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Mathematics

The Delta Method for Approximating Standard Errors

Quick fact

The delta method shows that the variance of a smooth function of an asymptotically normal estimator is approximately the square of the function's derivative times the estimator's variance—so even wildly nonlinear statistics like odds ratios have easily computed standard errors.

Why this is interesting

How do you compute the standard error of a ratio like X/Y, when both numerator and denominator are uncertain? The delta method provides a surprisingly simple answer.