QUANTITATIVE METHODS FOR APPLIED ECONOMICS

FEM11087
Health Economics (compulsory), Industrial Dynamics and Strategy (compulsory), Behavioural
Economics (compulsory/elective)

Academic year 2020/2021, September – October 2020

Contents
In this course we provide students with knowledge of econometric methods which are relevant for
applied economics. In particular, this course first refreshes the essentials of the standard regression
model, and subsequently covers methods for choice data. Finally, the last two parts of the course
cover methods that can be useful when the dependent variable of interest is endogenous.

Students follow a hands-on approach to understanding empirical econometric methods, in this way
getting the opportunity to develop experience with the application of these methods in their own
field of specialization.

The course consists of online materials, question hours and group practical work. The lecturers
present and discuss each method and relevant applications in online videos. For each part of the
course: i) a first set of videos introduce the empirical methods; ii) in a second set of videos, the
lecturers explain how to implement the methods in Stata, with special focus on the interpretation
of the results. Students put into practice the acquired skills through group assignments which are
practical empirical applications to real world datasets in applied economics.

This course consists of four parts:

1. Linear regression models (linear regression; conditions for causality; specification

tests, model selection).
2. Choice data models (models for binary data; models for (un)ordered categorical data;
model selection).
3. Endogeneity and instrumental variables estimation (causality, identifying and dealing
with endogeneity)
4. Linear panel data models (random effects models; fixed effects models; model
selection).

Course objectives
The main aim of this course is to become acquainted with econometric methods relevant for
applied economics and their application. More specifically, after the course the students should be
able to:

• Apply the main econometric methods that are suited to analyze cross-section, panel data
and choice data;
• Explain the advantages and disadvantages of each method;

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 • Interpret the results obtained;
• Understand the assumptions and limitations of each method and empirical application;
• Use the statistical software Stata to analyze datasets that are relevant for their
specialization.

Staff

Dr. Pilar García-Gómez (coordinator)

Dr. Teresa Bago d’Uva
Dr. Carlos Riumallo-Herl

Course Assessment

• Grade of five group assignments (see below) as follows: report one has a weight of 5%, reports
two to four have a weight of 10% each and report five has a weight of 15%.
• Grade of written (re-)exam (weight 50%).
• Only the exam can be repeated, while the marks of the assignments still count (50% in total)
for the re-examination.
• To pass the course, students need to have at least a 5.5 in the (re-)exam.

Course materials
Compulsory
• Online videos, slides and any other lecture materials (published weekly on Canvas)
• Assignments and data used in them (published timely on Canvas)

Recommended
Selected chapters from the books used in each part of the course:
➢ Linear regression models
• Wooldridge. 2014 (or any other edition). Introductory Econometrics: A Modern
Approach. Cengage Learning, EMEA Edition (selected parts from chapters 1-9).
➢ Choice data
• Long and Freese. 2014. Regression Models for Categorical Dependent Variables Using
Stata, 3rd edition. Stata Press (chapters 5-8).
• Also good introduction (only for binary models) in Wooldridge (sections 7.5 and 17.1)
➢ Endogeneity and instrumental variable estimation

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 • Wooldridge. 2014 (or any other edition). Introductory Econometrics: A Modern
Approach. Cengage Learning, EMEA Edition (chapter 15).
➢ Panel data
• Wooldridge. 2014 (or any other edition). Introductory Econometrics: A Modern
Approach. Cengage Learning, EMEA Edition (chapters 13 and 14).

Course structure
We have different learning activities (see table below for a summary, and the figure at the end of
the coursebook for the dates):

• Online videos introducing the empirical methods for each of the topics.
• Online videos with Stata demonstrations for each of the topics.
• Question hours on the contents and the organization of the course on Friday in weeks 1 to
5. Students attend one of the two online questions hours on Zoom. The aim of these
question hours is threefold: i) meet the other group members for the assignments; ii) agree
on a working plan with them; iii) ask the lecturers questions regarding the organization of
the course or the contents of the last week. Students will be assigned to different breakout
rooms with their group members during these question hours. We expect all students to
attend these sessions to meet their group members. We assume that a student that does not
attend this session will not participate in the group work and will therefore not get a mark
for the assignment.
• Question hours and online videos to ask questions about the assignments on Wednesday
in weeks 2 to 6. These sessions are meant to answer possible questions about the next
assignment to be submitted. Note that students should send their questions in advance (see
respective deadlines under “Other important dates” and more instructions under
“Questions?” below). The lecturers will upload a video before the question hour explaining
the most common questions. In the question hour, we will focus on specific detailed
questions asked by participants of the specific question hour. Students will have to select
one of the available on-campus or online sessions.
• Online videos providing feedback on previous assignments. These videos are meant to give
relevant feedback on previous assignments. They are based on the most common mistakes
of each of the assignments, and they will be available weekly.
• Presentations of a published paper using panel data methods in small groups in week 7 as
part of the panel data assignment.
• Online question hour preparation for exam in week 7. These sessions are meant to answer
questions that students might have in preparation for the exam. Note that students should
send these questions in advance (see respective deadlines under “Other important dates”
and more instructions under “Questions?” below). The lecturers will upload a video before
the question hour explaining the most common questions. In the question hour, we will
focus on specific detailed questions asked by participants of the specific question hour.
Students will have to select one of the available on-campus or online sessions

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 Linear Choice Choice Instrumental Panel
Topic
regression data I data II Variables data
Introduction empirical
x x x x x
methods

Stata application x x x x x

Question hour
x x x x x
(contents and organization)

Question hour
x x x x x
(assignment)

Assignment x x x x x

Presentation x

Feedback common
mistakes x x x x x
(assignment)
Question hour
x x x x x
(exam)
Exam x x x x x

Please regularly consult the Canvas site for announcements and up-to-date details of the time
schedule, links to zoom meetings, and rooms.

Important notes:
• The information on SIN-online about on-campus sessions is not accurate. It includes some
sessions that have been substituted by online videos, and it does not include the online
sessions. Check the Canvas calendar for this information.
• The exact timing for the question hours for the last two assignments will become available
in the second week of the course. We will aim to have at least one group on-campus,
although this still depends on current regulations and campus capacity. They will be
scheduled on Wednesday.

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Important dates and times (Rotterdam Time Zone)

• September 2: registration lists for specialization groups (SIN-online) and all question
hours for the first 4 weeks of the course (Canvas) close at 11:00.

• September 8: send questions about first assignment by 11:00.

• September 10: submission of first assignment by 11:00.

• September 15: send questions about second assignment by 11:00.

• September 16: registration lists for all question hours for the last 3 weeks of the course and
presentation sessions (Canvas) close at 11:00.
• September 17: submission of second assignment by 11:00.

• September 22: send questions about third assignment by 11:00.

• September 24: submission of third assignment by 11:00.

• September 29: send questions about fourth assignment by 11:00.

• October 1: submission of fourth assignment by 11:00.

• October 6: send questions about fifth assignment by 11:00.

• October 9: submission of fifth assignment by 11:00.

• October 13: send questions about all material in preparation for exam by 11:00.

• October 22: online proctored exam at 18:30.

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Assignments: contents and groups
Assignment 1 covers linear regression models, assignments 2 and 3 use choice data methods,
assignment 4 covers detecting and dealing with endogeneity using instrumental variable
estimation, and assignment 5 uses panel data methods. The last assignment will also include a
critical presentation of a published paper using panel data methods. We will randomly assign
papers to groups and announce them in due time. This last assignment is longer and therefore has
a higher weight.

Students will work in groups of 3 (or 4) on five assignments. These groups will be the same for
assignments 1 and 2 and will then change for each of the other assignments. Each group will be
composed of students of the same master specialization: Industrial Dynamics and Strategy; Health
Economics; Behavioural Economics. Other students can decide which specializations they will
join. See information about how to register in specialization groups under “Registering in
specialization group lists” below.

We will randomly allocate students to working groups ourselves and announce them in due time.
Please notice that you are expected to communicate with all the other members of your group using
your student’s e-mail account. Other forms of communication are only allowed after agreement
from all group members. Students are responsible for informing us about any incorrect information
on the group formation within the next 24 hours after we publish the group details on Canvas. We
cannot guarantee that the student will be able to solve the assignment in a group if this deadline is
not met. Students are expected to attend the Online question hour on Friday or inform the other
group members and ta-fem11087@ese.eur.nl otherwise. We will assume that a student who does
not attend this question hour nor communicates in advance with other group members and ta-
fem11087@ese.eur.nl is not following the course and will therefore not obtain points for the
assignments.

We are very aware of the fact that free-riding problems can occur in group work. In most cases
this should and can be solved at an early stage of the assignment work. In rare cases, however, it
is necessary to resort to penalties. Student teams should allocate tasks equivalently from the
beginning to make sure no one has the opportunity to free-ride. If a team member does not
contribute as agreed, the other members should first discuss this with him/her. If the issue is not
solved in this way, then it should be raised to the lecturers of the course. Based on the severity of
the free-riding, the student(s) in question will see his/her (their) grade reduced. In extreme cases,
this might even be a zero.

Assignment requirements

• “Just” having the right Stata commands and outputs is not enough to obtain a passing grade in
any assignment. It is also necessary to interpret results correctly and provide the right answers
to the questions posed.

• You are expected to answer all the questions using your own words. We check all the
assignments for plagiarism. According to ESE’s regulation, “(plagiarism is) also understood
to mean to copy from one’s own or someone else's (group)work an extract larger than a couple

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 of words literally or translated for the purpose of a paper, thesis or any other form of text being
part of the teaching without indicating this by means of quotation marks or another univocal
typographic means, even if bibliographically traceable and correct acknowledgements are
included” (https://my.eur.nl/en/ese/information-desk/regulations/rules-and-regulations)

• Students are required to submit .pdf file containing Stata code and output, and the answers to
each of the questions for each assignment via Canvas. In addition, students are required to
submit electronically via Canvas a .do file containing all Stata commands used. We will check
if this .do file runs in Stata and produces all results shown in the .pdf file.

• Submission: Electronic submission via Canvas (see above). Note this should be only one copy
per group. All group members are responsible for this submission.

• Note that the deadlines are taken in a very strict sense. If a report is handed in after the deadline
then this will reduce the mark assigned to the case report. The penalty structure is as follows.
A delay between 1 second and 1 hour gives 1 penalty point and a delay between 1 hour and
18:00 on the same day gives 3 penalty points. After 18:00 on the same day, no assignments
will be accepted, and will get zero points.

Downloading and uploading assignments on Canvas

Assignments and their required data can be found on Canvas from 15:00 every Thursday.

Students should upload their completed assignments (only one copy per group) on Canvas. Two
files should be uploaded, each of them in a specific folder: i) a .pdf file containing all commands
used, relevant Stata output and answers to questions, ii) a .do file containing all commands used.
These files should be named ‘groupnumber.pdf’ and ‘groupnumber.do’. Please always make sure
you upload the last version of your files. We will not accept any updated documents after the
deadline (not even by email) even when a wrong version was submitted.

In case of disagreement about mark obtained in assignment

In case the students disagree with the mark obtained for the assignment, they can download a form
from Canvas in which they can explain their opinion about each question about which there is a
disagreement. We will then mark these questions again. This reassessment will be final and might
lead to an increase or decrease in the original grade. Students should e-mail this form to ta-
fem11087@ese.eur.nl within 10 days after receiving the grade and feedback from the assignment.

Partial results from academic year 2019-2020 valid for two years

Students retaking the course have the following two options:

1. Use the grades from the assignments obtained in 2019-2020 and retake the final exam.
2. Retake all assignments and the final exam.

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Students retaking the course and choosing the first option (keep grades from the assignments
obtained in 2019-2020), please e-mail to ta-fem11087@ese.eur.nl before Wednesday 2 September.
We will use this information for the group formation.

Software

Statistical software - Stata

The statistical software Stata will be used in the assignments. We will post online material
demonstrating the application of all methods covered in the course using Stata. In particular, the
materials of week 1 will also include an introduction to Stata. After this, students will be able to
practice themselves and start working on their first assignment.

STATA 16 MP is available for students and employees of the Erasmus University. You can find
more information here: https://my.eur.nl/en/eur-employee/work-support/it/software/stata

Zoom

Please download and install Zoom (https://zoom.us/) software, create an account with your student
e-mail account, and test the microphone and camera settings with a fellow student before
Wednesday 2 September. For any scheduled Zoom meeting, please join the meeting few minutes
in advance. Please notice it is important you join the question hours with your student e-mail
account to identify you and your other group members. We will prepare small online meeting
rooms (breakout rooms) using this information.

Please consider the following online etiquette during our zoom sessions:
• Mute your microphone unless it is your turn to talk.
• If technically possible, please have your camera on. You can choose a blank or
virtual background to respect your privacy. If you use a virtual background, please
keep it professional not to distract fellow colleagues.
• Raise your virtual hand or use the chat to ask questions. The moderator will indicate
when it is your turn to talk.

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Registrations
Registering in specialization group lists

Students are split by specialization for the assignment groups. In order to be assigned to working
groups for the assignments, students need to register in their specialization list (Industrial
Dynamics and Strategy; Health Economics; Behavioural Economics) in SIN-Online
(https://ese.sin-online.nl/channel/reserveringen.html) . Other students should decide in which of
the three lists to register.

Note that registration in specialization group lists closes on Wednesday 2 September at 11:00.

Registering for question hours

Students are split in question hours. Students need to register for one session for each of the
question hours. Students will work with their group during these sessions and so it is not allowed
to attend a different session. Students can register through the Canvas’ calendar function
(https://canvas.eur.nl/calendar).

Note that registration in question hours for the first 4 weeks of the course closes on Wednesday 2
September at 11:00.

Note that registration in question hours for the last 3 weeks of the course closes on Wednesday 16
September at 11:00.

Registering in tutorials for the presentations in week 7

Students are split in tutorial groups in week 7 for the presentation panel data assignments. Students
need to register for one tutorial group. Students will work with their group during these sessions
and so it is not allowed to attend a different session. You can register through the
Canvas’ calendar function (https://canvas.eur.nl/calendar). Detailed information on the dates and
times of these sessions in week 7 will be available on Canvas during the second week of the course.

Note that registration in tutorials for the presentations closes on Wednesday 16 September at
11:00.

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Questions?
We are happy to answer questions during the question hours on Wednesdays and Fridays. During
the Friday sessions, we will answer questions related to the organization and the materials posted
in the online videos that week. During the Wednesday sessions, we will answer questions
specifically about the assignment to be submitted that week. Students should send these questions
the day before each question time session to ta-fem11087@ese.eur.nl (see exact deadlines under
“Other important dates” above). Note that these questions will not be answered by email but only
in the online video or during the question time session. Any other questions about the assignment
will be answered at the end of the session, only if time permits. A similar procedure applies to
questions that students might have while preparing for the exam (see also the deadline above).

Any questions about the organization of the course should also be emailed to ta-
fem11087@ese.eur.nl.

Only e-mails to ta-fem11087@ese.eur.nl will be answered. Do not email the lecturers directly, and
do not send messages through the Canvas direct messaging function.

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This table summarizes the structure of the course. It provides information about the dates in which the different materials will be available,
the deadlines to register to the different sessions, and to submit the assignments and the questions for the question hours.

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