Chap 001

What is Statistics?
Chapter 1
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 List ways statistics is used.
LO2 Know the differences between descriptive and inferential
statistics.
LO3 Understand the differences between a sample and a
population.
LO4 Explain the difference between qualitative and quantitative
variables.
LO5 Compare the differences between discrete and continuous
variables.
LO6 Recognize the levels of measurement in data.
1-2
LO1 List ways statistics is used.
Why Study Statistics?

Why Study Statistics?
1. Numerical information is everywhere
2. Statistical techniques are used to make decisions that affect our daily lives
3. The knowledge of statistical methods will help you understand how decisions are
made and give you a better understanding of how they affect you.
4. No matter what line of work you select, you will find yourself faced with decisions
where an understanding of data analysis is helpful.
Some examples of the need for data collection.

1. Research analysts for Merrill Lynch evaluate many facets of a particular stock before making
a “buy” or “sell” recommendation.
2. The marketing department at Colgate-Palmolive Co., a manufacturer of soap products, has
the responsibility of making recommendations regarding the potential profitability of a newly
developed group of face soaps having fruit smells.
3. The United States government is concerned with the present condition of our economy and
with predicting future economic trends.
4. Managers must make decisions about the quality of their product or service.
1-3
LO1
What is Meant by Statistics?

 In the more common usage, statistics refers
to numerical information
Examples: the average starting salary of college graduates, the number of
deaths due to alcoholism last year, the change in the Dow Jones Industrial
Average from yesterday to today, and the number of home runs hit by the
Chicago Cubs during the 2007 season.
 We often present statistical information in a

graphical form for capturing reader attention and
to portray a large amount of information.
1-4
LO2 Know the differences
Types of Statistics – between descriptive and
Descriptive Statistics and inferential statistics.
Inferential Statistics
Descriptive Statistics - methods of organizing, summarizing,

and presenting data in an informative way.
Inferential Statistics: A decision, estimate, prediction, or

generalization about a population, based on a sample.
Note: In statistics the word population and sample have a

broader meaning. A population or sample may consist of
individuals or objects
1-5
LO3 Understand the differences
between a sample and a population.
Population versus 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
1-6
LO3
Why take a sample instead of studying every

member of the population?
1. Prohibitive cost of census

2. Destruction of item being studied may be required
3. Not possible to test or inspect all members of a
population being studied
Using a sample to learn something about a population is done extensively

in business, agriculture, politics, and government.
EXAMPLE: Television networks constantly monitor the popularity of their

programs by hiring Nielsen and other organizations to sample the
preferences of TV viewers.
1-7
LO4 Explain the difference
between qualitative and
quantitative variables.
Types of Variables
Qualitative or Attribute variable - the
characteristic being studied is nonnumeric.
EXAMPLES: Gender, religious affiliation, type of automobile
owned, state of birth, eye color are examples.
Quantitative variable - information is

reported numerically.
EXAMPLES: balance in your checking account, minutes
remaining in class, or number of children in a family.
1-8
LO5 Compare the differences between
discrete and continuous variables.
Quantitative Variables - Classifications

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).
Continuous variable can assume any value within a

specified range.
EXAMPLE: The pressure in a tire, the weight of a pork chop, or the height of students in a
class.
1-9
LO4 and LO5
Summary of Types of Variables
1-10
LO6 Recognize the levels of
measurement in data.
Four Levels of Measurement

Nominal level - data that is Interval level - similar to the
classified into categories and ordinal level, with the additional
cannot be arranged in any property that meaningful amounts of
particular order. differences between data values
can be determined. There is no
natural zero point.
EXAMPLES:: eye color, gender, EXAMPLES: Temperature on the
religious affiliation. Fahrenheit scale.
Ordinal level – data arranged Ratio level - the interval level with
in some order, but the an inherent zero starting point.
differences between data Differences and ratios are
values cannot be determined or meaningful for this level of
are meaningless. measurement.
EXAMPLE: During a taste test of 4 soft EXAMPLES: Monthly income of
drinks, Mellow Yellow was ranked surgeons, or distance traveled by
number 1, Sprite number 2, Seven-up manufacturer’s representatives per
number 3, and Orange Crush number 4. month.
1-11
LO6
Nominal and Ordinal Level Data

NOMINAL LEVEL DATA ORDINAL LEVEL DATA
Properties: Properties:
1. Observations of a 1. Data classifications are
qualitative variable can represented by sets of labels or
only be classified and names (high, medium, low) that
counted. have relative values.
2. There is no particular 2. Because of the relative values, the
order to the labels. data classified can be ranked or
ordered.
1-12
LO6
Interval and Ratio Level Data

INTERVAL LEVEL DATA RATIO LEVEL DATA
Properties: Properties:
1. Data classifications are 1. Data classifications are ordered
ordered according to the according to the amount of the
amount of the characteristic characteristics they possess.
they possess. 2. Equal differences in the characteristic
2. Equal differences in the are represented by equal differences in
characteristic are represented the numbers assigned to the
by equal differences in the classifications.
measurements. 3. The zero point is the absence of the
characteristic and the ratio between two
numbers is meaningful.
Practically all quantitative data is

recorded on the ratio level of
measurement. Ratio level is the
“highest” level of measurement.
1-13
LO6
Summary of the Characteristics for Levels
of Measurement
Why Know the Level of Measurement of a Data?

•The level of measurement of the data dictates the calculations that can be
done to summarize and present the data.
•To determine the statistical tests that should be performed on the data
1-14

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What is Statistics?

Why Study Statistics?

Some examples of the need for data collection.

What is Meant by Statistics?

 We often present statistical information in a

Descriptive Statistics - methods of organizing, summarizing,

Inferential Statistics: A decision, estimate, prediction, or

Note: In statistics the word population and sample have a

Population versus Sample

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

Why take a sample instead of studying every

1. Prohibitive cost of census

Using a sample to learn something about a population is done extensively

EXAMPLE: Television networks constantly monitor the popularity of their

Quantitative variable - information is

Quantitative Variables - Classifications

Discrete variables: can only assume certain values

Continuous variable can assume any value within a

Summary of Types of Variables

Four Levels of Measurement

Nominal and Ordinal Level Data

Interval and Ratio Level Data

Practically all quantitative data is

Why Know the Level of Measurement of a Data?

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