11/1/2024

Outline
Applied Econometrics

1. Introduction
2. Econometric softwares packages -SPSS & STATA
Chapter 2
3. Data Processing & Analysis
Software Packages for Econometric Analysis ✓ Data Processing & Management

✓ Data editing, entry, & analysis

4. Descriptive Analysis using SPSS & STATA softwares

✓ Descriptive & Inferential statistical techniques
✓ Econometrics techniques
✓ Reporting results

Sisay Debebe (PhD)

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#. What is SPSS software's ?

I. Introduction

 SPSS (Statistical Package for the Social

#. What is SPSS software's ? Sciences), also known as IBM SPSS Statistics,
is a software package used for the analysis of
#. What is STATA software's?
statistical data.
 SPSS is currently stands for Statistical
Product & Service Solutions.
 Although the name of SPSS reflects its original
use in the field of social sciences, its use has
since expanded into other fields.

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#. What is STATA software's?

2.Econometric softwares packages

 STATA is a complete, integrated statistical

software package that provides everything you #. How to get started in data analysis using
need for data analysis, data management, and SPSS & STATA
graphics”.
 STATA is a software that allows you to store &
#. How to upload SPSS & STATA software's
manage data (large & small data sets),
on your laptop’s?
undertake statistical analysis on your data, and
create some really nice graphs.
 STATA is commonly used among various
researchers, particularly those working with
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Getting Started in Data Analysis using SPSS here is a brief description of SPSS…
Introduction

SPSS
• One of the most popular statistical packages
which can perform highly complex data
manipulation & analysis with simple instruction.

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Getting Started in Data Analysis using STATA here is a brief description of STATA…
Introduction…

STATA
• It’s a multi‐purpose statistical package to help
you explore, summarize & analyze datasets.

• Widely used in economics research & other

business fields such as accounting & finance

• The most used statistical software for applying

advanced econometrics techniques.
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How to upload SPSS & STATA software's on

Usage of SPSS & STATA?... your laptop’s?

 Both SPSS & STATA softwares’ used for data  Open SPSS folder crack folder readme
analysis in research- can be used: copy “License Authorization Wizard code” back to
◼ Processing questionnaires; setup folder setup next next accept term in
◼ Reporting in Tables & Graphs license agreement next next next next install
ok next pest the code next next finish
◼ Analyzing various statistical reports;
❖ Measures of central tendency
❖ Measures of dispersion & variation  Copy STATA-15 folder & then pest on my document
❖ Inferential statistics- chi-square, t-test, F-test then open the folder click stataSE
❖ Simple correlation, cross tabulation &
❖ Econometrics model such as regression & much more panel  You may create short-cut on the desktop,
and time serious models
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Data view & Data editor window

2.SPSS softwares packages

• The default window will have the data editor

• There are two sheets in the window:
1. Data view 2. Variable view
#. How to process questionnaire on SPSS?

#. How to use variable view & data view for data definition?

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Data View window components Variable View window

• The Data View window • This sheet contains information about the data set that is
• Click on the tab labeled Variable View stored with the dataset
◼ This sheet is visible when you first open the Data Editor &
this sheet contains the data
◼ Rows are cases
◼ Columns are variables

Click

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Variable View window: Name Variable View window: Name…

• Name • Name
• Click on the ‘Name’ box. • Provide short-hand form of the variable to be entered
• Space is not allowed.
• Give each variable a valid name (8 characters or less
with no spaces or punctuation, beginning with a letter
not a numeric number).
• Short, easy to remember word names.
• Each variable name must be unique; duplication is not
allowed.
• Variable names are not case sensitive: the names
NEWVAR, NewVar, and newvar are all considered
identical.
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Variable View window: Type Variable View window: Width

• Type • Width
• Click on the ‘type’ box. The two basic types of variables – Width allows you to determine the number of
that you will use are numeric & string. characters
• This column enables you to specify the type of variable. – SPSS will allow to be entered for the variable

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Variable View window: Decimals Variable View window: Label

• Decimals • Label
– Number of decimals – You can specify the details of the variable
– It has to be less than or equal to 5 – You can write characters with spaces up to 256
characters

3.14159265

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Variable View window: Values Defining the value labels

• Values • Click the cell in the values column as shown below

– This is used & to suggest which numbers • For the value, & the label, you can put up to 60
represent which categories when the variable characters.
represents a category • After defining the values click add & then click OK.

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Variable View window: columns Variable View window: align

• Columns • Align is the type of align- right, left & justified

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Variable View window: measure Measurement scales

• Measure is the type of measurement sale  The process of assigning numbers to objects in such
away that specific properties of the objects are
truthfully represented by specific properties of the
numbers.
 Types of scales
a) Nominal
b) Ordinal
c) Scale
▪ Interval
▪ Ratio
 It’s important factors to consider before data entry
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Measurement scales- Nominal scale Measurement scales- Nominal scale …

 Nominal scale- categorical data that comprises of Example:

categories that can not be rank ordered;
What is your Sex (please tick)
 It’s numbers assigned to the variables have no ⚫ Male
mathematical meaning beyond describing the ⚫ Female
characteristic or attribute under consideration.
What is your religion? (please tick)
 This makes it impossible to conduct standard ⚫ Muslim
mathematical operations such as addition, subtraction, ⚫ Orthodox
division & multiplication. ⚫ Protestant

⚫ Catholic

⚫ Others
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Measurement scales- Ordinal scale Measurement scales- Ordinal scale…

 Ordinal scale- is data that comprises of Example

categories that can be rank ordered 1. How is your satisfaction with the customers
 Variables can be ranked in relation to the amount of service of the staff
the attribute possessed. 1. Excellent
2. Good
 Like nominal data, ordinal data are qualitative in
3. Bad
nature & do not posses mathematical properties
4. Very bad
necessary for sophisticated statistical analyses.

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Measurement scales- Ratio scale Measurement scales- interval scale

 Ratio scale measurement is like interval scale  Interval scale measured on continuous scale &
measurement, but this one has an absolute zero has no true zero point
point, which means that all mathematical  It measured data on continuous scale can have
operations are possible. no true zero point
 Ratio data measured on a continuous scale & does  It’s without a zero point time.
have a zero point
Example: Example:
▪ Age Time moves along a continuous measure – minute or
second & so on
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Choice of scales in SPSS Exercise-I

 The default is scale, which refers to an interval 1. Choice the proper scale for the following variables?
or ratio level of measurement a. Religion
b. Weight
c. Height
 Choose nominal for categorical data & ordinal if d. Income of the household
your data involve ranking or ordered values; e. Marital status
f. Postal code
g. Celsius
h. Kelvin

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Defining Variables: Data coding & coding the Defining Variables: Data coding & coding the
questionnaire questionnaire …

 Translate the questionnaire into codes & enter in  Question response format:
SPSS ❖ Open-ended questions ( in word or number)
 The questions in the questionnaire are mapped into ❖ Close-ended questions
variables in SPSS ✓ Dichotomous & categorical question
✓ Multiple-choice questions
 Important factors to consider before data entry into
SPSS ❖ Scaled-response questions
◼ Question response format

◼ Scale characteristics

◼ Level of measurement

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Exercise-II Data Entry into SPSS

 Use Exercise –II word format & define the There are 2 ways to enter data into SPSS:
questionnaire 1. Directly enter into SPSS by typing in Data View
2. Enter into other database software such as
 In SPSS, open variable view, define the
Excel then import into SPSS
questioner on SPSS

 Let’s start with the 1st option, using data view &
 In STATA, open data editor, define the insert data on SPSS
questioner on STATA
 Use data editor & insert data on STATA

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Importing data from Excel spreadsheet into

Exercise-III SPSS.

 In SPSS, go to:
▪ Entering Variable Information in the "Variable  File, Open, Data
View“  Select Type of file (for example, Excel) you want to open
 Select File name you want to open
 In SPSS, open Data View, insert data for 15
interviewer randomly- just to practice how to enter
data

 In STATA, open Data editor, insert data for 15

interviewer randomly.

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Importing data from Excel spreadsheet into

STATA 3.Data Processing & Analysis using SPSS &
STATA

#.What are the aspects of data processing &

management?
#. What are the methods of data analysis?

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A. Data Processing & Management A. Data Processing & Management…

 Data processing & management contributes  In processing data, the researcher employs
to improving data quality. several activities.

 Data processing may start while the survey  The main ones are the following:
work is on progress or immediately after I. Data editing
field data collection is completed. II. Data entry
III.Data analysis
 Data processing should start as soon as possible
after data definition

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i. Data editing ii. Data entry

 Data editing: which includes,  Data entry: this is digitizing the data to
◼ data cleaning, computing software such as SPSS, excel,
◼ coding & STATA etc, using a computer.
data verification.
◼
 It is critical that the highest level of
accuracy need to be maintained when
inputting data.
 One way of ensuring the accuracy of data
entry is through double entry.

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ii. Data entry iii. Data analysis

 As an alternative to double entry, a careful  Data analysis requires a sound knowledge of

review of the inputted data for common statistics theory
data problems;
 Data analysis may start from simple description
❖ Out-of-range values, of the data using measure of central dendency
❖ Missing data, & and dispersion&
❖ Incorrect formatting.  Proceed to apply advanced statistical techniques
 Such as Iinferential statistical techniques using
t-test, F-test and Chi-square test.
 Econometrics techniques
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Data Problems & Way out B. Data Problems & Way out

#. What are the main data problems?  Data can be analyzed using a variety of ways.
#. How can we detect data Problems?  However, before data are analyzed it should be
#. How to deal with data problems? properly inspected
 Because, data analysis with problematic data
leads to biased results & misleading inferences
⚫ A first look at the data
⚫ Types of data problems
⚫ Dealing with data problems

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What are the main data problems? How Can We Detect Data Problems?

 Despite great care in research project  But any way, data problems can be detected at
design, empirical researchers may face various stages of data processing & analysis
various data problems. ⚫ Data cleaning/coding,
1) Missing data ⚫ Data entry (out of range values, missing values)
2) Distributional outliers ⚫ Data analysis (descriptive/analytical)
3) Data inconsistency  Some data problems are easy to detect while
Example: others are difficult.
⚫ Daughter’s age > mother’s age  For instance, detecting missing data is straight
forward while identification of data
⚫ employee’s salary < minimum wage
inconsistency is very difficult [it requires
⚫ negative value for a distance variable
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Dealing with Distributional outlier & its Dealing with Distributional outlier & its
way out? way out?...

 An observation which compared to other  The ultimate solution to deal with an outlier
observations has either too high or too low observation is either to drop an observation
values for one or more variables is regarded as an corresponding to an outlier data point or to drop
outlier or outlying observation. the variable containing an outlier from the analysis.

 Before trying to find out a solution it is essential  Researchers use alternative strategies to use
to examine the main cause of an outlier observation/s with an outlier data point/s.
observation. ✓ Transforming outlier information reduces the impact
of an outlier on sample estimates.
 In principle an outlier may be a genuine ✓ Try a regression with & without transforming an
observation or simply the result of a measurement outlier data.
error.
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Dealing with Missing Data or way out

Data examination using STATA

 Missing data is when information for some

variables is missing for some cases. • Before we start our statistical exploration we
will look at the data using
Describe
 There is no one solution to deal with a missing o
Codebook
data problem.
o

 The basic descriptive statistics command in STATA

 In practice however, researchers use various is
methods to minimize the missing data problem. ▪ summarize

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4.Data Analysis using SPSS & STATS A. Descriptive statistical techniques

 Descriptive statistical techniques

#.What are the various techniques of data analysis? ❖ Measures of Central tendency statistics
[e.g. mean, mode, median]
Measures of dispersion/disparity
A. Simple descriptive statistical techniques
❖

[e.g. Std.dev, range, max/minimum, S.E. mean,

B. Inferential statistical techniques kurtosis, Skwness etc. ]
C. Econometrics techniques ❖ Frequencies; charts
[e.g. histograms, bar, pie charts etc.]
❖ Other basic Statistical Procedures
[e.g. Cross-tabulation etc.]

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B. Inferential Statistical techniques C. Econometrics techniques

 Inferential statistical techniques Econometrics techniques

❖ Test’s; ❖ Regression analyses
❖ Chi- square test ❖ Simple linear regression
❖ Independent sample t-test ❖ Multiple linear regression
❖ F-test ❖ Non-Linear Regression analyses
❖ Correlation ❖ Binary choice model
❖ Bivariate correlation analysis ❖ Multiple choice model
Partial correlation analysis
❖ Ordered choice model
❖

❖ Panel data & time serious models

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Reporting results-SPSS Viewer…

D. Reporting results- SPSS Viewer

 The Viewer window is divided into two parts.

• The results from running a statistical
procedure are displayed in the output Viewer  The first part contains an outline of all of the
window. information stored in the Viewer.
 The second part contains statistical tables,
• The output produced can be statistical charts, & text output.
results using figures & tables, charts,
graphs,  Use the scroll bars to navigate through the
window's contents, both vertically & horizontally.

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