Six Sigma Certification
Econometrics, Monte Carlo, and Excel

by Charlie Kyd

An Excel user in a LinkedIn forum gave a high recommendation to a book I hadn’t heard of. I checked it out on Amazon and it looks very interesting: Introductory Econometrics: Using Monte Carlo Simulation with Microsoft Excel

At Amazon, if you “Click to Look Inside” the book, you’ll see that it’s NOT for all Excel users. It covers regression, correlation, Monte Carlo simulation, and other statistical methods. It uses these methods — primarily regression analysis — to teach Excel users how to better understand ways that business measures relate to economic measures.

The authors maintain a web site that offers about 150 spreadsheets that support what the book teaches. The book also comes with an add-in that implements Monte Carlo analysis.

(With the Monte Carlo method, you create a spreadsheet simulation, with random numbers determining key values. You automatically run this simulation thousands of times, tracking the outcomes. Then you summarize and analyze the results to determine likely outcomes.)

The book was published in 2005, so it covers Classic Excel, not New Excel. However, the authors maintain a page of updates, which frequently mention Excel 2007.

The book is fairly expensive. But if you’re interested in finding ways to better understand how economic measures affect your business, or if you’d like to create Excel analyses that use what you forgot from your statistics classes, this might be a book to consider.

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