Econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, … - Richard Stone

A choice may have to be made between a biased estimator which is believed to be relatively accurate and an unbiased estimator which is demonstrably highly inefficient, and it is by no means obvious that the latter is always to be preferred.

The object of this paper is fivefold. The first objective is to derive a practical system of demand equations which possess properties usually considered desirable from the standpoint of elementary economic theory. The second is to consider the statistical problems involved in applying the system of equations. The third is to analyse the pattern of demand for consumers' goods in terms of this system on the basis of annual data relating to the United Kingdom over the years 1920-38. The fourth is to compare the results of this system, and systems like it, with the actual state of demand in 1900. Finally, the fifth is to compare the post-war structure of demand with what might be expected from the inter-war relationshipp under free-market condition.

From 1931 to 1935, I was an undergraduate at Cambridge in my father's old college, Gonville and Caius, which was particularly strong in medicine and the law. However, after two years of law I switched to economics, much to my father's disappointment. At that time the world was in the depth of the great depression and my motive for wanting to change subject was the belief, bred of youthful ignorance and optimism, that if only economics were better understood, the world would be a better place.