Abstract
Publisher Summary The most conspicuous role of statistical theory in economics is that of a link between economic theory and data. These data are used to test the validity of an economic theory and/or to estimate the parameters of relations that are implied by this theory. This chapter focuses on the increased use of statistical concepts in economic analysis. It describes applications of information theory concepts to the measurement of income inequality, intergenerational occupational mobility, and several other topics in the social sciences. It explores economic applications of first- and second-order moments of univariate and bivariate distributions, including the measurement of the cost of living and of real income. The chapter also presents an outline of microeconomic theory from a statistical point of view. It describes a fundamental independence transformation in microeconomic theory, which can be viewed as a constrained principal component transformation.
Published Version
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