# Econometric Process
1. Question
2. Model
	'do police reduce crime?'
	![[Excalidraw/Drawing 2021-09-01 14.07.57.excalidraw.md]]
	When there's a systematic relationship between epsilons and x, data can be misleading.
	E is for expectation/average
	Crucial assumption:
		$E[\epsilon|\textit{condition}] = 0$ for all x 
		The Intuition is that other factors influencing y are not systematically related to x. 
		This assumption is often suspect.
	![[Conditional Expectations]]
3. Data
	Data Types:
	- Cross-Sectional: each obs different 'individual' ie person, city, group
	- Time Series: each observation different time period ie nanosecond, minute, day, week, year
		- about a single entitiy
	- Panel: combination of Time Series and Cross-Sectional data types. Each observation corresponds to an individual at some moment in time. 
4. Estimation
	![[Bivariate (simple) Regression Estimation]]