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Different Types of Data For Economic Analysis 2

There are four main types of data used for economic analysis: 1) time series data which tracks variables over time; 2) cross-sectional data which collects data from multiple units at a single point in time; 3) pooled cross-sectional data which combines multiple cross-sections over time; and 4) panel data which follows the same units over multiple time periods to analyze changes. Each type of data has distinct features that impact economic analysis.

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Rabbi Ul Apon
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68 views

Different Types of Data For Economic Analysis 2

There are four main types of data used for economic analysis: 1) time series data which tracks variables over time; 2) cross-sectional data which collects data from multiple units at a single point in time; 3) pooled cross-sectional data which combines multiple cross-sections over time; and 4) panel data which follows the same units over multiple time periods to analyze changes. Each type of data has distinct features that impact economic analysis.

Uploaded by

Rabbi Ul Apon
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Different Types of Data for Economic Analysis

A. Time Series Data:


A time series data set consists of observations on a variable or several variables over time.
Examples of time series data include stock prices, money supply, consumer price index, GDP,
annual homicide rates, and automobile sales figures. Because past events can influence future
events and lags in behavior are prevalent in the social sciences, time is an important dimension in
a time series data set. Unlike the arrangement of cross-sectional data, the chronological ordering
of observations in a time series conveys potentially important information.
A key feature of time series data that makes them more difficult to analyze than cross-sectional
data is that economic observations can rarely, if ever, be assumed to be independent across time.
Most economic and other time series are related, often strongly related, to their recent histories.
For example, knowing something about the GDP from last quarter tells us quite a bit about the
likely range of the GDP during this quarter, because GDP tends to remain fairly stable from one
quarter to the next.

B. Cross Sectional Data:


A cross-sectional data set consists of a sample of individuals, households, firms, cities, states,
countries, or a variety of other units, taken at a given point in time. Sometimes, the data on all units
do not correspond to precisely the same time period. For example, several families may be
surveyed during different weeks within a year. In a pure cross-sectional analysis, we would ignore
any minor timing differences in collecting the data. If a set of families was surveyed during
different weeks of the same year, we would still view this as a cross-sectional data set.
An important feature of cross-sectional data is that we can often assume that they have been
obtained by random sampling from the underlying population. For example, if we obtain
information on wages, education, experience, and other characteristics by randomly drawing 500
people from the working population, then we have a random sample from the population of all
working people. Random sampling is the sampling scheme covered in introductory statistics
courses, and it simplifies the analysis of cross-sectional data. A review of random sampling is
contained in Appendix C.

C. Pooled Cross Sactions Data:


Some data sets have both cross-sectional and time series features. For example, suppose that two
cross-sectional household surveys are taken in the United States, one in 1985 and one in 1990. In
1985, a random sample of households is surveyed for variables such as income, savings, family
size, and so on. In 1990, a new random sample of households is taken using the same survey
questions. To increase our sample size, we can form a pooled cross section by combining the two
years.
Some data sets have both cross-sectional and time series features. For example, suppose that two
cross-sectional household surveys are taken in the United States, one in 1985 and one in 1990. In
1985, a random sample of households is surveyed for variables such as income, savings, family
size, and so on. In 1990, a new random sample of households is taken using the same survey
questions. To increase our sample size, we can form a pooled cross section by combining the two
years.
D. Panel, longitudinal, or Micropanel Data:
A panel data (or longitudinal data) set consists of a time series for each cross-sectional member in
the data set. As an example, suppose we have wage, education, and employment history for a set
of individuals followed over a 10-year period. Or we might collect information, such as investment
and financial data, about the same set of firms over a five-year time period. Panel data can also be
collected on geographical units. For example, we can collect data for the same set of counties in
the United States on immigration flows, tax rates, wage rates, government expenditures, and so
on, for the years 1980, 1985, and 1990.
The key feature of panel data that distinguishes them from a pooled cross section is that the same
cross-sectional units (individuals, firms, or counties in the preceding examples) are followed over
a given time period. The data in Table 1.4 are not considered a panel data set because the houses
sold are likely to be different in 1993 and 1995; if there are any duplicates, the number is likely to
be so small as to be unimportant.

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