Why is econometrics important within economics?
So Victor’s answer is very descriptive of what they teach you in undergraduate studies about what the different “branches” of economics are. To be frank these divisions are somewhat silly when you are talking about actual economists, academia and industry alike. Most economists don’t think so much about classifying themselves into this way. So Econometrics is important for a couple of reasons though I would strongly urge you to be very wary of econometric conclusions and I will explain why in a minute. 1. It provides an easy way to test statistical significance so in theory, if we specify our econometric models properly and avoid common problems (i.e. heteroskedasticity or strongly correlated independent variables etc.), then it can let us know if we can say either, no there is no statistical significance or yes there is. That just means that for the data set we have at hand, we can or cannot rule out a significance. Problems with this: Correlation does not prove causality. It is theor
