While most people have at least a basic understanding of economics, fewer are aware of econometrics. In general terms, econometrics combines mathematics, in particular the use of statistics, with economics to analyze real-world and hypothetical situations.
Because of its use of statistical data, econometrics can be a powerful tool to study historic events and predict how various factors will affect future events. For example, using statistical data to measure the ratio of media coverage of past natural disasters to public aid provided may help relief agencies prepare contingency plans for future disasters that may receive more or less media coverage.
However, both the statistical model and the data must be reliable for a study and its resulting predictions to be effective. Additionally, the studies must take into account factors that may not appear on the surface in the raw data, such as cultural or gender differences that may otherwise influence the results.
Philip H. Brown is a development economist who has worked in China, Africa, Central America, and Chile. His research, which makes extensive use of econometrics, has been published in academic journals including Public Budgeting and Finance, the Review of Development Economics, and The Journal of Contemporary China.