MGCR 271: Business Statistics

Lecture 1: Introduction

© 2023 McGill University

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Introductions

About your instructor.

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Introductions

About your instructor.

Let’s get to know a little bit about you! We will use Slido, an online polling
platform.

To participate, you can either:

go to slido.com on your computer and enter the 7-digit code appearing on
my screen
go to slido.com on your phone and enter the 7-digit code appearing on my
screen, or scan the QR code

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What is statistics?

According to the course textbook: “Statistics is the science of collecting,

organizing, and interpreting numerical facts, which we call data.”

MGCR 271: Business Statistics © 2023 McGill University 3 / 16

What is statistics?

According to the course textbook: “Statistics is the science of collecting,

organizing, and interpreting numerical facts, which we call data.”

Some questions that call for the use of statistics:

Which candidate is likely to win the election?

How effective is a vaccine at preventing hospitalization due to Covid?

Does caffeine increase the risk of heart attacks?

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Why is statistics part of the BCom core curriculum?

Statistics underlies every field of study that is based on empirical observation,

which includes all aspects of management.

Some management questions that call for the use of statistics:

Is a branding redesign worth the cost?

Is the output of a manufacturing plant of sufficiently high quality?

Does an investor’s portfolio have a suitable balance between risk and reward?

Is a company engaging in pay discrimination against one group of its

employees?

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How NOT TO DO statistics

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How NOT TO DO statistics

“The death rate in the Navy during the Spanish-American War was nine per
thousand. For civilians in New York City during the same period, it was sixteen
per thousand. Navy recruiters later used these figures to show that it was safer to
be in the Navy than out of it.” (Source: How to Lie with Statistics)

Is the conclusion warranted?

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How NOT TO DO statistics

An acquaintance posts a study to Facebook that shows that breastfed babies tend
to have fewer behavioural problems in daycare. She says: “if you don’t want your
baby to have behavioural problems at daycare, you should breastfeed him.”

Is the conclusion warranted?

Not without additional information about the study. For example, was it
designed so as to minimize the doubts.

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How NOT TO DO statistics

In 1936, the Literary Digest predicted that Alf Landon would handily defeat
Franklin Roosevelt in the US presidential election, based on a poll of 10 million of
its subscribers that was conducted by telephone. As it turned out, Roosevelt won
in a landslide. (Source: How to lie with statistics)

What went wrong?

the voters who could afford telephone and magazine subscriptions do not
necessarily represent the majority.

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Statistical sampling

Often in statistics, we want to infer information about a large population

from a sample. hypothesis testing

Two important considerations:

Is the sample unbiased? Was it chosen in a way that gives everyone in

the population an equal chance to be in the sample?

We’ve touched on this in previous slides (but we’ll have more to say about this
in a few classes)

How big should the sample be?

Let’s do a thought experiment...

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A thought experiment

Suppose I flip a coin 10 times, and it comes up heads 7 times? Would you
conclude that the coin is not fair? That is, would you conclude that the coin is
weighted in such a way that it is more likely to come up heads than tails?

MGCR 271: Business Statistics © 2023 McGill University 10 / 16

A thought experiment

Suppose I flip a coin 10 times, and it comes up heads 7 times? Would you
conclude that the coin is not fair? That is, would you conclude that the coin is
weighted in such a way that it is more likely to come up heads than tails?

If I continue to flip the coin, and I continue to see 70% heads, after how many
tosses would you conclude that the coin is unfair?

MGCR 271: Business Statistics © 2023 McGill University 10 / 16

A thought experiment

Suppose I flip a coin 10 times, and it comes up heads 7 times? Would you
conclude that the coin is not fair? That is, would you conclude that the coin is
weighted in such a way that it is more likely to come up heads than tails?

If I continue to flip the coin, and I continue to see 70% heads, after how many
tosses would you conclude that the coin is unfair?

We will learn how to reason systematically about this question later in the course!

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MGCR 271: Course Overview

About the Instructor:

Office Hours:

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MGCR 271: Course Overview

About you:

Please complete the “About Me” sheet (to be posted on MyCourses later today)
to give me an indication of who you are. This is optional, but encouraged!

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MGCR 271: Course Overview

For other important information about the course, see the Course Outline,
posted on MyCourses

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Let’s Begin!

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