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Chapter

One

What is Statistics??

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Chapter One

What is Statistics?
GOALS
When you have completed this chapter, you will be able to:

ONE Understand why we study statistics. TWO Explain what is meant by descriptive statistics and inferential statistics. THREE Distinguish between a qualitative variable and a quantitative variable. FOUR Distinguish between a discrete variable and a continuous variable. FIVE Distinguish among the nominal, ordinal, interval, and ratio levels of measurement. SIX Define the terms mutually exclusive and exhaustive.

Goals

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Descriptive Statistics: Methods of organizing,

summarizing, and presenting data in an informative way. EXAMPLE 1: A Gallup poll found that 49% of the people in a survey knew the name of the first book of the Bible. The statistic 49 describes the number out of every 100 persons who knew the answer. EXAMPLE 2: According to Consumer Reports, General Electric washing machine owners reported 9 problems per 100 machines during 2001. The statistic 9 describes the number of problems out of every 100 machines.
Types of Statistics

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DESCRIPTIVE STATISTICS
Most of the Statistical Information in newspapers, magazines, company reports, and other publications consists of data that are summarized and presented in a form that is easy for the reader to understand. Such summaries of data, which may be tabular, graphical or numerical, are referred to as Descriptive Statistics

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Inferential Statistics:

the methods used to determine something about a population on the basis of a sample.

A Population is a Collection of all possible individuals, objects, or measurements of interest.

A Sample is a portion, or part, of the population of interest

Types of Statistics

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Samples and Populations

Population (N)

Sample (n)

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Example 1: TV networks constantly monitor the popularity of their programs by hiring Nielsen and other organizations to sample the preferences of TV viewers.

Example 2: Wine tasters sip a few drops of wine to make a decision with respect to all the wine waiting to be released for sale. Example 3: The accounting department of a large firm will select a sample of the invoices to check for accuracy for all the invoices of the company.
Types of Statistics
(examples of inferential statistics)

#1

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Using Statistics (Two Categories)

Descriptive Statistics
Collect Organize Summarize Display Analyze

Inferential Statistics
Predict and forecast values of population parameters Test hypotheses about values of population parameters Make decisions

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For a Qualitative or Attribute Variable the characteristic being studied is nonnumeric.

Gender

Eye Color
State of Birth

Type of car

Types of Variables

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In a Quantitative Variable information is reported numerically.

Balance in your checking account

Minutes remaining in class

Number of children in a family

Types of Variables

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Quantitative variables can be classified as either

Discrete or Continuous. Discrete Variables: can only assume

certain values and there are usually gaps between values. Example: the number of bedrooms in a house, or the number of hammers sold at the local Home Depot (1,2,3,,etc).
Types of Variables

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A Continuous Variable can assume any value within a specified range.

The pressure in a tire

The weight of a pork chop

The height of students in a class.

Types of Variables

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DATA

Qualitative or attribute (type of car owned)

Quantitative or numerical

discrete (number of children)

countable

continuous (time taken for an exam)

measurable
Summary of Types of Variables

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Contd

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HOW DO YOU DISTINGUISH BETWEEN CONTINUOUS AND DISCRETE

CONTINUOUS
They are real numbers Normally, they are measured values They can not take a single value. There is an area associated with it They are continuous Requires less sample size

DISCRETE
They are whole numbers Normally, they are counted values They can take only Zero or non-fractional positive values They are in steps of 1 Requires more sample size to have the more precision

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SOURCES OF DATA

PRIMARY

SOURCE SOURCE

SECONDARY

INERNAL

RECORDS

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DATA SOURCES
Data are also available from a variety of industry associations and special interest organizations E.g.: Internet used by Companies Maintaining websites that provide information like: General Information about the company Data on Sales Number of Employees Number of Products Product Prices Product Specifications

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More Benefits of Using Internet

Access

to Stock Quotes Meal Prices at Restaurants Salary Data And Other Infinite Variety of information

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Managers wanting to use data and Statistical Analyses as an aid to decision making must be aware of the time and cost required to obtain the data Use of existing data sources is desirable when data must be obtained in a relatively short period of time If important data are not readily available from an existing source, the additional time and cost involved in obtaining the data must be taken into account.

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In all cases, the decision maker should consider the contribution of the statistical analysis to the decisionmaking process

The cost of data acquisition and subsequent statistical analysis should not exceed the savings generated by using the information to make a better decision.

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There are four levels of data

Nominal Ordinal Interval Ratio

Levels of Measurement

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Types of Data

Qualitative Categorical or Nominal: Examples areColor Gender Nationality

Quantitative Measurable or Countable: Examples areTemperatures Salaries Number of points scored on a 100 point exam

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Nominal level
Data that is classified into categories and cannot be arranged in any particular order.

Gender

Eye Color

Nominal data

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Nominal level variables must be:

Mutually exclusive
An individual, object, or measurement is included in only one category.

Exhaustive
Each individual, object, or measurement must appear in one of the categories.
Levels of Measurement

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Ordinal level: involves data arranged in some

order, but the differences between data values cannot be determined or are meaningless. During a taste test of 4 soft drinks, Coca Cola was ranked number 1, Dr. Pepper number 2, Pepsi number 3, and Root Beer number 4.

2 1

4 3

Levels of Measurement

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Interval level
Similar to the ordinal level, with the additional property that meaningful amounts of differences between data values can be determined. There is no natural zero point.

Temperature on the Fahrenheit scale.

Levels of Measurement

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Ratio level: the interval level with an inherent

zero starting point. Differences and ratios are meaningful for this level of measurement.

Miles traveled by sales representative in a month

Monthly income of surgeons

Levels of Measurement

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Scales of Measurement

Nominal Scale - groups or classes

Gender

Ordinal Scale - order matters

Ranks (top ten videos)

Interval Scale - difference or distance matters has arbitrary zero value.

Temperatures (0F, 0C)

Ratio Scale - Ratio matters has a natural zero value.

Salaries

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Answer these
What is the level of measurement for each of the following variables? Student IQ Ratings Distance students travel to class Student scores on the first statistics test A Classification of the students by State of Birth A ranking of students by freshman, sophomore, junior and senior Number of hours students study per week

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What is the level of measurement for these items related to the newspaper business?
The

number of papers sold each Sunday during the

year 2004
The

departments, such as Editorial, Advertising,

Sports etc
A

Summary of the number of papers sold by country

number of years with the paper for each employee

The

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Cross-Sectional and Time Series Data

Cross-Sectional data are the data collected at the same or approximately the same point in time.

Time series data are data collected over several time periods.

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QUESTION AND ANSWERS

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TEST YOURSELF

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The science of statistics includes which of the following: A. Organizing data. B. Presenting data. C. Interpreting data. D. All of the above. Option D

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In descriptive statistics our main objective is to A. Describe the population. B. Describe the data we collected. C. Infer something about the population. D. Compute an average.

Option B

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Which of the following statements is true regarding a population? A. It must be a large number of values. B. It must refer to people. C. It is a collection individuals, objects, or measurements. D. None of the above.

Option C

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Option A
Which of the following statements is true regarding a sample? A. It is a part of population. B. It must contain at least five observations. C. It refers to descriptive statistics. D. All of the above are correct

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A discrete variable is A. An example of a qualitative variable. B. Can assume only whole number values. C. Can assume only certain clearly separated values. D. Cannot be negative.

Option C

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A Nominal Scale Variable is A. Usually the result of counting something. B. Has a meaningful zero point. C. May assume negative values. D. Cannot have more than two categories.

Option D

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The ratio scale of measurement A. Usually involves ranking. B. Cannot assume negative values. C. Has a meaningful zero point. D. Is usually based on counting.

Option C

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The ordinal scale of measurement A. Has a meaningful zero point. B. Is based on ranks C. Cannot assume negative values. D. All of the above

Option B

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Option C Categories are exhaustive when A. There is a meaningful zero point. B. The objects can be ranked. C. Each object must appear in at least one category. D. Each object can be included in only one category.