Statistical Methods & Economics

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Relationship between statistical methods and Economics

The relationship between statistical methods and economics presents significant complexity when economists apply them in real data. This complexity is caused by the approach used in statistical methods in economics is considered shallow in coverage of the necessary principles. The primary contributor has been the economics course outline, which only dedicated a small amount of time to study of statistical methods in economics. There are two leading causes of inaccurate economic data and decisions relating to statistical methods. These include;

Quality of economic data

With the rise of technology and freedom to provide information has resulted in compromising on the quality of information available online. Unfortunately, this information is most times extracted from websites on which statistical methods are applied for analysis purposes. This is done without consideration of the pitfalls of this data and more so the hazards usually hidden. Even if the statistical methods applied are correct, incorrect economic data will lead to didactic errors, which may be irreversible.

Simplification of statistical methods

Statistical methods applied in economics are usually simplified and shallow, only expressing basic principles. This leads to challenges when economist are faced with real life problems that need the application of statistical methods. In other cases, the simplified statistical methods result in simplified interpretations. This means that an economic problem is only partially solved with the potential of its recurrence in the future. For economists to make accurate interpretations, they need to incorporate the practical and theoretical part of economics to the quantitative techniques. Bias in one field will lead to wrong and simplified economic decisions.


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