Econometrics 10: Measurement Error

Question 1

What is measurement error and how does it differ from sampling error?

Answer 1

Question 2

What are common sources of measurement error?

Answer 2

Some classic examples:
▶ Individuals misreporting incomes in survey data
▶ “Age heaping” in historical census data
▶ Self-reported agricultural crop yields and soil quality
▶ High-frequency data (e.g. daily Covid case numbers) where most recent
data may have some error
But we can think of less standard sources of error:
▶ For example: measurement of nefarious activities (corruption, crime, …)

Question 3

What happens when the dependent variable is measured with error?

Answer 3