Intro to Econometrics -  ECON 345 - 002


Prof. Alex Tabarrok, Carow Hall


Tel. 703-993-2314


Class TR 10:30-11:45, Science and Technology 1, 224

Final Exam: Thurs. 5/11 10:30 a.m. - 1:15 p.m.


Web Page:


Office Hours:  TR, 2-4.  I will, however, be in my office in Carow Hall most mornings and most afternoons.  Feel free to drop by at any time.  Call ahead to guarantee that I will be around.  Email is a good way to get in contact with me.  All students should periodically check their GMU email account for important information.


            This course will introduce you to econometrics, the science and art of using economic theory and statistical techniques to analyze data.


            The main texts are Introduction to Econometrics by James Stock and Mark Watson and Statistics with Stata by Lawrence Hamilton, both are available in the book store.  In addition, there will be a number of article readings most of which are listed below.  These articles are available online from  An easy way to get the articles is to go to my home page, access the online version of this syllabus and click on the live links.  You must do this on a university computer or when logged in to the university system to get access to Jstor.



Empirical Paper          30% or 0%

Media Project             5%

Homework                  25%

MidTerm                    20%

Final                            20% or 50%


My personal grading scale is as follows.  Note that sometimes the university does not allow certain grades such as Ds.  Plus-Minuses for B through D grades, where allowed by university policy, will occur at the upper and lower 2.5% level.  For example, 70-72.49 will be B-, 72.5-77.49 B, 77.5-79.9 B+ and so forth.


A+: 90%+

A:   85-89% 

A-:  80-84%

B:   70-79%

C:   60-69%

D:   50-59%

F:    50% -

Empirical Paper and Media Project


            In addition to homework, midterm and final I would like you to write an empirical paper for this class.  To write the paper you will need to come up with a question capable of being answered by empirical methods, collect appropriate data and analyze the data.  The paper should be short (certainly fewer than 20 pages).  It is best to start early - so start looking around for possible topics and then discuss with me.


            If, for whatever reason, you do not hand in a paper I will weight your final more heavily.  Thus, you do have the option of not writing a paper but you will learn more if you do write a paper.


            The media sometime use statistics and/or results from econometric studies in their stories.  Often they use the statistics poorly and misinterpret the original studies.  Your media project is to monitor the media for stories involving statistics and econometrics.  Compare the stories with the original research and/or proper use of statistics.  You do not have to catch the media in an error to make your presentation, although it is always fun to do so. 


The empirical paper and the homework will require use of statistical software.  You have several choices of software programs.


Required Software


1) Buy a version of Stata.  Stata is the most widely used software in econometrics.  Stata is a very powerful, full featured program and I will be explaining common Stata commands as part of the class.  You can buy Stata as an annual license or in perpetuity in several forms


1) Intercooled Stata software w/ Getting Started manual
(Windows, Macintosh, & Linux)                              
$ 89.00/annual
2) Small Stata software w/ Getting Started manual
(Windows & Macintosh only)                                    39.00/annual
(Note Small Stata is limited to 1000 observations).
3) Intercooled Stata software w/ Getting Started Manual
(Windows, Macintosh, & Linux)                                129.00/perpetual

            If you are thinking of doing graduate work in economics, public policy or any related field then it won’t hurt to have a copy of Stata and I recommend that you purchase the perpetual license for Intercooled Stata.  If you do no think you will ever use Stata again then I recommend the annual license.  You can probably get by in this class with a one-year license to Small Stata but it is limited to 1000 observations which, depending on your project, may or may not be enough.  It is not enough for most serious econometrics work and I do not recommend it.   


            Stata has extensive documentation most of which you will not need.  You can use the built-in help functions, find documentation to the basics online and use Statistics with Stata by Hamiltion.  But if you plan to do future work in econometrics it is much cheaper to buy the program and documentation when a student.


(User's Guide & Base Reference Manual (4-vol))               129.00
User's Guide                                                  35.00


            To buy Stata, you call them at 1-800-782-8272  (Monday thru Friday 7:30 to 5 Central Time) and tell them that you are ordering under the GMU grad plan.  Stata will send a copy of the order to David Armor in the School of Public Policy.  You can then pick up your order from Professor Armor’s research assistant in Finley 201B.  Send an email to Stephanie Duck, to get a time to pick up. Best times will be Tues 12-5 and Wed 12-4.



Rough Guide to the Class – this will give you some idea of the order of the topics to be covered.  It is not a lecture by lecture plot.




Statistical fallacies


Describing and summarizing data

Lecture, Helland and Tabarrok (2003)

Review of probability and statistics

SW 2,3

Simple linear regression

SW 4, Helland and Tabarrok (2003)

Indentifying and measuring causal effects

SW 4, 7, Donohue and Levitt (2001)

Midterm about here


Omitted variable bias

SW 5

Nonlinear regression functions

SW 6

Panel data and fixed effects

SW 8

Instrumental variables

SW 10, McClellan et al. (1994), Levitt (1996), Klick and Tabarrok (2004)

Regression discontinuity design

Lee (2001), Angrist and Lavy (1999), Chay and Greenstone (2001)

Difference in difference design

Card and Krueger (1994)



Papers to be discussed in class


1) Helland, Eric. and Alexander Tabarrok. 2003. Race, Poverty, and American Tort Awards: Evidence from Three Datasets. Journal of Legal Studies 32 (2): 27-58.


2) Levitt, Steven D. 1996. The Effect of Prison Population Size on Crime Rates: Evidence from Prison Overcrowding Litigation. Quarterly Journal of Economics 111 (2): 319-351.


3) Klick, Jonathan and A. Tabarrok. 2004. Using Terror Alert Levels To Estimate the Effect of Police on Crime. Journal of Law and Economics

4) Donohue, John J. and S.D. Levitt. 2001. The Impact of Legalized Abortion on Crime. The Quarterly Journal of Economics. 116 (2) pp. 379-420

5) McClellan, M., B. J. McNeil, and J. P. Newhouse. 1994. Does More Intensive Treatment of Acute Myocardial Infarction in the Elderly Reduce Mortality?  Journal of the American Medical Association 272 (11):859-66.


6) Redelmeier, Donald A. and Sheldon M. Singh. 2001. Survival in Academy Award–Winning Actors and Actresses. Annals of Internal Medicine 134 (10): 955-962.


7) Lee, David S. 2001. The Electoral Advantage to Incumbency and Voters' Valuation of Politicians' Experience: A Regression Discontinuity Analysis of Elections to the U.S. House. NBER Working Paper 8441.


8) Angrist, J. D., and V. Lavy. 1999. Using Maimonides Rule to Estimate the Effect of Class Size On Scholastic Achievement. Quarterly Journal of Economics 114 (2):533-75.


9) Chay, K. Y., and M. Greenstone. 2001. Air Quality, Infant Mortality, and the Clean Air Act of 1970. Working Paper.


10)  Card, David and A. Krueger. 1994. Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. The American Economic Review 84 (4): 772-793.

11) Tabarrok, A and E. Helland. Does Three Strikes Deter: A Non-Parametric Estimation

12)  Peters, Elizabeth H. 1986. Marriage and Divorce: Informational Constraints and Private Contracting The American Economic Review, Vol. 76, No. 3. (Jun., 1986), pp. 437-454.