amount someone saves = their income x their happiness to save

amount someone saves = their income x their happiness to save

Of course, we can't measure happiness to save exactly, but with econometric mathematics we can give it a value. Then we can see how that value differs between groups of people or cultures. Econometrics is about finding relationships between variables - in other words relationships between values that change. Economists try to find out if variable.A changes every time value B changes. They want to find out if variable A is dependent on variable B. This is called analysis, and there are two main kinds of econometric analysis: time-series analysis and cross-sectional analysis.

Time-series analysis shows how variables change over a period of time. How salaries increased over. He last century, for example. Gross-sectional analysis compares variables at one point in time. The salaries of men compared to women right now, for example. Of course, economists like to make things more complicated than that. Sometimes they combine cross-sectional with time-series analysis, and this is called panel data analysis.

As we said earlier, econometrics is good for testing economic theories. However, there is also a practical side to econometrics. The same maths and statistics are used by governments and business managers, as well as academics. Econometrics can help governments and companies find out how well they are doing. With the data from all this mathematics, they can make better decisions and plan better for the future.

B Comprehension

Now read the text again and choose the best answer A, B or C to complete each sentence.

1 A theory is only good if you can...

A. express it clearly.

B. test it.

C. measure it.

2 Empirical evidence is evidence that...

A. we can see.

B. economists can't use.

C. can be measured.

3. Econometrics is.... '

A. the maths that economists use.

B. a way to measure how much someone saves.

C. a formula to find out why people save.

4 Panel data analysis...

A. only shows differences over time.

B. only shows differences between groups.

C. shows differences between groups and changes over time.

5 Econometrics is...

A. only good for proving theories.

B. good for making practical economic

decisions.

C. only good for academic work.

Before you

Discuss the following with your partner.

The table below is an example of econometric data.

-» What does the table show?

-» Is this time-series analysis or cross-sectional analysis?

-» What do you think are the missing numbers?

H C Listening H)))

Weekly spending by children aged seven to fifteen in the UK

Girls Boys

sweets, snacks and food: £ (1)........................ £4.60

clothing and personal care: £(2)......................... £1.30

mobile phone charges: £ (3)........................ £0.40

magazines and books: £0.90 £ (4)..........

music, DVDs and videos: £0.70 £0.90

games and hobbies: £0.90 £ (S)...........

Now listen to somebody talking about a survey of young people's spending habits. Fill in the gaps in the table.

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