Introduction to econometrics II eco 356 faculty of social sciences course guide course Developers: Dr. Adesina-Uthman

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Introduction to Econometrics ECO 356 Course Guide and Course Material

Figures a) to (d);
INTRODUCTION TO ECONOMETRICS II ECO 306 NOUN 37 Table 1.2.1

INTRODUCTION TO ECONOMETRICS II

ECO 306

NOUN
36 downward-sloping straight line. A value of 0 indicates that there is no association between the observations on X and Y in the sample. Of course the fact that r = 0 does not necessarily imply that ρ = 0 or vice versa. That is
1
( , ) 1
( , )
1
( , )
1
( , )
0
corr X Y
corr X Y
means perfect positive linear association
corr X Y
means perfect negative linear association
corr X Y
means no linear association
 


 Figures a) to (d) below give more graphical explanations

Figures a) to (d);Scattered diagrams of correlation coefficient as a measure of
linear association
Example: For illustration, using the education and earning example, the sample correlation coefficient can be estimated. This is shown below

INTRODUCTION TO ECONOMETRICS II

ECO 306

NOUN
37
Table 1.2.1 Sample correlation coefficient
Observ. S Y
̅
̅
( ̅)
( ̅)
( ̅)( ̅)
1 15 17.24 1.75 3.016 3.063 9.093 5.277 2
16 15.00 2.75 0.775 7.563 0.601 2.133 3
8 14.91
-5.25 0.685 27.563 0.470
-3.599 4
6 4.50
-7.25
-9.725 52.563 94.566 70.503 5
15 18.00 1.75 3.776 3.063 14.254 6.607 6
12 6.29
-1.25
-7.935 1.563 62.956 9.918 7
12 19.23
-1.25 5.006 1.563 25.055
-6.257 8
18 18.69 4.75 4.466 22.563 19.941 21.211 9
12 7.21
-1.25
-7.015 1.563 49.203 8.768 10 20 42.06 6.75 27.836 45.563 774.815 187.890 11 17 15.38 3.75 1.156 14.063 1.335 4.333 12 12 12.70
-1.25
-1.525 1.563 2.324 1.906 13 12 26.00
-1.25 11.776 1.563 138.662
-14.719 14 9
7.50
-1.45
-6.725 18.063 45.219 28.579 15 15 5.00 1.75
-9.225 3.063 85.091
-16.143 16 12 21.63
-1.25 7.406 1.563 54.841
-9.257

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