5.1 The Data Generating Process

Introduction

• Data generating process (DGP): set of underlying laws that determine how the data we observe in created

  • science: regular laws that govern the way the universe works
  • physical law: if movement is determined by equation, then we observe their movement as data
  • social science: if observed data comes from at least somewhat regular laws, there is a DGP

Two Parts of DGPs

1. Parts we already know about process through prior assumptions or research
   
2. Parts we don’t know: what we’re attempting to learn about through additional research