What is Statistics?
Chapter 1
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Learning Objectives
LO1-1Explain why knowledge of statistics is important
LO1-2Define statistics and provide an example of how
statistics is applied
LO1-3Differentiate between descriptive and inferential
statistics
LO1-4Classify variables as qualitative or quantitative, and
discrete or continuous
LO1-5Distinguish between nominal, ordinal, interval, and
ratio levels of measurement
LO1-6List the values associated with the practice of
statistics
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Why Study Statistics
Data are collected everywhere and require statistical
knowledge to make the information useful
Statistical techniques are used to make professional and
personal decisions
A knowledge of statistics is needed to understand the
world and be conversant in your career
In summary, statistics will help you make more effective
personal and professional decisions
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What is Meant by Statistics
What is statistics?
It’s more than presenting numerical facts
STATISTICS The science of collecting, organizing, presenting,
analyzing, and interpreting data to assist in making more effective
decisions.
Example: The inflation rate for the calendar year was 0.7%. By
applying statistics we could compare this year’s inflation rate to
past observations of inflation. Is it higher, lower, or about the same.
Is there a trend of increasing or decreasing inflation?
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Types of Statistics
There are two types of statistics, descriptive and inferential
Descriptive statistics can be used to organize data into a
meaningful form
You can summarize data and provide information that is easy to
understand
DESCRIPTIVE STATISTICS Methods of organizing, summarizing,
and presenting data in an informative way.
Example: There are a total of 46,837 miles of interstate
highways in the U.S. The interstate system represents 1% of the
nations roads but carries more than 20% of the traffic. Texas has
the most interstate highways and Alaska doesn’t have any.
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Types of Statistics
POPULATION The entire set of individuals or objects of interest or the
measurements obtained from all individuals or objects of interest.
SAMPLE A portion or part of the population of interest.
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Types of Statistics
Inferential statistics can be used to estimate properties of a
population
You can make decisions based on a limited set of data
INFERENTIAL STATISTICS The methods used to estimate a property
of a population on the basis of a sample.
Example: TV networks constantly monitor the popularity of
their programs by hiring Nielsen to sample the preferences of
TV viewers. For example, 9% of a sample of households with
television watched The Big Bang Theory during the week of
November 2, 2015.
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Types of Variables
There are two basic types of variables
QUALITATIVE VARIABLE An object or individual is observed and
recorded as a non-numeric characteristic or attribute.
Examples: gender, state of birth, eye color
QUANTITATIVE VARIABLE A variable that is reported numerically.
Examples: balance in your checking account, the life of a car battery,
the number of people employed by a company
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Types of Variables
Quantitative variables can be discrete or continuous
Discrete variables are typically the result of counting
Values have “gaps” between the values
Examples: the number of bedrooms in a house, the
number of students in a statistics course
Continuous variables are usually the result of measuring
something
Can assume any value within a specific range
Examples: the air pressure in a tire, duration of flights
from Orlando to San Diego
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Types of Variables Summary
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Levels of Measurement
There are four levels of measurement
Nominal, ordinal, interval, and ratio
The level of measurement determines the type of statistical
analysis that can be performed
Nominal is the lowest level of measurement
NOMINAL LEVEL OF MEASUREMENT Data recorded at the
nominal level of measurement is represented as labels or names. They
have no order. They can only be classified and counted.
Examples: classifying M&M candies by color, identifying
students at a football game by gender
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Levels of Measurement
The next level of measurement is the ordinal level
The rankings are known but not the magnitude of
differences between groups
ORDINAL LEVEL OF MEASUREMENT Data recorded at the ordinal
level of measurement is based on a relative ranking or rating of items
based on a defined attribute or qualitative variable. Variables based on
this level of measurement are only ranked and counted.
Examples: the list of top ten states for best business
climate, student ratings of professors
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Levels of Measurement
The next level of measurement is the interval level
This data has all the characteristics of ordinal level data
plus the differences between the values are meaningful
There is no natural 0 point
INTERVAL LEVEL OF MEASUREMENT For data recorded at the
interval level of measurement, the interval or the distance between
values is meaningful. The interval level of measurement is based on a
scale with a known unit of measurement.
Examples: the Fahrenheit temperature scale, dress sizes
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Levels of Measurement
The highest level of measurement is the ratio level
The data has all the characteristics of the interval scale and
ratios between numbers are meaningful
The 0 point represents the absence of the characteristic
RATIO LEVEL OF MEASUREMENT Data recorded at the ratio level
of measurement are based on a scale with a known unit of measurement
and a meaningful interpretation of zero on the scale.
Examples: wages, changes in stock prices, and weight
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Levels of Measurement Summary
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Ethics and Statistics
Practice statistics with integrity and honesty when
collecting, organizing, summarizing, analyzing, and
interpreting numerical information
Maintain an independent and principled point of view
when analyzing and reporting finding and results
Question reports that are based on data that
do not fairly represent the population
does not include all relevant statistics
introduces bias in an attempt to mislead or misrepresent
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