LECTURE 1
What is
Statistics ?
What is Statistics?
Statistics is a way to get information from data. It is
a tool for creating new understanding from a set of
numbers.
Descriptive statistics deals with methods of
organizing, summarizing, and presenting data in a
convenient and informative way.
Descriptive statistics uses graphical and tabulation techniques to
present data in ways that make it easy to extract useful
information.
Another form of descriptive statistics uses numerical
techniques to summarize data.
Example: A class of fifty statistics students obtained an
average score of 53.5.
Inferential statistics is a body of methods used to draw
conclusions or make inferences about
characteristics of populations based on sample data.
Example: Based on a sample of 500 subscribers, a
local cable system estimates that the proportion of all
subscribers watch a premium channel is between 0.35 to
0.48.
Key Statistical Concepts
Population is the group of all items (people,
objects, firms, households etc.) of interest.
Sample is a set of data drawn from the population.
• Large populations make investigating each member
impractical and expensive. Easier and cheaper to
take a sample and make inferences about the
population from the sample.
Parameter is a descriptive measure of population.
Statistic is a descriptive measure of a sample.
Statistical Inference
estimate the unknown value of a
population parameter on the basis of a
sample statistic
Estimation
Hypothesis testing
evaluate or test a claim about the population
parameter based on a sample statistic
Exercise 1
Identify each of the following as a use of descriptive
statistics or inferential statistics.
a) Finding the weights of a sample of 85
manufacturer parts.
b) Estimating the percentage of the U.S. population that
will vote for your favorite candidate in the next
presidential election.
c) Calculating the proportion of UKM students play
basketball.
d) Selecting a random sample of 190 babies born last
year and using this information to estimate the mean
birth weight of all babies born last year.
e) Tabulate the average oil consumption per day of
the top 15 countries.
f) Randomly selecting 225 cans of Coca Cola and using
their average weight to test whether the 350 ml.
label on the cans is truthful or not.
g) Graphically present the government expenditures for
public works in years 2000, 2005, 2010 and 2015.
Exercise 2
A manufacturer of computer chips claims that less than
10% of its products are defective. When 1,000 chips were
drawn from a large production, 7.5% were found to be
defective.
i) Identify the population, sample, parameter, and
statistic in this survey.
ii) Explain briefly how the statistic can be used to make
inferences about the parameter.
Exercise 3
The administrator of a college want to determine the
average commuting distance for their students who
commute to school. They randomly select 150 students who
commute and ask them the distance of their commute to
campus. From this group a mean of 18.2 miles is computed.
i) Describe the population and the sample.
ii) What is the parameter?
iii) What is the statistic?
Variable, Observation, Data
Variable is a characteristic that varies within a
population or sample
E.g: the marks for statistic exam for students
Represent the name of variable using upper cases
Observation is an individual measurement
of a variable.
Data are the actual measurements or observed
values of a variable.
Types of Variables
Qualitative / categorical variable is a
characteristic with observations that are nonnumeric and
can only be placed into categories.
Quantitative / numerical variable is a numerical quantity
on each object whose observations can be ordered in terms
of the magnitude of the characteristic.
Discrete & Continuous Variables
VARIABLES
QUANTITATIVE QUALITATIVE
Discrete (diskret) Continuous (selanjar)
observations that can take on a observations that can take on a value
countable number at any point along an interval
- refers to any value along the
of values
- refers to certain value interval
- Obtained from measuring process
- Obtained from counting
- E.g: weight, income, heights
process
Example
A quality-assurance inspector periodically examines the
output of a machine to determine whether it is properly
adjusted. When set properly, the machine produces nails
having a mean length of 2.000 inches, with a standard
deviation of 0.070 inches.
i) Identify the variable of interest.
ii) Indicate whether the variable of interest would
be qualitative, continuous, quantitative, discrete
Example
Researchers in a California community have asked a sample
of 175 automobile owners to select their favourite from two
popular automotive magazines. Of the 111 import owners in
the sample, 54 selected Car and Driver, and 57 selected
Road & Track. Of the 64 domestic-make owners in the
sample, 19 selected Car and Driver, and 45 selected Road &
Track.
i) Identify the variable of interest.
ii) Indicate whether the variable of interest would
be qualitative, continuous, quantitative or discrete
Example: Types of Variables
• For each of the following, indicate whether the
appropriate variable would be qualitative or
quantitative. If the variable is quantitative,
indicate whether it would be discrete or
continuous.
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Example
• a) Whether you own • Qualitative Variable
a Panasonic two levels: yes/no
television set no measurement
• b) Your status as a • Qualitative Variable
full-time or a part-time two levels: full/part
student no measurement
• c) Number of people • Quantitative, Discrete
who attended your Variable
school’s graduation a countable number
last year only whole numbers
• d) The price of • Quantitative, Discrete
your most recent Variable
haircut a countable number
only whole numbers
• e) Sam’s travel • Quantitative, Continuous
time from his Variable
dorm to the any number
student union time is measured
can take on any value greater
than zero
Measurement Scales
VARIABLES
QUANTITATIVE QUALITATIVE
Ratio Nominal
Interval Ordinal
Nominal & Ordinal Scales
Nominal scale classifies data into distinct categories
in which no ranking is implied.
Single; married; divorced; widowed
Ordinal scale classifies data into distinct categories in
which ranking is implied and the magnitudes of the
differences between measurements are unknown.
Grade : A; B; C; D; E
Poor; fair; good; very good; excellent
Interval & Ratio Scales
Interval (selang) scale distinguishes data by the
amount of the characteristic they possess. The numerical
quantity indicate order and differences between
measurements.
There is no absolute zero and the ratio of two
measurements is meaningless.
Ratio scale data are similar to the interval
scale data, but has an absolute zero and the ratio of
two measurements is meaningful.
Example 4
Indicate whether the following variables would be nominal,
ordinal, interval or ratio.
a) The number of miles joggers run per week
b) Your favorite brand of sneakers
c) The months in which a firm’s employees choose to take
their vacations
d) The final letter grades received by students in a
statistics course
e) The daily Bursa Malaysia KLCI Index
f) The size of soft drink (small, medium, or large)
ordered by a sample of McDonald’s customers
g) The number of Toyotas imported monthly by the
United States over the last 5 years
h) Fields of study (accounting, economics, finance,
management, or marketing)
i) The starting salaries of graduates of MBA programs
j) MUET Aggregated Score
Example: Scales of Measurement
• Bill scored 1200 on the Scholastic Aptitude Test
and entered college as a physics major. As a
freshman, he changed to business because he
thought it was more interesting. Because he
made the dean’s list last semester, his parents
gave him $30 to buy a new Casio calculator.
Identify at least one piece of information in the:
Example:
• a) nominal • 1. Bill is going to college.
scale of 2. Bill will buy a Casio
measurement. calculator.
3. Bill was a physics major.
4. Bill is a business major.
5. Bill was on the dean’s list.
Example
• b) ordinal scale of • Bill is a freshman.
measurement
• c) interval scale of • Bill earned a 1200 on the
measurement SAT.
• d) ratio scale of • Bill’s parents gave him $30.
measurement
Primary & Secondary Data
Primary (primer) data: Data collected first hand for
subsequent analysis to meet a specific purpose.
It could be collected using census, sample survey,
designed experiment.
Secondary (sekunder) data: Data that have already
been collected.
It could be obtained from the published or unpublished
sources such as online databases, government
publications, annual reports of companies, etc.
Types of Data
Time series data: A set of data for single entity or
country that collected over several time periods (daily,
weekly, monthly, quarterly, yearly).
Example: GDP per capita from year 2005-2013
Cross sectional data: A set of data collected for many
entities or countries at the same point in time.
Example: Contribution to the gross output by
manufacturing groups in year 2012.
Time
Series
Data
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-28
Cross Sectional Data
Bank Total Assets 2000
Bank Total Asset (million)
CIMB 3.5
Bank Islam 4
Maybank 6
Hong Leong
Bank 2.5
Affin Bank 2
AmBank 1.5
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-29
Types of Data
Pooled Data
A set of data collected for many entities or
countries that collected over several time periods
(daily, weekly, monthly, quarterly, yearly).
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-30
PANEL/POOLED DATA
Year Bank Total Assets (Million)
2000CIMB 3.5
2000Bank Islam 4
2000Maybank 6
2000Hong Leong Bank 2.5
2000Affin Bank 2
2000AmBank 1.5
2001CIMB 7.2
2001Bank Islam 6
2001Maybank 9
2001Hong Leong Bank 4
2001Affin Bank 3
2001AmBank 2
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-31
Statistical Packages
SPSS, Minitab, Eviews, Stata, etc.
Microsoft Excel – Statistical functions, Spreadsheets,
Analysis ToolPak etc.
