Confession: I use principal component analysis in my papers every now and then. I'm sure I read and thought about the math behind it the first time I used it, but recently, I rather mindlessly just type pca into Stata whenever I have many potential variables measuring the same thing, and I'm not sure which is best.
So what exactly is Stata doing in the background to create that index of the different measures? Check out this excellent explanation. My favorite is the moving lines. What a great way to show what is going on!
But what makes it such an excellent explanation? The different ways to explain the same thing! My challenge to all of you: Pick a tricky topic, any topic (examples: your job market paper, instrumental variables, lasso). Start by explaining it to your great-grandmother, then your grandmother, ...all the way down the line up until you need to explain it to an expert in the field. If you can explain it well to all of these people, you know it well.
Hmm..I wonder if I should use this type of exercise as a problem set question one of these days.
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