2.5 Discussion

In this lecture, we’ve discussed some fundamental blocks you need to consider before starting up with research. Data plays a critical component of research and it is necessary to put in deep thought as to how the DGP might be constructed. This will allow us to recognize “good” vs. “bad” pathways and also it’ll inform you about the variables that you’d want to have in consideration.

Not all of the variables that you want will be available to you. But you need to make the best out of what you have. This could mean various things including but not limited to: i) figuring out what variables you’d want but are not available, ii) giving thought to the potential problem of omitted variable bias (and reverse causality), and iii) trying out several different ways to account for controls.

Ultimately, we are trying to understand something (new) about the DGP. In reality, the laws governing the DGP may not be that simple. That means we should try harder with persistence and creativity. In the next lecture we’ll talk about regression.