Introduction To Statistics

Pravin kumar
Conditions for successful course
completion
Lab Work Evaluation
 Recommended literature:

Anderson, D.R. - Sweeney, D.J. -

Williams, T.A.: Statistics for Business
and Economics. South-Western Pub.,
2005, 320 p., ISBN 978-032-422-486-3
Why study statistics?

1. Data are everywhere

2. Statistical techniques are used to make
many decisions that affect our lives
Applications of statistical
concepts in the business world
Finance – correlation and regression, index
numbers, time series analysis
Marketing – hypothesis testing, chi-square tests,
nonparametric statistics
Personel – hypothesis testing, chi-square tests,
nonparametric tests
Operating management – hypothesis testing,
estimation, analysis of variance, time series
analysis
Statistics
The science of collectiong, organizing, presenting,
analyzing, and interpreting data to assist in making
more effective decisions
Statistical analysis – used to manipulate
summarize, and investigate data, so that useful
decision-making information results.
 Types of statistics
Descriptive statistics – Methods of organizing,
summarizing, and presenting data in an informative
way
Inferential statistics – The methods used to
determine something about a population on the basis
of a sample
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
 Data and Statistics
Data consists of information coming from
observations, counts, measurements, or responses.

Statistics is the science of collecting,

organizing, analyzing, and interpreting data
in order to make decisions.
A population is the collection of all
outcomes, responses, measurement, or
counts that are of interest.
A sample is a subset of a population.
Populations & Samples
Example:
In a recent survey, 250 college students at
Union College were asked if they smoked
cigarettes regularly. 35 of the students
said yes. Identify the population and the
sample.
Responses of all students
at Union College
(population)

Responses of
students in survey
(sample)
 Parameters & Statistics
A parameter is a numerical description of a
population characteristic.

A statistic is a numerical description of a

sample characteristic.

Parameter Population

Statistic Sample
 Parameters & Statistics
Example:
Decide whether the numerical value describes a population parameter or a sample statistic.

a.) A recent survey of a sample of 450

college students reported that the
average weekly income for students is
$325.
Because the average of $325 is
based on a sample, this is a sample
statistic.
b.) The average weekly income for all
students is $405.
Because the average of $405 is based
on a population, this is a population
parameter.
 Branches of Statistics
The study of statistics has two major
branches: descriptive statistics and
inferential statistics.
Statistics

Descriptive Inferential
statistics statistics
Involves the Involves using a
organization, sample to draw
summarization, conclusions
and display of about a
data. population.
 Descriptive and Inferential
Example:
Statistics
In a recent study, volunteers who had less than 6 hours of sleep were four times more likely to answer incorrectly on a science test than were participants who
had at least 8 hours of sleep. Decide which part is the descriptive statistic and what conclusion might be drawn using inferential statistics.

The statement “four times more

likely to answer incorrectly” is a
descriptive statistic. An inference
drawn from the sample is that all
individuals sleeping less than 6
hours are more likely to answer
science question incorrectly than
individuals who sleep at least 8
 Data
Classification
 Types of Data
Data sets can consist of two types of data:
qualitative data and quantitative data.
Data

Qualitative Quantitative
Data Data
Consists of Consists of
attributes, numerical
labels, or non- measurements or
numerical counts.
entries.
 Levels of Measurement
The level of measurement determines which
statistical calculations are meaningful. The
four levels of measurement are: nominal,
ordinal, interval, and ratio.
Nominal
Lowest to
Levels of
Measurement
Ordinal highest

Interval
Ratio
 Nominal Level of
Measurement
Data at the nominal level of measurement
are qualitative only.
Nominal
Calculated using names, labels, or
Levels qualities. No mathematical
of computations can be made at this
Measurement level.

Colors in Names of students Textbooks you are

the US in your class using this
flag semester
 Ordinal Level of
Measurement
Data at the ordinal level of measurement
are qualitative or quantitative.

Levels Ordinal
of Arranged in order, but differences
Measurement between data entries are not
meaningful.

Class standings: Numbers on the Top 50 songs

freshman, back of each played on the radio
sophomore, junior, player’s shirt
senior
 Interval Level of
Measurement
Data at the interval level of measurement
are quantitative. A zero entry simply
represents a position on a scale; the entry is
not an inherent zero.
Levels Interval
of Arranged in order, the differences between
data entries can be calculated.
Measurement
Temperatures Years on a timeline Atlanta Braves
World Series
victories
 Ratio Level of Measurement
Data at the ratio level of measurement are
similar to the interval level, but a zero entry is
meaningful.
A ratio of two data values can be formed so
Levels one data value can be expressed as a ratio.
of
Measurement
Ratio

Ages Grade point Weights

averages
Summary of Levels of
Measurement
Arran Determine
Put
Level of ge Subtract if one data
data in
measurem data data value is a
categor
ent in values multiple of
ies
order another
Nominal Yes No No No
Ordinal Yes Yes No No
Interval Yes Yes Yes No
Ratio Yes Yes Yes Yes
Population and Sample
 Inferential Statistics

Estimation
e.g., Estimate the
population mean
weight using the
sample mean weight
Hypothesis testing
e.g., Test the claim
that the population
Inference
mean is is
weight the
70process
kg of drawing
conclusions or making decisions
about a population based on sample
Sampling
a sample should have the same characteristics
as the population it is representing.
Sampling can be:
with replacement: a member of the population
may be chosen more than once (picking the candy
from the bowl)
 without replacement: a member of the
population may be chosen only once (lottery
ticket)
 Sampling methods
Sampling methods can be:
random (each member of the population has an equal
chance of being selected)
nonrandom

The actual process of sampling causes sampling

errors. For example, the sample may not be large
enough or representative of the population. Factors not
related to the sampling process cause nonsampling
errors. A defective counting device can cause a
nonsampling error.
 Random sampling methods
simple random sample (each sample of the same
size has an equal chance of being selected)
stratified sample (divide the population into groups
called strata and then take a sample from each
stratum)
cluster sample (divide the population into strata and
then randomly select some of the strata. All the
members from these strata are in the cluster sample.)
systematic sample (randomly select a starting point
and take every n-th piece of data from a listing of the
population)
 Descriptive Statistics

Collect data
e.g., Survey

Present data
e.g., Tables and graphs

Summarize data

e.g., Sample mean = X i
n
 Statistical data
The collection of data that are relevant to the
problem being studied is commonly the most
difficult, expensive, and time-consuming part of
the entire research project.
Statistical data are usually obtained by counting
or measuring items.
Primary data are collected specifically for the
analysis desired
Secondary data have already been compiled
and are available for statistical analysis
A variable is an item of interest that can take on
many different numerical values.
A constant has a fixed numerical value.
 Data
Statistical data are usually obtained by counting or
measuring items. Most data can be put into the
following categories:
Qualitative - data are measurements that each fail
into one of several categories. (hair color, ethnic
groups and other attributes of the population)
quantitative - data are observations that are
measured on a numerical scale (distance traveled to
college, number of children in a family, etc.)
 Qualitative data
Qualitative data are generally described by words or
letters. They are not as widely used as quantitative data
because many numerical techniques do not apply to the
qualitative data. For example, it does not make sense to
find an average hair color or blood type.
Qualitative data can be separated into two subgroups:
dichotomic (if it takes the form of a word with two
options (gender - male or female)
polynomic (if it takes the form of a word with more
than two options (education - primary school,
secondary school and university).
Quantitative data
Quantitative data are always numbers and are the
result of counting or measuring attributes of a
population.
Quantitative data can be separated into two
subgroups:
discrete (if it is the result of counting (the number
of students of a given ethnic group in a class, the
number of books on a shelf, ...)
continuous (if it is the result of measuring
(distance traveled, weight of luggage, …)
 Types of variables
Variables

Qualitative Quantitative

Dichotomic Polynomic Discrete Continuous

Children in Amount of
Gender, marital Brand of Pc, family, income tax
status hair color Strokes on a paid, weight
golf hole of a student
 measurement:
Nominal – consist of categories in each of which the
number of respective observations is recorded. The
categories are in no logical order and have no
particular relationship. The categories are said to be
mutually exclusive since an individual, object, or
measurement can be included in only one of them.
Ordinal – contain more information. Consists of
distinct categories in which order is implied. Values in
one category are larger or smaller than values in other
categories (e.g. rating-excelent, good, fair, poor)
Interval – is a set of numerical measurements in
which the distance between numbers is of a known,
constant size.
Ratio – consists of numerical measurements where
the distance between numbers is of a known, constant
size, in addition, there is a nonarbitrary zero point.
Data presentation
Numerical presentation of
qualitative data
pivot table (qualitative dichotomic statistical
attributes)
contingency table (qualitative statistical attributes
from which at least one of them is polynomic)

You should know how to convert absolute

values to relative ones (%).
Frequency distributions –
numerical presentation of
quantitative data
Frequency distribution – shows the frequency, or
number of occurences, in each of several
categories. Frequency distributions are used to
summarize large volumes of data values.
When the raw data are measured on a qunatitative
scale, either interval or ratio, categories or classes
must be designed for the data values before a
frequency distribution can be formulated.
 Steps for constructing a
frequency distribution
1. Determine the number of classes m n
 max  min 
2. Determine the size of each class h
m
3. Determine the starting point for the first class
4. Tally the number of values that occur in each
class
5. Prepare a table of the distribution using actual
counts and/ or percentages (relative frequencies)
Frequency table
absolute frequency “ni” (Data TabData
AnalysisHistogram)
relative frequency “fi”
Cumulative frequency distribution shows the total
number of occurrences that lie above or below
certain key values.
cumulative frequency “Ni”
cumulative relative frequency “Fi”
Charts and graphs
Frequency distributions are good ways to present
the essential aspects of data collections in concise
and understable terms
Pictures are always more effective in displaying
large data collections
 Histogram
Frequently used to graphically present interval and
ratio data
Is often used for interval and ratio data
The adjacent bars indicate that a numerical range is
being summarized by indicating the frequencies in
arbitrarily chosen classes
Histogram
 Frequency polygon
Another common method for graphically
presenting interval and ratio data
To construct a frequency polygon mark the
frequencies on the vertical axis and the
values of the variable being measured on
the horizontal axis, as with the histogram.
If the purpose of presenting is comparation
with other distributions, the frequency
polygon provides a good summary of the
data
Frequency Polygon
Ogive
A graph of a cumulative frequency distribution
Ogive is used when one wants to determine how
many observations lie above or below a certain
value in a distribution.
First cumulative frequency distribution is
constructed
Cumulative frequencies are plotted at the upper
class limit of each category
Ogive can also be constructed for a relative
frequency distribution.
Ogive
Pie Chart
The pie chart is an effective way of displaying the
percentage breakdown of data by category.
Useful if the relative sizes of the data components
are to be emphasized
Pie charts also provide an effective way of
presenting ratio- or interval-scaled data after they
have been organized into categories
Pie Chart
Bar chart
Another common method for graphically
presenting nominal and ordinal scaled data
One bar is used to represent the frequency for each
category
The bars are usually positioned vertically with
their bases located on the horizontal axis of the
graph
The bars are separated, and this is why such a
graph is frequently used for nominal and ordinal
data – the separation emphasize the plotting of
frequencies for distinct categories
Bar Chart
Time Series Graph
The time series graph is a
graph of data that have been
measured over time.
The horizontal axis of this
graph represents time periods
and the vertical axis shows the
numerical values corresponding
to these time periods
Time Series Graph
Mean,
Median,
Mode,
Skewness