Class Introduction and Overview

The A’s win the American league west with one of the lowest payrolls in baseball.
Sabermetrics is use of in game data to drive team management decisions (sign these players because they will produce numbers for good value)

The Oakland A’s

The A’s go on to win the American League West with one of the lowest payrolls in baseball.

How? Data!

The team uses in-game data to drive team management decisions:

• sign players because they have high stats (e.g., on base percentage) for a good value

• tell players to look for certain pitches because they tend to hit those pitches better

Data-driven decision making is a process in which decisions are based on data and analysis rather than on intuition or personal experience.

Intuition and experience are important, but data can contain hidden patterns and insights.

The objective of this course is to introduce this process of transforming data into actionable insights.

Which store should we expand?

Metric	Store A	Store B
Avg. Monthly Revenue	$420,000	$395,000
Avg. Monthly Foot Traffic	18,000 visits	14,500 visits
Avg. Transaction Value	$23.30	$27.20
Monthly Rent	$38,000	$24,000
Local Median Household Income	$52,000	$68,000
Year-over-Year Revenue Growth	4%	9%

Give the students a moment to read the data and think. Now that we have AI tools, we can ask them to help us analyze the data and make a recommendation.

Prompt

You are a business data analyst advising a regional retail company.

The company is deciding whether to expand Store A or Store B next quarter. 
You are given the following summary data from the last 12 months:

Store A:
- Average monthly revenue: $420,000
- Average monthly foot traffic: 18,000 visits
- Average transaction value: $23.30
- Rent: $38,000 per month
- Local median household income: $52,000
- Year-over-year revenue growth: 4%

Store B:
- Average monthly revenue: $395,000
- Average monthly foot traffic: 14,500 visits
- Average transaction value: $27.20
- Rent: $24,000 per month
- Local median household income: $68,000
- Year-over-year revenue growth: 9%

Tasks:
1. Compare the performance of Store A and Store B.
2. Identify which store is the better candidate for expansion.
3. Clearly state your recommendation.
4. Explain your reasoning in plain language suitable for senior management.
5. Note any assumptions you are making.

Provide a concise but professional recommendation.

Should the company actually follow this recommendation?

What else might you want to know before making a recommendation?

Write student answers on board. e.g., Uncertainty, Risk, Sensitivity to assumptions,

What would change the recommendation? What if you found out a competitor is planning to open near Store B? The issue is that there is more to being an analyst than just crunching numbers. You need to exercise judgement and think critically about the context of the problem.

AI and Large Language Models

AI tools like ChatGPT can help you analyze data and generate insights quickly.

We will learn how to use them effectively in this course.

• What questions to ask?
• How to provide guardrails.
• Skeptical evaluation of results.

Data + Analyst = Insight

Data can reveal patterns and insights that can improve decision making

But, it is not magic.

You must understand the context, the data, and the methods you are using…

… and effectively communicate your findings to others.

1 What does the figure tell you?

2 What does the figure tell you?

Charles Minard (1781–1870) was a French civil engineer and a pioneer in the field of information graphics. Shows the size of the army marching to moscow, the temperature during the retreat, and the location on a map.

3 What does the figure tell you?

Storytelling with Data

The art of communicating data insights effectively through visualizations and narratives.

Even the best model has no impact if decision-makers don’t understand or trust it.

Syllabus

https://jbayham.github.io/arec-330/syllabus/

College is probably still worth it

https://doi.org/10.1093/qje/qjaf055

https://doi.org/10.1093/qje/qjaf048

Engage

I will try to make the course interesting and relevant to you

Please come to class prepared to engage with the material and participate in discussions and activities

Question 1

Will you engage with the class?

A. Yes

B. No

C. Maybe

Due Friday

• Read syllabus
• Try to install/configure software on the computer you will bring to class:
  • R and Rstudio
  • Visual Studio Code
  • PowerBI (desktop application windows only)
• Sign up for Github education