Describing Data:

Numerical Measures
Chapter 3

1
Learning Objectives

LO3-1 Compute and interpret the mean, the median, and the mode
LO3-2 Compute a weighted mean
LO3-3 Compute and interpret the geometric mean
LO3-4 Compute and interpret the range, variance, and standard deviation
LO3-5 Explain and apply Chebyshev’s theorem and the Empirical Rule
LO3-6 Compute the mean and standard deviation of grouped data

2
Measures of Location

• A measure of location is a value used to describe the central tendency of a set

of data
• Common measures of location
• Mean (The arithmetic mean is the most widely reported measure of location)
• Median
• Mode

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Population Mean

Sum of all the values in the population

POPULATION MEAN =
𝑥
𝜇=
Number of values in the population 𝑁

Where:
• μ represents the population mean. It is the Greek lowercase letter “mu.”
• N is the number of values in the population.
• x represents any particular value.
• Σ is the Greek capital letter “sigma” and indicates the operation of adding.
• Σx is the sum of the x values in the population
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Population Mean

PARAMETER A characteristic of a population.

The mean of a population is an example of a parameter

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Example: Population Mean

There are 42 exits on I-75 through the state of Kentucky. Listed below are the
distances between exits (in miles).

1. Why is this information a population?

2. What is the mean number of miles between exits?
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Example: Population Mean Continued

There are 42 exits on I-75 through the state of Kentucky. Listed below are the distances between exits (in
miles).

1. Why is this information a population?

This is a population because we are considering all of the exits in Kentucky.
2. What is the mean number of miles between exits?

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Sample Mean

Sum of all the values in the sample σ𝑥

SAMPLE MEAN = 𝑥ҧ = .
Number of values in the sample 𝑛
Where:
• x represents the sample mean. It is read “x bar.”
• n is the number of values in the sample.
• x represents any particular value.
• Σ is the Greek capital letter “sigma” and indicates the operation of adding.
• Σx is the sum of the x values in the sample.
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Sample Mean

STATISTIC A characteristic of a sample.

The mean of a sample is an example of a statistic

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Example: Sample Mean

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Parameter Versus Statistics

PARAMETER A measurable characteristic of a population.

STATISTIC A measurable characteristic of a sample.

Properties of the Arithmetic Mean

• To compute a mean, the interval or ratio scale of measurement is required

• All the data values are used in the calculation
• The mean is unique
• The sum of the deviations from the mean equals zero
• A weakness of the mean is that it is affected by extreme values

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Properties of the Arithmetic Mean
The Median

MEDIAN The midpoint of the values after they have been ordered
from the minimum to the maximum values.

Prices Ordered from Prices Ordered from

Minimum to Maximum Maximum to Minimum
$ 60,000 $ 275,000
65,000 80,000
70,000 Median 70,000
80,000 65,000
275,000 60,000

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Characteristics of the Median

• The median is the value in the middle of a set of ordered data

• At least the ordinal scale of measurement is required
• It is not influenced by extreme values
• Fifty percent of the observations are larger than the median
• It is unique to a set of data

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Finding the Median

• To find the median for an even numbered data set

• Sort the observations and calculate the average of the two middle values
The number of hours a sample of 10 adults used Facebook last
month:

3 5 7 5 9 1 3 9 17 10
Arranging the data in ascending order gives:

1 3 3 5 5 7 9 9 10 17

Thus, the median is 6.

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The Mode

MODE The value of the observation that occurs most frequently.

Major Characteristics of the mode:

• The mode can be found for nominal-level data
• A set of data can have more than one mode

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Relative Positions of Mean, Median, and Mode

Chart 3-2 A Symmetric Distribution

Chart 3-3 A Positively Skewed

Distribution

Chart 3-4 A Negatively Skewed

Distribution

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The Weighted Mean

• The weighted mean is found by multiplying each observation, x, by its corresponding

weight, w

• The Carter Construction Company pays its hourly employees $16.50, $19.00, or $25.00
per hour. There are 26 hourly employees: 14 are paid at the $16.50 rate, 10 at the
$19.00 rate, and 2 at the $25.00 rate.
• What is the mean hourly rate paid for the 26 employees?

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The Geometric Mean

• The geometric mean is the nth root of the product of n positive values
• The formula for geometric mean is

• The geometric mean is also used to find the rate of change from one period to another

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Why Study Dispersion?

• A measure of location, such as the mean, median, or mode, only describes the center of
the data. It is valuable from that standpoint, but it does not tell us anything about the
spread of the data. A small value for a measure of dispersion indicates that the data are
clustered closely, say, around the arithmetic mean. The mean is therefore considered
representative of the data. Conversely, a large measure of dispersion indicates that the
mean is not reliable.
• A second reason for studying the dispersion in a set of data is to compare the spread in
two or more distributions.

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Range

• The range is the difference between the maximum and minimum values in a set of data
• The formula for range is

• The major characteristics of the range are

• Only two values are used in its calculation
• It is influenced by extreme values
• It is easy to compute and to understand
• A limitation of the range is that it is based on only two values, the maximum and the minimum; it
does not take into consideration all of the values
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Variance

The variance measures the mean amount by which the values in a population, or sample, vary
from their mean.

VARIANCE The arithmetic mean of the squared deviations from the

mean.

The variance has an important advantage over the range. It uses all the values in the
computation. Recall that the range uses only the highest and the lowest values.

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Population Variance

where: Major characteristics of the variance

• σ2 is the population variance (σ is the lowercase are:
Greek letter sigma). It is read as “sigma squared.” • All observations are used in the
• x is the value of a particular observation in the calculation
population. • The units are somewhat difficult
• μ is the arithmetic mean of the population. to work with, they are the original
• N is the number of observations in the population units squared
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Population Standard Deviation

where:
• σ2 is the population variance (σ is the lowercase Greek letter sigma). It is read as “sigma squared.”
• x is the value of a particular observation in the population.
• μ is the arithmetic mean of the population.
• N is the number of observations in the population

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Sample Variance

where:
s2 is the sample variance.
x is the value of each observation in the sample.
xത is the mean of the sample.
n is the number of observations in the sample.
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Example: Sample Variance

The hourly wages for a sample of 5 part-time employees at Home Depot are: $12, $20, $16,
$18, and $19.
What is the sample variance?

The sample mean:

σ 𝑥 $85
𝑥ҧ = = = $17
𝑛 5

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Standard Deviation

where:
s is the sample standard deviation
𝑥 is the value of each observation in the sample
𝑥ҧ is the mean of the sample
n is the number of observations in the sample
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Standard Deviation

The major characteristics of the standard deviation are:

• It is in the same units as the original data
• It is the square root of the average squared distance from the mean
• It cannot be negative
• It is the most widely used measure of dispersion

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Interpretations and Uses of the Standard Deviation

CHEBYSHEV’S THEOREM For any set of observations (sample or population), the proportion
of the values that lie within k standard deviations of the mean is at
least 1 – 1/k2, where k is any value greater than 1.

The arithmetic mean biweekly amount contributed by the Dupree Paint employees to
the company’s profit-sharing plan is $51.54, and the standard deviation is $7.51. At
least what percent of the contributions lie within plus 3.5 standard deviations and
minus 3.5 standard deviations of the mean?

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Interpretations and Uses of the Standard Deviation

THE EMPIRICAL RULE For a symmetrical, bell-shaped frequency distribution, approximately 68% of the
observations will lie within plus and minus one standard deviation of the mean, about
95% of the observations will lie within plus or minus 2 standard deviations of the
mean, and practically all (99.7%) will lie within 3 standard deviations of the mean.

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Sample Mean of Grouped Data

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Sample Mean of Grouped Data

The computations for the arithmetic mean of data grouped into a frequency distribution will be shown based
on the Applewood Auto Group profit data. Recall in Chapter 2, in Table 2–7 on page 30, we constructed a
frequency distribution for the vehicle profit. The information is repeated below. Determine the arithmetic
mean profit per vehicle.

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Sample Mean of Grouped Data

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Standard Deviation of Grouped Data

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Calculating the Standard Deviation of Grouped Data

Step 1: Subtract the mean from the class midpoint. That is, find (M − 𝑥ҧ )
Step 2: Square the difference between the class midpoint and the mean.
Step 3: Multiply the squared difference between the class midpoint and the mean by the class
frequency.
Step 4: Sum the f(M − 𝑥ҧ )2. Using formula (3-12) to calculate the standard deviation.

The mean and the standard deviation calculated from the data grouped into a frequency distribution are
usually close to the values calculated from raw data. The grouped data result in some loss of information.
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Calculating the Standard Deviation of Grouped Data

Applewood Auto Group Frequency Distribution Compute the standard deviation of the vehicle
profits.

68% x180=122.4
- min $1199
- max $2503

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Sample Mean and Standard Deviation of Grouped Data

The mean and the standard deviation calculated from the data grouped into a
frequency distribution are usually close to the values calculated from raw data.
The grouped data result in some loss of information.

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Ethics and Reporting Results

• Useful to know the advantages and disadvantages of mean, median, and mode
as we report statistics and as we use statistics to make decisions
• Important to maintain an independent and principled point of view
• Statistical reporting requires objective and honest communication of any
results

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