ABSTRACT

Probability theory is usually the starting point for pedagogical developments of econometrics. The ideal roots are traced to the mathematical treatment of games of chance, errors in measurement and combination of observations. The practices of merchants, bankers and captains of industry, however, had more influence on early economic statistics than did the logic of mathematical philosophers. The humbler origins of econometrics lie in the nineteenthcentury rules of thumb on temporal comparisons of prices, sales and assets. Political economists adapted these tricks of the trade in their search for scientific means for investigating laws of motion.