COL Karen Gutermuth
Professor of Economics and Business
Econometrics
So, just what is Econometrics? Well, economic theory is concerned with explaining the relationships between economic variables and using that information within a general theory of choice. Statistical inference is concerned with drawing conclusions from limited data. The scarcity of data has led to the development of a general theory for dealing with decision problems under conditions of uncertainty. Econometrics applies economic theory, mathematical economics, and statistical inference as analytical foundation stones. Using economic data as the informational base, econometrics provides a basis for (1) modifying, refining or refuting conclusions put forth by economic theory, and (2) attaching signs, numbers, and reliability statements to the "effects" of variables in economic relationships. The goal of econometrics is to provide a basis for sound decision making and rational choice. And, remember, Econometrics is FUN! (Paraphrased from Introduction to the Theory and Practice of Econometrics, George G. Judge et. al. 1988.)
