Definition of econometrics
: the application of statistical methods to the study of economic data and problems
econometricplay \i-ˌkä-nə-ˈme-trik, ē-ˌkä-\ adjective
econometricallyplay \i-ˌkä-nə-ˈme-tri-k(ə-)lē, ē-ˌkä-\ adverb
econometricianplay \i-ˌkä-nə-mə-ˈtri-shən, ē-ˌkä-\ noun
econometristplay \i-ˌkä-nə-ˈme-trist, ē-ˌkä-\ noun
Origin and Etymology of econometrics
blend of economics and metric
First Known Use: 1931See Words from the same year
Financial Definition of ECONOMETRICS
What It Is
Econometricians are economists who use math and statistics to measure economic data.
How It Works
Econometricians measure things such as gross domestic product, inflation, or to predict changes in the economy. Their models often forecast key economic measures and then compare those forecasts with actual results.
There are two kinds of econometrics: applied and theoretical. Applied econometrics tends to focus on consumer behavior and predictive models of how something will respond to specific changes in something else (for example, what plane ticket prices will be in Detroit if United Air Lines stops flying there). Theoretical econometrics uses statistical methods such as regression analyses, probability, and frequency distributions to model how well economic models work or don't work.
Econometricians work for government agencies, but can also work for politicians, companies, lobbyists, research organizations, and universities. They usually hold advanced degrees in economics and statistics.
Why It Matters
Economics is largely regarded as a social science, but it is also a mathematical science. For that reason, econometricians measure much of what we experience in the world: interest rates, wages, prices, rents, and changes in those things. For this reason, econometricians can help verify theories about how consumers behave, what governments will do, and when things will change.
Learn More about econometrics
Britannica.com: Encyclopedia article about econometrics
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