ABSTRACT
This chapter begins with discussions on how we form hypotheses and considers difference of means analysis as a way of introducing statistical inference. Economic theory predicts that demand curves will slope downward, but it does not predict the degree of responsiveness of demand to price and other variables; it is the task of statistical analysis to estimate these magnitudes. Economists studying health care often face statements that, while plausible, demand some validation: "men and women don't smoke the same numbers of cigarettes." and "rich people spend more on health care than do poor people." In the past decade, health professionals have turned their attention, often with some alarm, to the increased level of population obesity. The National Institutes of Health collected a database of over 43,000 people ages 18 and over, called the National Epidemiologic Survey on Alcohol and Related Conditions, or National Epidemiologic Survey on Alcohol and Related Conditions.
