Module 4 and 5 (Confidence, Hypothesis Testing, Selection Bias))

Question 1

Confidence interval

Answer 1

a range of values where we’re fairly certain that, given some true value, the random variable will fall into

Question 2

What are the 3 types of confidence intervals?

Answer 2

Centered, right-handed , left-handed

Question 3

Centered CI

Answer 3

both sides have the same probability (symmetrical)

Question 4

Right-handed CI

Answer 4

one-sided and only has a lower bound

Question 5

Left-handed CI

Answer 5

one-sided and only has an upper bound

Question 6

t-distribution

Answer 6

a “correction” of the normal distribution when n is small

Question 7

Properties of the t-distribution

Answer 7

symmetrical about the mean, has a mean of 0, approaches normal as n increases

Question 8

Why are t-based intervals larger than normal-based ones?

Answer 8

they reflect the increased uncertainty caused by using s instead of σ

Question 9

Hypothesis

Answer 9

a declarative description/statement about something you want to learn about (e.g. a population parameter) that are tested to certain levels of confidence; can be falsified

Question 10

How is econometrics inductive in nature?

Answer 10

we learn about it by repeated observation and ruling out possible explanations

Question 11

One-sided hypothesis test

Answer 11

null hypothesis is “less than” or “more than”; a right- or left-handed CI is constructed

Question 12

Two-sided hypothesis test

Answer 12

null hypothesis is “equal to”; a centered CI is constructed

Question 13

Size of hypothesis test

Answer 13

alpha or 1 minus the size of the CI

Question 14

Why would the p-value be small?

Answer 14

the sample size is large, meaning it is easy to statistically detect even small difference (statistical significance)

Question 15

Type 1 error

Answer 15

false positive; reject the null hypothesis when it is true

Question 16

Type 2 error

Answer 16

false negative; fail to reject the null hypothesis when it is false

Question 17

Treatment vs. Outcome

Answer 17

an action which affects a group of people (treated); the impact of the treatment

Question 18

How is selection bias fundamental?

Answer 18

Cannot be fixed by collecting a bigger sample or by using a more sophisticated comparison

Question 19

What ways can you deal with selection bias?

Answer 19

use a method which explicitly deal with selection or acknowledge and understand the impact it has on results

Question 20

Selection bias

Answer 20

arises when the treatment group would have acted differently than the untreated group IF they had been untreated