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How is Stata Used in Economics?

Stata is one of the leading and fastest growing econometric software packages on the market today.  Over the past five years, citations to Stata programs in scholarly articles indexed in Google Scholar have increased 55 percent to 23,000 citations in 2014.  Employers in a wide variety of fields value knowledge of this important software tool; in July of 2015, nearly 1,400 job openings posted in Indeed.com mentioned knowledge of Stata as an important asset for candidates.  Employers listing knowledge of Stata as one of the qualifications they look for among their candidates include Facebook, Mathematica, Amazon, and ICF. 

Because of its growing popularity, the Department of Economics at American University has chosen Stata as the primary statistical software used in most of our core and elective courses in the online MA in Economics program. Beginning in ECON-623 Econometrics I, faculty provide hands on training, walking students through the most effective way to analyze data using this rich and flexible statistical analysis package.  By week two of Econometrics I, students will already be running their own regressions using data from the Department of Education’s High School and Beyond survey to test whether proximity to college significantly lowers the cost of higher education, thus allowing students to complete more years of education.  By the end of their two course sequence in Econometrics, students will be asked to replicate the results in the seminal minimum wage article, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania.”  And by the time students are completing the program, they will be using Stata to analyze their own datasets to study a question of their choosing in their final capstone project.     

More and more economists are now using Stata for virtually all of their data analysis needs.  Among its many capabilities, Stata includes built in commands to manage and clean data, engage in basic statistical analysis, perform advanced econometric procedures including panel and time series regression models, and create visually stunning graphs and tables. Stata allows you to write your own code or use menus to perform your analysis. Stata can import data in a variety of formats, including csv and spreadsheet (including Excel) formats.  Stata’s proprietary file formats are platform independent, so users of different operating systems can easily share datasets and programs. There are four different versions of Stata in the market.  These are Stata/MP for multiprocessor computers (including dual-core and multicore processors), Stata/SE for large databases, Stata/IC, which is the standard version, and Small Stata, which is a smaller, student version for educational purchase only.  We strongly recommend students purchase a perpetual license to the standard version (Stata/IC) as students will be using this software throughout the program.  Alternatively, students can always use Stata on AU’s Virtual Computer Lab free of charge. This virtual access is available 24/7.

For students that need additional help, AU’s Center for Teaching, Research and Learning (CTRL) will provide students in the MA program with technical support while using Stata and other statistical packages. See their website for more information.    

Card, David and Krueger, Alan B. (1994), “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economic Review 84(4): 772-793.

About the Authors

Professor Reynolds joined the department in 2003 after completing her PhD at the University of Virginia. Her research interests include the political economy of trade protection, particularly antidumping protection, and the impact of trade liberalization on workers and firms. She will be teaching ECON-600 Microeconomic Theory. Learn more about Kara M. Reynolds.

Professor Yesuf’s research interests include poverty, environment and development issues in low-income countries, with a special focus on households’ behavioral issues (such as risk aversion). He has international teaching and research experience working on projects with the World Bank and International Food Policy Research Institute (IFPRI) in Africa. He will be teaching ECON 623 and ECON 624 (Econometrics I and II).

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