STATISTICS THEORY – PRANIL VERMA

Properties of Measurement Scales

Each scale of measurement satisfies one or more of the following properties of
measurement.

▪ Identity. Each value on the measurement scale has a unique meaning.

▪ Magnitude. Values on the measurement scale have an ordered
relationship to one another. That is, some values are larger and some
are smaller.
▪ Equal intervals. Scale units along the scale are equal to one another.
This means, for example, that the difference between 1 and 2 would be
equal to the difference between 19 and 20.
▪ A minimum value of zero. The scale has a true zero point, below which
no values exist.

1. Nominal Scale –
Nominal variables can be placed into categories. These don’t have a
numeric value and so cannot be added, subtracted, divided or multiplied.
These also have no order, and nominal scale of measurement only
satisfies the identity property of measurement.

For example, gender is an example of a variable that is measured on a nominal

scale. Individuals may be classified as “male” or “female”, but neither value
represents more or less “gender” than the other.
 2. Ordinal Scale –
The ordinal scale contains things that you can place in order. It measures a
variable in terms of magnitude, or rank. Ordinal scales tell us relative order,
but give us no information regarding differences between the categories. The
ordinal scale has the property of both identity and magnitude.

Interval Scale: 3rd Level of Measurement

Interval Scale is defined as a numerical scale where the order of the
variables is known as well as the difference between these
variables.

Variables which have familiar, constant and computable

differences are classified using the Interval scale.

It is easy to remember the primary role of this scale too, ‘Interval’

indicates ‘distance between two entities’, which is what Interval
scale helps in achieving.

These scales are effective as they open doors for the statistical
analysis of provided data.

Mean, median or mode can be used to calculate the central

tendency in this scale.

The only drawback of this scale is that there no pre-decided

starting point or a true zero value.

Interval scale contains all the properties of ordinal scale, in

addition to which, it offers a calculation of the difference between
variables.

The main characteristic of this scale is the equidistant difference

between objects.

• 80 degrees is always higher than 50 degrees and the difference between

these two temperatures is the same as the difference between 70
degrees and 40 degrees.
• Also, the value of 0 is arbitrary because negative values of temperature
do exist – which makes Celsius/Fahrenheit temperature scale a classic
example of interval scale.

• Interval scale is often chosen in research cases where the difference

between variables is a mandate – which can’t be achieved using nominal
or ordinal scale. Interval scale quantifies the difference between two
variables whereas the other two scales are solely capable of associating
qualitative values with variables.
• The mean and median values in an ordinal scale can be evaluated,
unlike the previous two scales.

• In statistics, interval scale is frequently used as a numerical value can not

only be assigned to variables but calculation on the basis of those values
can also be carried out.

The following questions fall under the Interval Scale category:

• What is your family income?

• What is the temperature in your city?

4. Ratio Scale –
The ratio scale of measurement is similar to the interval scale in that it also
represents quantity and has equality of units with one major difference: zero is
meaningful (no numbers exist below the zero). The true zero allows us to know
how many times greater one case is than another. Ratio scales have all of the
characteristics of the nominal, ordinal and interval scales. The simplest
example of a ratio scale is the measurement of length. Having zero length or
zero money means that there is no length and no money but zero temperature
is not an absolute zero.

For example, in distance 10 miles is twice as long as 5 mile.

 Ratio Scale Examples
The following questions fall under the Ratio Scale category:

• What is your daughter’s current height?

• Less than 5 feet.
• 5 feet 1 inch – 5 feet 5 inches
• 5 feet 6 inches- 6 feet
• More than 6 feet
• What is your weight in kilograms?
• Less than 50 kilograms
• 51- 70 kilograms
• 71- 90 kilograms
• 91-110 kilograms
• More than 110 kilograms

Nominal Scale Examples

• Gender
• Political preferences
• Place of residence
What is your Gender? What is your Political preference? Where do you live?
• 1- Independent • 1- Suburbs
• M- Male
• 2- Democrat • 2- City
• F- Female
• 3- Republican • 3- Town

Ordinal Scale Examples

This scale not only assigns values to the variables but also measures
the rank or order of the variables, such as:

• Grades
• Satisfaction
• Happiness
How satisfied are you with our services?

• 1- Very Unsatisfied
• 2- Unsatisfied
• 3- Neural
• 4- Satisfied
• 5- Very Satisfied
 For example, a semantic differential scale question such as:
How satisfied are you with our services?

• Very Unsatisfied – 1
• Unsatisfied – 2
• Neutral – 3
• Satisfied – 4
• Very Satisfied – 5

Normal Distribution

• A normal distribution is a bell-shaped frequency distribution curve.

• Most of the data values in a normal distribution tend to cluster around

the mean.

• The further a data point is from the mean, the less likely it is to occur.

• There are many things, such as intelligence, height, and blood

pressure, that naturally follow a normal distribution.

For example, If you took the height of one hundred 22-year-old women
and created a histogram by plotting height on the x-axis, and the frequency
at which each of the heights occurred on the y-axis, you would get a normal
distribution.

Formula z= x-u/ S.D

Properties of a Normal Distribution

1. The normal curve is symmetrical about the mean μ;

2. The mean is at the middle and divides the area into halves;
3. The total area under the curve is equal to 1;
4. It is completely determined by its mean and standard deviation σ (or
variance σ2)
Poison Distribution
The Poisson distribution is the discrete probability distribution of
the number of events occurring in a given time period, given the
average number of times the event occurs over that time period.

A Poisson experiment is a statistical experiment that has the

following properties:

• The experiment results in outcomes that can be classified

as successes or failures.

• The average number of successes (μ) that occurs in a

specified region is known.

• The probability that a success will occur is proportional to

the size of the region.

• The probability that a success will occur in an extremely

small region is virtually zero.
• Note that the specified region could take many forms. For
instance, it could be a length, an area, a volume, a period
of time, etc.

Binomial Distribution

A binomial experiment is a statistical experiment that has the following

properties:

• The experiment consists of n repeated trials.

• Each trial can result in just two possible outcomes. We call
one of these outcomes a success and the other, a failure.
 • The probability of success, denoted by P, is the same on
every trial.
• The trials are independent; that is, the outcome on one
trial does not affect the outcome on other trials.

Consider the following statistical experiment. You flip a coin 2

times and count the number of times the coin lands on heads.
This is a binomial experiment because:

• The experiment consists of repeated trials. We flip a coin

2 times.
• Each trial can result in just two possible outcomes - heads
or tails.
• The probability of success is constant - 0.5 on every trial.
• The trials are independent; that is, getting heads on one
trial does not affect whether we get heads on other trials.

Bayesian probability theory provides a mathematical framework for peforming

inference, or reasoning, using probability.

Bayes’ rule Bayes’ rule really involves nothing more than the manipulation of conditional
probabilities.

P(AB) = P(A|B)P(B) (1) = P(B|A)P(A)

 Mutually exclusive events
• If two events are mutually exclusive, it means that they cannot
occur at the same time.

• For example, the two possible outcomes of a coin flip

are mutually exclusive; when you flip a coin, it cannot land
both heads and tails simultaneously.

• For example, you can’t run backwards and forwards at the same
time. The events “running forward
• ” and “running backwards” are mutually exclusive.

◼ Random sampling

• Every unit of the population has the same probability of being

included in the sample.
• A chance mechanism is used in the selection process.
• Eliminates bias in the selection process
• Also known as probability sampling
◼ Based on random selection where each sample from the population of
interest has a known probability of selection under a given sampling
scheme.
◼ Also termed as Equal Probability of SElection Method
◼ Every element of the population has a known chance of being included in
the sample
 Random

Simple Systematic

Stratified Cluster

simple random sample (SRS).

▪ The most widely known type of a random sample is the simple random
sample (SRS).
▪ Characterized by the fact that the probability of selection is the same for
every case in the population.
▪ Method of selecting n units from a population of size N such that every
possible sample of size n has equal chance of being drawn.
▪ That is, each possible sample has an equal chance of being selected and
each item in the entire population also has an equal chance of being
selected.

SYSTMATIC RANDOM SAMPLING

◼ In the same retailer example, if the first invoice is randomly selected, say
a number 6.
◼ Thereafter she would select subsequent bills according to a systematic
plan.
◼ May be she selects every fifth invoice so that selected invoices are bill
nos are 6, 11, 16 and so on.
◼ If the sample size is n from population N … (N/n)* 2000 = I (number of
intervals)
◼ Explanation from case study. DTH services in India
 STRATIFIED SAMPLING

o In this form, the population is first divided into two or more

mutually exclusive segments based on some categories.

o Stratified Sampling is generally used when the population is

heterogeneous.

o With stratified random sampling the population of N units is

divided into subparts called strata, based on relevant
characteristics .

o Each stratum is called a subpopulation.

o A small sample is selected from each stratum at random to

represent the population properly.

o The process of obtaining and examining a Stratified Sample with a

view to estimate the characteristic of the population is known as
Stratified Sampling.

o The primary benefit of this method is to ensure that cases from

smaller strata of the population are included in sufficient numbers
to allow comparison.

• The same retailer can use stratified sample if the invoices

are analysed according to items purchased
• DVD Buyers
• Stereo Buyers
• LED/LCD Buyers
• Then for each stratum a random sample can be taken

CLUSTER SAMPLING

◼ Population is divided into nonoverlapping clusters or

areas.
◼ Each cluster is a miniature, or microcosm, of the
population.
◼ A subset of the clusters is selected randomly for the
sample. The population is divided into clusters or groups
and then Random Sampling is done for each cluster

Nonrandom Sampling- Categorized into:.

◼ Convenience Sampling:
Sample elements are selected for the convenience
of the researcher

◼ Judgment Sampling:
Sample elements are selected by the judgment of
the researcher
◼ Snowball Sampling:
Survey subjects are selected based on referral
from other survey respondents