Basic Statistics (Stat 2151)

Sisay A. (MSc.)
sisaybest2000@yahoo.ca /sisay.awoke@aau.edu.et

Addis Ababa University

College of Natural and Computational Sciences
Statistics Department

July, 2021
Course Outline
1. Introduction to Statistics
1.1 What is Statistics?
1.2 Descriptive Versus Inferential Statistics
1.3 Types of Variables and Scales of Measurement
1.4 Statistics in Business Decisions
2. Visual Description of Data
2.1 The Frequency Distribution and the Histogram
2.2 The Stem-and-Leaf Display and the Dotplot
2.3 Other Methods for Visual Representation of the Data: Bar
Chart, Line Graph, Pictograms, Pie Chart
2.4 The Scatter Diagram
2.5 Tabulation and Contingency Tables
3. Statistical Description of Data
3.1 Statistical Description: Measures of Central Tendency
3.2 Statistical Description: Measures of Dispersion
3.3 Descriptive Statistics from Grouped Data
3.4 Statistical Measures of AssociationMeasures of Variation
4. Probability And Probability Distribution
4.1 Basic definitions of probability
4.2 Fundamental concepts: experiment and event, event and their
relationships, conditional and joint probability
4.3 Definitions and classification of probability distribution
4.4 Discrete random variables, expected value and variance of discrete
random variable
4.5 The binomial, Poisson, and hyper geometric probity distributions
and their applications.
4.6 Continuous Probability distribution: Uniform, Normal, and
exponential probability distributions and their applications.
 1. Introduction
Definition of Statistics
 Plural form
 numerical facts and figures collected for a certain purposes

 aggregates of numerical expressed facts (figures) collected in a systematic

manner for a predetermined purpose

 Singular form
 the science of collecting, organizing, presenting, analyzing and interpreting

numerical data to make decision on the bases of such analysis

 systematic collection and interpretation of numerical data to make a decision

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What Is Business Statistics?

 Briefly defined, business statistics can be described as the

collection, summarization, analysis, and reporting of numerical
findings relevant to a business decision or situation.
 Classification of Statistics
 As we have seen, statistics can refer to a set of individual
numbers or numerical facts, or to general or specific statistical
techniques.
 A further breakdown of the subject is possible, depending on
whether the emphasis is on
1. Simply describing the characteristics of a set of data or
2. Proceeding from data characteristics to making
generalizations, estimates, forecasts, or other judgments
based on the data.
 The former is referred to as descriptive statistics, while the latter
is called inferential statistics.
 Descriptive Statistics
 In descriptive statistics, we simply summarize and describe the
data we‟ve collected.
 Mainly concerned with the methods and techniques used in
collection, organization, presentation, and analysis of a set of
data without making any conclusions or inferences.
 Gathering data
 Editing and classifying them
 Presenting data in tables
 drawing diagrams and graphs for them
 Calculating averages and measures of dispersions.
Remark: Descriptive statistics doesn‟t go beyond describing the
data themselves.
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 Classification of Statistics …
 Descriptive Statistics (Example)
 Upon looking around your class, you may find that 35% of your fellow

students are wearing watches. If so, the figure “35%” is a descriptive

statistic. You are not attempting to suggest that 35% of all college students in
the country, or even at your school, wear watches. You‟re merely describing
the data that you‟ve recorded.

 The average age of students in this class is 21.

 The sample shows 40% of year I students have positive attitude toward the

delivery of lectures.

 Drawing graphs that show the difference in the „scores‟ of fourth year

Maths males and females students.

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 Classification of Statistics …
 Inferential Statistics
 In inferential statistics we go beyond mere description of the data
and arrive at inferences regarding the phenomenon or phenomena
for which sample data were obtained.
 Deals with the method of inferring or drawing conclusion
about the characteristics of the population based upon the
results of a sample
 Utilizes sample data to make decision for entire data set based on
sample
 Inferential Statistic (Example)
 There is a definitive relationship between smoking and lung
cancer
 Drinking decaffeinated coffee can raise cholesterol levels by
7%.
 Forward soccer players have a better performance than
midfielders 9
 Definition of Some Basic Statistical Terms
 Data
 A collection of related facts and figures from which conclusions
may be drawn
 a scientific term for facts, figures, information and measurement

 Population/target population
 a totality of things, objects, peoples, etc about which information
is being collected
 A population may refer to things as well as people.
 Often too large to sample in its entirety
 Before beginning a study, it is important to clearly define the
population involved. For example, in a given study, a retailer
may decide to define “customer” as all those who enter her store
between 9 A.M. and 5 P.M. next Wednesday.
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 Definition of Some Basic Statistical Terms
 Sample
 part of a population selected to draw conclusions about the population

 Subset of a population

 The retailer in the preceding definition may decide to select her sample by

choosing every 10th person entering the store between 9 a.m. and 5 p.m. next
Wednesday.

Population

Sample

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 Definition of Some Basic Statistical Terms
 Census

 a complete enumeration of the population. But in most real problems

it cannot be realized, hence we take sample.

 Statistic
 A value computed from the sample, used to describe the sample.

 For example, our retailer may find that 73% of the sample members rate the

store as having higher-quality merchandise than the competitor across the

street. The sample statistic can be a measure of typicalness or central
tendency, such as the mean, median, mode, or proportion, or it may be a
measure of spread or dispersion, such as the range and standard deviation:

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 Parameter
 A descriptive measure (value) computed from the population.
 If we were to take a complete census of the population, the
parameter could actually be measured. As discussed
earlier, however, this is grossly impractical for most business
research.
 The purpose of the sample statistic is to estimate the value of the
corresponding population parameter (e.g., the sample mean is
used to estimate the population mean).
 Typical parameters include the population
mean, median, proportion, and standard deviation.
 For our retailer, the actual percentage of the population who rate
her store‟s merchandise as being of higher quality is unknown.
(This unknown quantity is the parameter in this case.)
However, she may use the sample statistic (73%) as an estimate of
what this percentage would have been had she taken the
time, expense, and inconvenience to conduct a census of all
customers on the day of the study.
 Stages in Statistical Investigation

 Statistical data must possess the following properties

 The data must be aggregate of facts

 They must be affected to a marked extent by a multiplicity of causes

 They must be estimated according to reasonable standards of accuracy

 The data must be collected in a systematic manner for predefined purpose

 The data should be placed in relation to each other

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 Stages in Statistical Investigation
1. Data Collection
 The processes of measuring, assembling and gathering data

 Data may be collected by the investigator directly using

interview, questionnaire, and observation or may be available from published
or unpublished sources.

 Data gathering is the basis (foundation) of any statistical work.

 Valid conclusions can only result from properly collected data.

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 Stages in Statistical Investigation …
2. Data Organization
 It is a stage where we edit our data

 The collected data involve irrelevant figures, incorrect facts, omission and

mistakes

 classify (arrange) according to their common characteristics

3. Data Presentation
 The organized data can now be presented in the form of tables, diagram and

graphs.

 The main purpose of data presentation is to facilitate statistical analysis

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 Stages in Statistical Investigation …
4. Data Analysis
 Study the data to draw conclusions about the population parameter

 Dig out information useful for decision making

 Calculations of averages, the computation of measures of

dispersion, regression and correlation analysis

5. Data Interpretation
 Draw valid conclusions from the results obtained through data analysis

 Making inference about general population from sample results

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 Uses and Limitations of Statistics
 Uses of Statistics
 Condenses and summarizes complex data

 Facilitates comparison of data

 Helps to measure variability in data

 Used to create relationship between variables

 Helps in predicting future trends

 Influences the policies of government

 Helpful in formulating and testing hypothesis and to develop new theories

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 Uses and Limitations of Statistics …
 Limitations of Statistics
 Statistics doesn‟t deal with single (individual) values rather it deals with

aggregate values

 Statistics can‟t deal with qualitative characteristics directly

 Statistical conclusions are not universally true

 Statistical interpretations require a high degree of skill and understanding of

the subject

 Statistics can be misused

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 Scales of Measurment
 Variable:- is a characteristic or attribute that can assume different
values.

 A variable in statistics is any characteristic, which can take on different

values for different elements when data are collected

 Variable can be qualitative or quantitative

 Qualitative Variables are nonnumeric variables and can't be

measured, example (gender, blood type, etc.).

 Quantitative variables are numeric variables and can be quantified

 Quantitative variables can be discrete (takes always whole number values)

or continuous (assume or take any decimal value )

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 Scales of Measurement
 Measurement “is assigning numbers to objects, events, or abstract
concepts according to a known set of rules”

 This permits data to be categorised, quantified and/or analysed in order

that meaningful conclusions can be drawn.

 Four scales of measurement are identified

 Nominal Scale Lowest Level

 Ordinal Scale

 Interval Scale

 Ratio Scale Highest Level

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 Scales of Measurement
 Nominal Scales of Measurement
 A measure of identity or category into mutually exclusive classes

 Useful for quantifying qualitative data

 Provides no information regarding either order or magnitude

 Example: Blood type (A, B, AB and O) , Name of A student, Identification number

 Ordinal Scales of Measurement

 A measure of order or rank

 Used to arrange data into series

 Provides no information regarding magnitude

 Example: Ratings (good, v.good & excellent), economic status (low, medium & high)

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 Scales of Measurement …
 Interval Scales of Measurement
 A measure of order and quantity

 Difference between values can be calculated

 Cannot establish „x-fold‟ increase

 Example: Temperature (10oC (50oF) and 20oC (68OF) as between 25oc (77oF) and 35oc
(95oF))

 Ratio Scales of Measurement

 Highest level of measurement

 An interval scale with an absolute zero point

 Example: weight, height, income, etc.

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STATISTICS IN BUSINESS DECISIONS
 One aspect of business in which statistics plays an especially vital
role is decision making.
 Every year, businesses risk billions of dollars in important
decisions involving plant expansions, new product
development, personnel selection, quality assurance, production
techniques, supplier choices, and many others.
 These decisions almost always involve an element of uncertainty.
 Competitors, government, technology, and the social and
economic environment, along with sometimes capricious
consumers and voters, constitute largely uncontrollable factors
that can sometimes foil the best-laid plans.
 Prior to making decisions, companies often collect information
through a series of steps called the research process. The steps
include:
1) defining the problem in specific terms that can be answered
by research,
2) deciding on the type of data required,
3) determining through what means the data will be obtained,
4) planning for the collection of data and, if necessary, selection
of a sample,
5) collecting and analyzing the data,
6) drawing conclusions and reporting the findings, and
7) following through with decisions that take the findings into
consideration.
 Business and survey research provides both descriptive and
inferential statistics that can improve business decisions in
many kinds of situations.