EconStatsCraft rigorous, plain-spoken econometrics
Econometrics that explains itself.
Regression, panel data, time series and the whole battery of tests. Every result is followed by a verdict you can defend.
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EconStatsCraft › Scatter plot
The chart for "do these two move together". Turn the fitted line on and it reports the slope and the correlation, which are the two numbers a scatter is usually being read for.
A scatter plot is the most information-dense chart in common use: two variables, one point per observation, nothing aggregated away. It is the right first look at any pair of continuous variables, and it is the only common chart where the reader can see the things summary statistics hide - clusters, curvature, outliers, and the fact that a correlation of 0.8 can come from several completely different pictures.
Before any regression of one variable on another, always. And afterwards, to check the relationship you fitted is the relationship in the data.
Each observation is a point at (x_i,y_i): position on two aligned scales, which is the single most accurately judged visual encoding. No aggregation happens, so the display shows the joint distribution rather than a summary of it. A fitted line added on top is a MODEL, not data, and the distinction matters - Anscombe's quartet is four datasets with identical means, variances, correlation and regression line, and four completely different scatter plots.
Anscombe's four datasets share a mean of 9 in x and 7.5 in y, the same variances, a correlation of 0.816 and the same fitted line y = 3 + 0.5x. Plotted, one is a clean linear relationship, one is a perfect parabola, one is a straight line with a single outlier dragging it, and one is a vertical stack of points at a single x with one point far to the right doing all the work. Four identical summary tables, four incompatible stories. This is the entire argument for plotting before modelling, and it takes one chart to make.
| If you see this | It means | Do this |
|---|---|---|
| A solid blob in the middle | Overplotting | Reduce opacity, shrink points, or hexbin |
| Points in a grid pattern | Values rounded at collection | Jitter, and say that you did |
| A strong line and a low R-squared | A few outliers dominating | Check the residuals; consider a robust fit |
| The relationship looking flat | Aspect ratio, or an axis with an outlier stretching it | Bank to 45 degrees; check the range |
| Two visible clouds | A hidden grouping variable | Colour by the candidate group and see |
| Curvature | A linear fit is the wrong model | The scatter is telling you something the correlation cannot |
Bubble chart, which adds a third variable as size. Correlation and OLS, the summaries this chart exists to check.
Line chart · Area chart · Bar chart · Stacked bar · Bubble chart · Histogram · Box plot · Pie chart · Heat map · Rebased to 100 · Lorenz curve and Gini
Line chart · Area chart · Bar chart · Stacked bar · Scatter plot · Bubble chart · Histogram · Box plot · Pie chart · Heat map · Rebased to 100 · Lorenz curve and Gini
World map · Bivariate map · Flow map · India - state map · India - district map
Descriptive statistics · Summary by group · Two-way table · Classical statistical tests
Multiple regression (OLS) · Logit / Probit · Tobit (censored) · Truncated regression · Multinomial logit · Ordered logit / probit · Quantile regression · Poisson / Negative binomial
Time-varying coefficients (Kalman) · Unit root tests · Correlogram (ACF / PACF) · ARIMA / SARIMA · Rolling-origin cross-validation · Theta method · Unobserved components · STL forecasting · Forecast combination · Markov regime switching · Change frequency (resample) · ARCH / GARCH volatility · Decompose & filter · Spectral analysis · Exponential smoothing · Forecast accuracy
Yield curve (Nelson–Siegel / Svensson) · Dynamic factor model · Dynamic regression (ARIMAX) · Structural VAR · VAR · Granger causality · Cointegration · VECM · ARDL & bounds test
Panel regression · Panel cointegration tests · Heterogeneous panel: Mean Group & PMG · Gravity model of trade · Dynamic panel GMM · Panel diagnostics · Panel unit-root tests
Principal components (PCA) · Factor analysis · Cluster analysis
Conjoint analysis · MaxDiff (best–worst scaling) · TURF - reach of a product line · Price sensitivity (Van Westendorp) · Market basket analysis · Perceptual map · Scale reliability (Cronbach’s alpha) · Key driver analysis
Spatial autocorrelation · Spatial regression · Heckman selection · Instrumental variables (2SLS) · Difference-in-differences · Staggered difference-in-differences · Regression discontinuity · Matching & weighting · Oaxaca–Blinder decomposition
Black–Scholes option pricing · Bond price, duration & convexity · Merton distance to default · EMI / home loan planner · CAPM / beta estimation · Multi-factor model · Portfolio optimization · Value at Risk & Expected Shortfall · Performance & drawdown · Time value of money & NPV/IRR · Equity valuation (DDM, FCF, residual income) · Cost of capital (WACC) · Binomial option pricing · Option strategies (payoff & profit) · Forwards, futures & swaps · Credit risk & Basel capital · Extreme value theory (tail risk)
Life table · Life annuity · Life insurance pricing · Chain ladder reserving · Buhlmann credibility · Survival analysis · Mortality graduation · Aggregate loss model · Ruin probability · Multi-state Markov model · Loss severity fitting
Monte Carlo experiment · F-test, Wald & Chow · Structural breaks & stability
Regression vs machine learning · Ridge / Lasso / Elastic Net · Random forest · Gradient boosting
EconStatsCraft rigorous, plain-spoken econometrics
Regression, panel data, time series and the whole battery of tests. Every result is followed by a verdict you can defend.
Load a dataset to see it here.
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