We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is Panel Data Econometrics?

John Lister
By
Updated: May 17, 2024
Views: 5,678
Share

Panel data econometrics is a specific form of statistical data analysis. It involves multi-dimensional data, which is where the data measures multiple things for the same subject. This naturally allows analysts to find more information and patterns, including cross-referencing data. The downside of panel data econometrics is that it can be much more complicated to analyze.

Econometrics is an activity that lies somewhere between economics and statistics. Much of traditional economics involves developing theories to explain and predict activities such as market behavior. Econometrics is more about starting with results and attempting to work backward to find possible causes and connections.

Panel data is sometimes known as longitudinal data — it is any set of data that covers multiple factors for the same subjects. For example, a list of the height of every child in a class would be ordinary data. A list of every child in a class giving both the child's height and the child's weight would be a very simple form of panel data. Some forms of panel data are far more complicated: for example, a national census may contain dozens of items of data about each household.

At its simplest, panel data econometrics can be used to establish relationships. For example, a set of data may show the college admission test scores of former students and their salaries ten years after leaving school. This could show a strong relationship between having a high score and having a high salary. This does not necessarily prove the two are connected: a commonly used phrase is that "correlation does not equal causation."

More complex panel data econometrics can work with multiple factors. For example, the test scores and salary data might also include details of the average test score in the student's school. By cross-referencing, analysts could find the salaries are more dependent on how well a student performed compared with his or her classmates than in the student's actual score. This could lead to a theory that students who outperform peers are more competitive or driven and that this translates into getting ahead in the workplace and winning promotions.

Using multiple variables can make it easier to identify potential links. It can also reduce the chances that a particular link was caused purely by chance, or make it clearer when that is the case. The main problem is that each additional variable causes a dramatic increase in the total number of potential links being explored. This not only increases the analysis work required, but increases the chance of a mistake slipping through.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
John Lister
By John Lister
John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With a relevant degree, John brings a keen eye for detail, a strong understanding of content strategy, and an ability to adapt to different writing styles and formats to ensure that his work meets the highest standards.

Editors' Picks

Discussion Comments
John Lister
John Lister
John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With...
Learn more
Share
https://www.wisegeek.net/what-is-panel-data-econometrics.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.