Keller SME 12e PPT CH02

Statistics for Management and
Economics, 12e
Chapter 2: Graphical Descriptive

Techniques I
Keller, Gerald, Statistics for Management and Economics, 12th Edition. © 2023 Cengage. All Rights Reserved.
May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter Outline
2-1 Types of Data and Information

2-2 Describing a Set of Nominal Data
2-3 Describing the Relationship between
Two Nominal Variables and
Comparing Two or More Nominal
Data Sets
Appendix 2.A Xlstat Output and Instructions
Appendix 2.B Stata Output and Instructions
Introduction
The purpose of this chapter and the next is to present the principal methods in descriptive
statistics. We introduce graphical and tabular statistical methods that allow to summarize data
visually and produce useful information used in decision making.
Another class of descriptive techniques, numerical methods, is introduced in Chapter 4.
Descriptive statistics uses graphical techniques and numerical descriptive measures to
arrange, summarize, and present data to produce information that is useful in making
decisions.
The descriptive methods presented in this chapter and the next two apply to both population
and sample data sets.
The two most important factors that determine the appropriate graph to use are:
• the type of data
• the information needed.
Both are discussed next.
2-1 Variables and Values
A variable is a characteristic of a population or sample.
Typically denoted with an uppercase letter, such as X, Y, or Z.
Examples: student grade, stock price
The values of the variable are the range of possible values for a variable.
Example: student marks (0...100)
Data are the observed values of a variable.

Example: student marks {67, 74, 71, 83, 93, 55, 48, 82, 68, 62}
2-1a Types of Data
Data fall into three main groups:
Interval data
• Values are real numbers, i.e., heights, weights, prices, etc.
• Also referred to as quantitative or numerical.
• All computations can be performed, such as 2*Height, Price + $1, etc.
Nominal Data
• Values are categories, i.e., marital status (single, married, divorced…)
• Also referred to as qualitative or categorical.
• Cannot perform arithmetic operations. Can only count categories.
Ordinal Data
• Values are categorical but can be ranked, i.e., letter grades (A, B, C, D, F)
• Computations can be performed on numerical ratings assigned to each ranked
categorical value.
2-1b Hierarchy of Data
Interval Data:
• Values are real numbers.
• All calculations are valid.
• Data may be treated as ordinal or nominal.
Ordinal Data
• Values must represent the ranked order of the data.
• Calculations based on an ordering process are valid.
• Data may be treated as nominal but not as interval.
Nominal Data
• Values are the arbitrary numbers that represent categories.
• Only calculations based on the frequencies or percentages of occurrence are valid.
• Data may not be treated as ordinal or interval.
2-2 Describing a Set of Nominal Data
Graphical & Tabular Techniques for Nominal Data

• The only allowable calculation on nominal data is to count the frequency of
each variable value.
• We can summarize the data in a table called a frequency distribution that
presents the categories and their counts.
• A relative frequency distribution lists the categories and the proportion with
which each occurs.
Example 2.1 – Frequency Distribution
Work Status in the General Social Survey
GSS asked: “Last week were you working full time, part time, going to school, keeping house, or what?”
The responses were as follows:
1. Working full time
2. Working part time
3. Temporarily not working
4. Unemployed, laid off
5. Retired
6. School
7. Keeping house
8. Other
DATA: GSS2018
Variable: WRKSTAT (Column X)
*See notes for Excel instructions.
Example 2.1 – Bar Chart
Graphical techniques generally catch a
reader’s eye more quickly than a table of
numbers does.
A bar chart is used to display frequencies.
The bar chart is created by drawing a
rectangle representing each category. The
height of the rectangle represents the
frequency.
The width of the base is arbitrary.
Example 2.1 – Pie Chart
A pie chart is used to shows relative frequencies. The
pie chart is created by segmenting a circle into several
wedges, one for each category.
The angle on each wedge is proportional to the
respective relative frequency. The size of the circle is
arbitrary.
Interpret:
Only 48.3% of respondents were working full time,
Among the rest, 19% were retired, 11% working part
time, and 10.3% keeping house. The remaining were in
one of the other four categories.
Example 2.2 – Energy Consumption in the USA in 2019
Use an appropriate graphical
technique to depict the total
energy consumption of the USA
from all sources in 2019.
DATA: Xm02-02
Solution:
The pie chart is the appropriate
method to describe the
proportion of total energy
consumption from each source.
Interpret:
The USA depends heavily on the
fossil fuels (80%). Renewables
amount to about 11% of the total
consumption.
Example 2.3 – Beer Consumption (Top 20 Countries)
We select a bar chart to depict the per capita beer
consumption in liters per year for each of the top 20
countries around the world because we are primarily
interested in the numbers, and there is no use in presenting
proportions.
2-2b Describing a Set of Ordinal Data
Graphical & Tabular Techniques for Ordinal Data

• There are no specific graphical techniques for ordinal data.
• To describe a set of ordinal data, we use the same techniques described in
this section for nominal data.
• The only criterion is that the bars in bar charts should be arranged in
ascending (or descending) ordinal values.
• In pie charts, the wedges are typically arranged clockwise in ascending or
descending order.
2-3a Tabular Method of Describing the Relationship
between Two Nominal Variables
The set of tabular and graphical techniques used to summarize a single

nominal or ordinal variable are called univariate.
To summarize the relationship between two nominal variables we use bivariate
methods.
The first step is to produce a cross-classification table (also called a cross-
tabulation), which lists the frequency of each combination of the values of the
two variables.
Example 2.4 – Newspaper Readership Survey
A sample of newspaper readers was asked to report Cross-tabulation of Frequencies
which newspaper they read: Globe and Mail (1) Post
(2), Star (3), Sun (4), and to indicate whether they
were blue-collar worker (1), white-collar worker (2),
or professional (3).
DATA: Xm02-04
Determine if the two variables are related.
Cross-tabulation of Row Proportions
Solution:
By counting the number of times each of the 12
combinations occurs, we produce the cross-
classification table of frequencies.
To investigate if occupation and newspaper are related,
we convert the frequencies in each row to relative
frequencies as shown in the cross-classification table of row proportions.
Notice how the relative frequencies in rows 2 and 3 are similar and how there are large differences between
row 1 and rows 2 and 3. This tells us that the variables occupation and newspaper are related.
Example 2.4 – Cross-classification Tables with Excel
Excel can produce a cross-classification table using several methods.
We will use and describe the PivotTable to (1) create the cross-classification table featuring the counts and (2)
create a table showing the row relative frequencies.
Instructions:
1. Click Insert and PivotTable. PivotTable of Frequencies
2. Select the whole Table/Range. Click OK.
3. In the Pivot Table Fields, check Reader
and right-click Add to Values.
4. Check Occupation and right-click Add to
Row Labels.
5. Check Newspaper and right-click Add to PivotTable of Row Proportions
Column Labels.
6. Place the cursor in the table and right-click
Summarize Values by and click Count.
7. To convert to row percentages, right click any
number, click Show Values As and click % of
Row Total.
Example 2.4 – Graphing the Relationship between Two
Nominal Variables with Excel
There are several ways to graphically display
the relationship between two nominal variables.
We have chosen two-dimensional bar charts
for each of the three occupations.
The charts can be created from the output of
the PivotTable either with counts or with row
proportions.
Instructions:
From the cross-classification table, click Insert
and Column. You can do the same from any
completed cross-classification table.
Interpret:
The graphs tell us the same story as the table did. The shapes of the bar charts for occupations 2 and 3
(white collar and professional) are very similar. Both differ considerably from the bar chart for occupation 1
(blue collar).
Chapter Summary
• Descriptive statistical methods are used to summarize data sets so that we

can extract relevant information.
• In this chapter, we presented graphical techniques for nominal data.
• Bar charts, pie charts, and frequency and relative frequency distributions are
employed to summarize single sets of nominal data.
• Because of the restrictions applied to nominal data, we can only show the
frequency and proportion of each category.
• To describe the relationship between two nominal variables, we produce
cross-classification tables and bar charts.
Appendix 2.A – Frequency Distribution and Bar Chart
Example 2.1 – XLSTAT Output and Instructions
Note that the output has been edited.

XLSTAT does not draw pie charts.
*See notes for XLSTAT instructions.
Appendix 2.A – Cross-Classification Table
Example 2.4 – XLSTAT Output and Instructions
Output has been edited.
*See notes for XLSTAT instructions.
Appendix 2.B – Frequency Distribution and Bar Chart
Example 2.1 – Stata Output and Instructions
*See notes for STATA instructions.
Appendix 2.B – Cross-Classification Table
Example 2.4 – Stata Output and Instructions
*See notes for STATA instructions.

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Statistics for Management and

Chapter 2: Graphical Descriptive

2-1 Types of Data and Information

Data are the observed values of a variable.

Graphical & Tabular Techniques for Nominal Data

*See notes for Excel instructions.

*See notes for Excel instructions.

*See notes for Excel instructions.

Graphical & Tabular Techniques for Ordinal Data

The set of tabular and graphical techniques used to summarize a single

• Descriptive statistical methods are used to summarize data sets so that we

Example 2.1 – XLSTAT Output and Instructions

Note that the output has been edited.

*See notes for XLSTAT instructions.

Example 2.4 – XLSTAT Output and Instructions

Output has been edited.

*See notes for XLSTAT instructions.

Example 2.1 – Stata Output and Instructions

*See notes for STATA instructions.

Example 2.4 – Stata Output and Instructions

*See notes for STATA instructions.

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