables in the form of charts, graphs and histograms, describing distributions in terms
of their central tendency and spread; examining possible relationship between variables and calculating
correlation and basic regression analysis. This module also introduces basic sampling methods and experimental
design. The next module introduces probability and the notion of random variables and their distributions. Some
well-known discrete probability distributions are introduced. The following module introduces statistical
inference and testing hypotheses about means and proportions. The third module deals with special topics: (i)
inference in the context of regression analysis, (ii) tests of means of more than two population, and (iii) non-
parametric tests.

Pre-requisites Course(s): None

Note: The reference to the chapters in Section B below is to the chapters in the recommended text: Introduction
to the Practice of Statistics, 9th edition, by David Moore, George P. McCabe, Bruce A. Craig.

B. Course Goals and Performance Objectives:

Goal 1: Motivate students to get feel for patterns in the data by plotting data, calculating summary
measures of central tendency and spread, and identifying outliers. Extend the graphical
representation to introduce density curves and the density curve of a normal distribution
and discuss mean and variance in the context of the normal distribution.
(4 lectures; 8% of scheduled learning activities; chapters 1)
Objectives 01: Display distributions with Graphs (Categorical variables: bar graphs and pie charts. Quantitative
variables: histograms. Examining distributions. Dealing with outliers. Time plots).
Objective 02: Describe Distributions with Numbers (Measuring center: the mean and the median. Mean versus
median. Measuring spread: the quartiles and standard deviation. Properties of the standard
deviation. Choosing measures of center and spread. Changing the unit of measurement).
Objective 03: Introduce Density Curves and Normal Distributions (Density curves. Measuring center and
spread for density curves. Normal distribution. Standardizing observations. Normal distribution
calculations. Using the standard Normal table).

Goal 2: Continue to motivate students to study data by examining relationship between variables.
Introduce basic correlation and regression analysis. Analyse two-way tables and introduce
joint, marginal and conditional distributions.
(4 lectures; 9% of scheduled learning activities; chapters 2)
 Department of Economics
GC UNIVERSITY LAHORE

Objectives 01: Discuss and analyse scatterplots (Interpreting scatterplots. The log transformation. Adding
categorical variables to scatterplots. Categorical explanatory variables).
Objective 02: Introduce the concept of correlation (The correlation r. Properties of correlation);
Objective 03: Discuss Least-Squares Regression (Fitting a line to data. Prediction. Least-squares regression.
Interpreting the regression line. Correlation and regression).
Objective 04: Caution students about the limitations of correlation and regression (Residuals. Looking at
residuals, outliers and influential observations. Lurking variable. Correlations based on averaged
data. Restricted range proble).
Objective 05: Discuss data analysis for two-way tables (The two-way table. Joint distribution. Marginal
distributions. Conditional distributions).
Objective 06: Discuss correlation, regression and causation (Explaining association. Establishing causation).

Goal 3: Discuss sources of data and elaborate how experiments & samples can be designed.
(4 lectures; 8% of scheduled learning activities; chapters 3)
Objectives 01: Introduce sources of data (Anecdotal data. Available data. Sample surveys and experiments.)
Objective 02: Discuss design of experiments (Comparative experiments. Randomization. Randomized
comparative experiments. How to randomize. Randomization using software. Randomization
using random digits. Cautions about experimentation. Matched pair’s designs. Block designs.)
Objective 03: Discuss sampling design (Simple random samples. Selection of a simple random sample using
software. Selection of a simple random sample using random digits Stratified random samples.
Multistage random samples. Cautions about sample surveys. Capture-recapture sampling.)
Objective 04: Introduce the question of ethics in surveys and sampling (Institutional review boards. Informed
consent. Confidentiality. Clinical trials. Behavioural and social science experiments.)

Goal 4: Introduce probability and rules of probability. Discuss the concept of random variables,
distribution of random variables, and mean and variance of probability distributions.
(5 lectures; 10% of scheduled learning activities; chapters 4)
Objectives 01: Introduction to randomness (The language of probability. Thinking about randomness. The uses
of probability).
Objectives 02: Introduce probability models (Sample spaces. Probability rules. Assigning probabilities: finite
number of outcomes. Assigning probabilities: equally likely outcomes. Independence and the
multiplication rule. Applying the probability rules).
Objectives 03: Define random variables (Discrete random variables. Continuous random variables.
Normal distributions as probability distributions).
Objectives 04: Derive means and variances of random variables (The mean of a random variable. Statistical
estimation and the law of large numbers. Rules for means. The variance of a random variable.
Rules for variances and standard deviations).

Goal 5: Study the sampling distribution of a sample mean and a sample proportion.
(5 lectures; 10% of scheduled learning activities; chapters 5)
Objectives 01: Introduction to statistical inference (Sampling variability. Sampling distributions. Bias and
variability. Sampling from large populations. Why randomize?)
Objectives 02: Discuss the sampling distribution of a sample mean (The mean and standard deviation of x .̅ The
central limit theorem).
Objectives 03: Discuss sampling distributions for counts and proportions (The binomial distributions for sample
counts. Binomial distributions in statistical sampling. Finding binomial probabilities. Binomial
mean and standard deviation. Sample proportions. Normal approximation for counts and
proportions. Binomial formula. The Poisson distributions).
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GC UNIVERSITY LAHORE

Goal 6: Introduce statistical inference and testing hypothesis for a population mean of normal
distribution with known population variance.
(4 lectures; 8% of scheduled learning activities; chapters 6)
Objectives 01: Provide an overview of inference and confidence intervals (Statistical confidence. Confidence
intervals. Confidence interval for a population mean. How confidence intervals behave. Choosing
the sample size).
Objectives 02: Introduce tests of significance (The reasoning of significance tests. Stating hypotheses. Test
statistics. P-values. Statistical significance. Tests for a population mean. Two-sided significance
tests and confidence intervals. The P-value versus a statement of significance).
Objectives 03: Explain use and abuse of tests (Choosing a level of significance. What statistical significance
does not mean. Do not ignore lack of significance. Statistical inference is not valid for all sets of
data. Beware of searching for significance).
Objectives 04: Explain power and inference as a decision (Power. Increasing the power. Inference as decision.
Two types of error. Error probabilities. The common practice of testing hypotheses).

Goal 7: Develop methods of inference for means when population variances are unknown.
(6 lectures; 14% of scheduled learning activities; chapters 7)
Objectives 01: Introduction to inference for the mean of a population (The t distributions. The one-sample t
confidence interval. The one-sample t test. Matched pair’s t procedures. Robustness of the t
procedures).
Objectives 02: Develop tests for comparing two means (The two-sample z statistic. The two-sample t
procedures. The two-sample t confidence interval. The two-sample t significance test. Robustness
of the two-sample procedures. Inference for small samples. The pooled two-sample t procedures).
Objectives 03: Discuss additional topics on inference (Choosing the sample size. Inference for non-Normal
populations. Transforming data. Use of a distribution-free procedure.)

Goal 8: Discuss inference for proportions.

(4 lectures; 8% of scheduled learning activities; chapters 8)
Objectives 01: Introduce inference for a single proportion (Large-sample confidence interval for a single
proportion. Significance test for a single proportion. Choosing a sample size for a confidence
interval. Choosing a sample size for a significance test).
Objectives 02: Develop tests for comparing two proportions (Large-sample confidence interval for a difference
in proportions. Significance test for a difference in proportions. Choosing a sample size for two
sample proportions).

Goal 9: Show how the theory of inference can be extended to regression models.
(4 lectures; 9% of scheduled learning activities; chapters 10)
Objectives 01: Introduce inference in a simple linear regression (Statistical model for linear regression.
Preliminary data analysis and inference considerations. Estimating the regression parameters.
Checking model assumptions. Confidence intervals and significance tests. Confidence intervals
for mean response. Prediction intervals.
Objectives 02: More detail about simple linear regression (Analysis of variance for regression. The ANOVA F
test. Calculations for regression inference. Inference for correlation.)

Goal 10: Develop one-way analysis of variance to test the hypothesis about population means from
multiple populations.
(4 lectures; 8% of scheduled learning activities; chapters 12)
Objectives 01: Introduce one-way analysis of variance (Data for one-way ANOVA. Comparing means. The two-
sample t statistic. The ANOVA model. Estimates of population parameters. Testing hypotheses
in one-way ANOVA. The ANOVA table. The F test.)
 Department of Economics
GC UNIVERSITY LAHORE

Goal 11: Develop test procedures (nonparametric tests) when normality assumption about the
population is not tenable.
(4 lectures; 8% of scheduled learning activities; chapter 15)
Objectives 01: Explain the Wilcoxon Rank Sum test (The rank transformation. The Wilcoxon rank sum test. The
Normal approximation. What hypotheses does Wilcoxon test? Ties. Rank, t, and permutation
tests).
Objectives 02: Explain the Wilcoxon Signed Rank test (The Normal approximation. Ties. Testing a hypothesis
about the median of a distribution).
Objectives 03: Explain the Kruskal-Wallis test (Hypotheses and assumptions. The Kruskal-Wallis test).

C. Recommended text:
• Introduction to the Practice of Statistics, 9th edition, by David Moore, George P. McCabe, Bruce A. Craig

D. Semester Work
The instructor should follow the following scheme for semester work for this course:
Sr. No Assessment Tool Weightage in Semester Work
1. Quizzes 65% of Semester marks
(Multiple Choice Questions)
2. Assignment 35% of Semester marks
(Application of concepts studied in class by asking
students to collect information through examples in real
life.)

E. Assessment Criteria
a) Final Paper
The student will be assessed in final paper from the following Units. The breakup of each unit
and its weightage in the final question paper is given as follows:
Modules Goals Weightage in Breakup of Questions
Examination
Unit 1 Goal 1 20% 30-50% theory / knowledge recall / comprehension
50-70 % numerical / application / analysis
Unit 2 Goal 2 20% 30-50% theory / knowledge recall / comprehension
50-70 % numerical / application / analysis
Unit 3 Goal 3 20% 30-50% theory / knowledge recall / comprehension
Goal 4 50-70 % numerical / application / analysis
Unit 4 Goal 5 20% 30-50% theory / knowledge recall / comprehension
Goal 6 50-70 % numerical / application / analysis
Unit 5 Goal 7 20% 30-50% theory / knowledge recall / comprehension
Goal 8 50-70 % numerical / application / analysis

Students will have to pass Semester Work and Final Examination separately by securing at
least 50% marks in each.