Statistics Is the Science of Finding Order in Chaos
Regression analysis is by far the most commonly used statistical analysis tool in many areas of science, including Economics. After you finish the book, I hope you will agree with me that if there was one tool tailor-made for economics, it must be regression analysis. They are many aspects of regression that perfectly match the needs of an economist.
Often students of introductory statistics are overwhelmed because of the diversity of the material. There are too many new concepts and too many different topics, which may not seem related in any sensible way. In regression analysis, the focus is on one and only one topic, regression analysis. This narrow focus is due to several reasons. Reason one is that after having been exposed to introductory statistics, you are now ready to focus on a special topic. Reason two is that the topic is so vast that even dedicated books are sufficient to cover all aspects of the topic. The present manuscript does not even scratch the surface of the vast topic of regression analysis. My hope is that you learn to see economics from an applied angle and manage to focus on specific outcomes and their magnitude. I want you to know that every claim in economics is a testable hypothesis, and every theorem in economics can be written as a regression model and thus tested for the magnitude of the expected outcome. Regression analysis or its broader subject area, statistics, is not a substitute for economic theory. Instead, it is a complementary tool that allows us to estimate the magnitude of the theoretically predicted outcome and to test the results against the claims of policy makers and planners.