QM3-IB (EBS2001), 2016-2017: Statistical Formulas

The first page of this formula sheet contains

- some basic, non-inferential formulas;
- some fundamental principles of inferential statistics.
The second page lists all the inferential tools which have been discussed in either QM1 or QM2.
The third page reports, for all these tools and in the same order, the required assumptions and the associated
conditions.

Basic non-inferential formulas Chapter

åy
y= 3
n
å ( y - y)
2
s= 3
n -1
y-μ y- y
z= (model based) z= (data based) 3
σ s
å zx z y
r= 4
n -1
P ( A and B)
P (B A ) = 5
P( A )
Events A and B are independent whenever P (B A ) = P(B) 5
y = μ y + ε = β 0 + β1 x + ε 15
sy
yˆ = b0 + b1 x where b1 = r and b0 = y - b1 x 4, 15
sx
e = y - yˆ 4, 16
y = μ y + ε = β 0 + β1 x1 + β 2 x 2 + ... + β k x k + ε 17
yˆ = b0 + b1 x1 + b2 x 2 + ... + bk x k 17

SSE
se = 17
n - k -1
SST = SSR + SSE with SST = å ( y - y ) 2 , SSR = å ( yˆ - y ) 2 , SSE = å ( y - yˆ ) 2 = å e 2 17
SSR SSE
R2 = =1- 17
SST SST
SSE /(n - k - 1)
2
R adj =1- 17
SST /(n - 1)
1
VIF j = 18
1 - R 2j

Some fundamental principles of inferential statistics

Sampling distribution of y :
σ
(CLT) As n grows, the sampling distribution approaches the Normal model with μ ( y ) = μ and SD( y ) =
n
confidence interval = point estimate ± critical value * standard error
point estimate - hypothesized value
test statistic = (only for t and z, not for F and χ2)
standard error

1
 Quick Guide to Inference

Plan Do Report
Inference One group
Procedure Model Parameter Estimate SE Chapter
about? or more?
p0 q0
1-proportion z-test 10
n
One group z p p̂
1-proportion pˆ qˆ
Proportions 9
z-interval n
Two
2-proportion pˆ1qˆ1 pˆ 2 qˆ2
independent z p1 - p2 pˆ1 - pˆ 2 + 14.5
z-interval n1 n2
groups
1-sample t-test t s
One group μ y 11
1-sample t-interval df = n – 1 n
t
2-sample t-test s12 s22
df from +
2-sample t-interval n1 n2
technology
Two
Means independent μ1 - μ2 y1 - y2 1 1
s pooled +
groups Pooled t-test t n1 n2 13
Pooled t-interval df = n1 + n2 – 2 (n - 1)s12 + (n2 - 1) s22
s 2pooled = 1
n1 + n2 - 2

Matched Paired t-test t sd

μd d
pairs Paired t-interval df = n – 1 n
Goodness-of-fit χ2
One group
Distributions χ2-test df = # cells – 1
(one categorical Several
Homogeneity
variable) independent (Obs - Exp) 2
χ2-test å 14
groups χ2 Exp
Independence Independence
df = (r–1)(c–1)
(two categorical One group
χ2-test
variables)
t-test or se
confidence β1 b1 sx n - 1
Simple interval for β1 (compute with technology)
regression t
(one quantitative One group Confidence
μv μ̂v se2 15
df = n – 2 SE 2 (b1 ) ´ ( xv - x ) 2 +
variable modeled interval for μv n
by another)
Prediction interval se2
yv ŷv SE 2 (b1 ) ´ ( xv - x )2 + + se2
for yv n
t-test or
t
confidence βj bj (from technology)
Multiple interval for each βj
df = n – k – 1
regression 17
F
SSR / k MSR
(one quantitative One group Overall F-test df = k and F= =
variable modeled SSE /( n - k - 1) MSE
n–k–1
by k quantitative Partial F-test for F
(SSER - SSEC ) /( k - g ) Extra text
variables) comparing nested df = k – g and Fpartial =
SSEC /(n - k - 1) week 6
regression models n–k–1

SSTr /(k - 1) MSTr

Several (k) F F= =
SSE /( N - k ) MSE
Means independent One-way ANOVA df = k – 1 and 20
k k
groups N–k with SSTr = å ni ( y i - y ) and SSE = å (ni - 1)si
2 2
i =1 i =1

2

Assumptions for Inference
Proportions
● One group: 1-proportion z
1. Individuals are independent.
2. Sample is sufficiently large.
● Two independent groups: 2-proportion z
1. Groups are independent.
2. Data in each group are independent.
3. Samples are sufficiently large.
Means
● One group: 1-sample t
1. Individuals are independent.
2. Population has a Normal model.
● Two independent groups: 2-sample-t or Pooled t
1. Groups are independent.
2. Data in each group are independent.
3. Both populations are Normal.
4. Equal variance (only for Pooled t)
● Matched pairs: Paired t
1. Data are matched.
2. Individuals are independent.
3. Population of differences is Normal.
Distributions / Independence
● One group: Goodness of fit χ2
1. Data are counts.
2. Individuals are independent.
3. Sample is sufficiently large.
● Several independent groups: Homogeneity χ2
1. Data are counts.
2. Individuals in groups are independent.
3. Groups are sufficiently large.
● One group: Independence χ2
1. Data are counts.
2. Individuals are independent.
3. Sample is sufficiently large.
Regression with k predictors
1. Form of relationship is linear.
2. Errors are independent.
3. Variability of errors is constant.
4. Errors follow a Normal model.
Means
● Several independent groups: One-way ANOVA
1. Individuals are independent.
2. Equal variance across treatment levels.
3. The response follows a Normal model.
And the Conditions That Support or Override Them
(SRS = simple random sample)
1. SRS and n < 10% of the population.
2. Successes and failures each ≥ 10.
1. Think about the design.
2. SRSs and n < 10% of the population OR random allocation.
3. Successes and failures each ≥ 10 in both samples.
1. SRS and n < 10% of the population.
2. Histogram is approximately unimodal and symmetric.*
1. Think about the design.
2. SRSs and n < 10% of the population OR random allocation.
3. Both histograms are approximately unimodal and symmetric.*
Sample variance in both groups is similar;
4.
histograms and boxplots per group show similar spreads.
1. Think about the design.
2. SRS and n < 10% of the population OR random allocation.
3. Histogram of differences is unimodal and symmetric.*
1. Are they?
2. SRS and n < 10% of the population.
3. All expected counts ≥ 5.
1. Are they?
2. SRSs and n < 10% of the population OR random allocation.
3. All expected counts ≥ 5.
1. Are they?
2. SRS and n < 10% of the population.
3. All expected counts ≥ 5.
Scatterplots of y against each x are straight enough. Scatterplot of residuals
1.
against predicted values shows no special structure.
Cross-section: Think about the design.
2.
Time series: Check for autocorrelation.
Plots of residuals against predicted values and each x have constant spread,
3.
don’t “thicken”.
4. Histogram of residuals is approximately unimodal and symmetric.*
1. Randomized experiment or other suitable randomization.
Sample variance per level/group is similar;
2.
histograms and boxplots per level/group show similar spreads.
3. Histograms per level/group are approximately unimodal and symmetric.
(* Less critical as n increases)