Why Econometrics is Confusing Part 1: The Error Term

“Suppose that \(Y = \alpha + \beta X + U\).” A sentence like this is bound to come up dozens of times in an introductory econometrics course, but if I had my way it would be stamped out completely.

A New Way of Looking at Least Squares

Have you got a ruler handy? Fantastic! Then hold out your right hand, extend your thumb and little finger as far as they’ll go, and measure the distance in centimeters, rounding to the nearest half centimeter.