Chapter 2
Getting the Hang of Probability
In This Chapter
Reviewing the basics of probability theory
Understanding probability density functions for discrete and continuous random variables
Finding the relationship between two random variables
The purpose of this chapter is to review some fundamental concepts of probability theory that are essential to moving forward with your understanding of econometrics. These topics center on the properties of probability distributions and their use in calculating descriptive measures of random variables. Other topics are either less important for econometrics or are covered as necessary in the relevant chapters of this book. (If you find that your probability skills are rustier than you expected, consult Statistics For Dummies [by Deborah J. Rumsey; John Wiley & Sons, Inc.] and a good statistics or probability textbook.)
In this chapter you get a refresher on the properties of probability distributions for both discrete and continuous random variables. Then you find out how you can use information from probability distributions to calculate measures of central tendency, dispersion, and correlation.
Reviewing Random Variables and Probability ...
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