COM508 BUSINESS STATISTICS
REVIEWER
UNIT 1 Intro to data collection
A. Preview of Business stats
1. Origin of statistics
➔ Statista (statesman)
➔ First used by gottfried achenwall at
marlborough Gottingen
➔ Introduced to England by Dr. EAW
Zimmerman
➔ Popularized by Sir John Sinclair in his
“Statistical account of scotland
1791-1799”
2. Definition
➔ A collection of numerical facts or data
➔ An academic discipline
➔ The collection, presentation, analysis
and utilization of numerical data to
make inferences and reach decisions in
the face of uncertainty or
incompleteness of data
3. Divisions
a. Descriptive statistics
➔ Summarizing and describing a body of
data in the form of tables, charts, and
graphs and other forms of graphic
display which is often done with the use
of frequency distributions
➔ It consists of procedures for describing
some characteristics of the data through
the use of descriptive tools such as
measures of central tendency,
dispersion, shape, and association.
b. Inferential statistics
➔ The process of reaching generalizations
about a population by examining a
sample
➔ Involves inductive reasoning
➔ To be valid it must be based on a sample
that fully reflects the characteristics and
properties of the population it is being
drawn
➔ Possibility of error exists
➔ Probability theory is essential, it is also
referred to as deductive statistics
➔ Statistical inference is a branch of
statistics called decision theory.
4. Relevance
➔ The application of statistics in a wide
variety of business, economic, and daily
situations show its importance and
relevance
➔ Statistics are the sets of mathematical
equations that we use to analyze the
things, it keeps us informed about what
is happening in the world
B. Concepts of Data, Variables, Elements, and
observations
1. Distinction of data, variables,
elements, and observations
Data
- The facts and figures collected,
summarized for presentation analyzed
and interpreted
- All the data collected in a particular
study are referred to as the data set for
the study
Elements (like sample)
- The characteristic of interest for
elements
- Measurements observed values collected
on each variable
Observation
- The set of measurements obtained for a
particular element, thus if there are 50
elements there are also 50 observations
 2. Types of Data
According to the nature of data
Categorical/Qualitative Data
➔ Dichotomous
➔ Multinomial
Numerical/Quantitative Data
➔ Discrete
➔ Continuous
Categorical data
Dichotomous
- There are only 2 categories/choices and
is binary coded
- Ex: sex, gender, answer
Multinomial
- There are 3 or more categories/choices
and zero is refrained in coding
- Ex: Nationality, languages, religion
Numerical Data
Discrete
- Countable numbers and whole numbers
- Ex: People, chairs, tables
Continuous
- Numbers in fraction form
- Ex: price, income, weight
Time periods and number of elements
Cross sectional
➔ One time period only (current) and
many elements
Time series
➔ Many time periods and one element
Panel or longitudinal
➔ Many time period and many elements
3. Levels of measurement scale
Qualitative: Nominal and ordinal
Quantitative: Interval and ratio
Nominal
➔ Consists or uses labels to identify an
attribute of the element
➔ A numerical as well as non numerical
code/label may be used
Ordinal
➔ Exhibits properties of nominal data but
in addition the order or rank of data is
meaningful
➔ A non-numeric or numerical code can
be used to record it but in assigning the
code the order of values should be
maintained
Interval
➔ The data has all the properties of ordinal
data and the interval between values is
expressed in terms of a fixed unit of
measurement
➔ Always numerical
➔ The difference between values are
meaningful
➔ Characterized by not having a
meaningful zero value
Ratio
➔ The data has all the properties of
interval data and the ratio of two values
is meaningful
➔ This scale requires that zero value be
included to indicate that nothing exists
for the variable at zero point

Grouping 4. Relationships among variables

Ungrouped - raw data ★ Dependent
Grouped - ranges are made ★ Independent
★ Moderating
Filling ★ Control
Stacked - cross sectional or time series ★ Intervening
Unstacked - Panel or longitudinal
1. Dependent variable
➔ The presumed effect, response,
or affected variable and its
outcome can be predicted
➔ Since its value is predicted from
the models, it can also be called
an endogenous variable
2. Independent Variable
➔ The one causing the change, the
main factor presumes to be the
cause, stimulus and manipulates
the value of dependent variable
➔ Sometimes called the main
explanatory variable
➔ The value of this variable is
derived outside of the model
and is thus called an exogenous
variable
3. Moderating Variable
➔ It is the second independent
variable or another explanatory
variable
➔ Believed to have significant
contributory or contingent effect
on the originally IV-DV
relationship
4. Control Variable
➔ Another extraneous variable or
explanatory variable which is
considered to have
compounding effect on the
hypothesized IV-DV
relationship
5. Intervening Variable (Qualitative)
➔ A conceptual mechanism
through which the IV and MV
might affect the DV
➔ The factors which theoretically
affects the observed
phenomenon but cannot be seen,
measured or manipulated; its
effect must be inferred from the
effects of the IV and DV on the
preserved phenomenon
C. Data Collection Methods
Sources of Data
1. Secondary Data
2. Primary Data
Secondary Data
➔ It involves the acquisition of data from
secondhand sources or from data
previously gathered or generated by
other agencies, public, or private for
other purposes
➔ Different sources of secondary data
◆ Printed out reports or
publications
◆ Electronic databases
◆ Gov agencies,universities,
commercial info service groups
etc
Primary Data
➔ It involves the gathering of data from
the direct source for the first time for the
purpose of the study of the researchers
Different techniques to gather primary data
1. Surveys
2. Observations
3. Experimentation
4. Unobtrusive
5. Delphi technique
6. Focus group discussion
7. Projective method
Survey
Interview
➔ Personal or telephone by using an
interview guide or interview schedule
➔ Interview guide - unstructured/open
ended
➔ Interview schedule - structured/close
ended
Questionnaire
➔ Self-administered;mailed;email/internet
 ➔ Important consideration for this is the
response rate/retrieval rate is only about
25%-30% of questionnaires are returned
so there is a need to persistently follow
up
Guide in constructing a good questionnaire
Content
Purpose - should adequately answer the
objectives and hypothesis of the study
Language - the words to be used should be
familiar and nearest to the respondents’ level of
comprehension
Questions - open-ended or close-ended
Measurement - determine the type of response
categories to be used for the close-ended
questions
- Validity and reliability
Order - should be arranged in a manner which
facilitates the respondent’s replies
Other Features
Introduction - must contain an introductory part
- State the purpose and significance of the
study, the reason for choosing the
respondent for his/her cooperation
Appearance - should motivate the respondent
Length - short to encourage the respondent
Personal data - standard practice that
demographic information is collected
Observation
➔ This method requires the use of one’s
senses by looking at behavioral and
non-behavioral phenomena with the aid
of a camera, one way mirror and or
recording instrument without directly
posing the questions to the respondents
➔ Approach to use can be participant or
non participant observation
Experiment
➔ Data is derived under controlled
conditions
➔ Time and cost issues should be greatly
considered under this method
Unobtrusive
➔ Other sources aside from individuals
such as employee attendance, report
cards, diaries, bills etc
Delphi Technique
➔ Qualitative process of acquiring
information on issues
➔ Involves forecasting or predicting trends
or outcomes
➔ Entails choosing a panel of key
informants who are considered experts
on the topic under study to be the
respondents
Focus group discussions
➔ It involves gathering 5-15 selected
participants to elicit opinions,
perceptions, ideas, beliefs about a
specific or particular topic of interest
Projective method
➔ These data can be useful in studies on
consumer preferences and workers
motivation
➔ Uses standardized psychological tests
such as inkblots, sentence completion or
thematic apperception to probe deeper
into the minds, behavior, and attitudes of
respondents
Triangulation/Quadrangulation
➔ This process means that a combination
of different procedures from the same
group of respondents can strengthen
confidence in one’s result since the data
from one procedure can be validated
with the data of the other procedure
D. Sampling Theory
➔ sampling design - Method used to select
a sample from the population
➔ The main objective of the sampling
design is to provide guidelines for
selecting a sample that will provide a
specific amount of information about the
population at a minimum cost
 ➔ If the elements in the population are
relatively uniform, then any small
sample will provide acceptable results
➔ When the elements in the population are
not relatively uniform we must be
determining how to obtain a sample of
data
➔ We want to obtain a sample that is a
representative of all the elements of the
population
Terms:
Sampling design - the set of decisions that must
be made before the data are collected
Population - it is a set or collection of all
possible observations of some specific
characteristics
Sample - Representative portion of population
Parameter - data collected from the population
Statistic - Data collected from the sample
Census - every element in the population is
recorded
Elementary unit or element - object/person
which measurement is taken
Frame - A listing of all elementary unit in a
given problem
Since the sample is only part of a population,
any inferences made about the population
characteristics may be erroneous, despite this
possibility there are various reasons for taking a
sample rather than a census of the entire
population
Reasons for using sampling
➔ Expense
➔ Speed of response
➔ Infinite number of observations
➔ Destructive sampling
➔ Accuracy
Steps in Sampling process:
1. Define the population from which the
sample is to be drawn
2. Specify the population frame from
which the sample will be taken
3. Choosing the sampling method on
selecting samples
4. Determine the sample size required for
the study
5. Select the actual samples
Sampling Methods/Designs
According to element selection
➔ Unrestricted - any element from the
population has the chance to become a
sample
➔ Restricted - Certain elements are given
the chance to become a sample given
certain qualifications
According to representation basis
➔ Probability - everyone is given an equal
chance to become a respondent
➔ Non-Probability - not everyone is given
an equal chance to become a respondent
Probability
Simple random sampling
➔ Each element in the population has an
equal and known chance of being
chosen as a respondent
Systematic sampling
➔ Allows the elements of the population to
be selected using a constant number (K)
derived from dividing the total
population (N) from the sample (n)
➔ K = N/n
➔ First is selected by random sampling
and the succeeding respondents are the
kth element
Stratified sampling
➔ The population is divided into strata or
subgroups. It establishes homogeneity
within each subgroup so that clear
differences between groups are
determined
➔ Once stratification is made the final
respondents can be selected either by
simple random or systematic sampling
Clustered Sampling
➔ Involves grouping or division of the
elements of the population into
heterogeneous groups, it should be
noted that each cluster sample is
composed of respondents with different
perspectives and interests
Area Sampling
➔ It pertains to the grouping of the
population into geographical division
before the respondents. This sampling
can be done if there exists a clear
delineation of communities where the
respondents can be found
Double stage sampling
➔ Getting a smaller sample from the initial
large sample
➔ Called Sample within a sample
➔ Done when the researcher intends to
gather more in-depth focused data on
the topic of investigation
Sample size determination
Sampling from a finite population
➔ Sampling without replacement
➔ Sampling with replacement
Sampling from an infinite population
➔ Each element selected comes from the
same population
➔ Each elements is selected independently
Sample size determination in research involving
proportions normally uses the formula which
came from the Philippine social science council
survey series
Another is the simple formula
(Sloven’s formula)
N = N (1+Ne^2)
Guidelines for min number of respondents
Descriptive studies - min 100
Correlational studies - min 50
Experimental and causal - min 30
Sampling errors
➔ Happens when an unrepresentative
sample used to represent the
characteristic of the population - it
results when non-random sampling is
done
Non-sampling errors
➔ Mistakes made in data acquisition or
from sample observations being selected
improperly
Coverage Errors
➔ If the research objective and the
population from which the sample is
drawn are not aligned, the data collected
cannot accomplish its research objective
Non-responses error
➔ When segments of the target population
are systematically underrepresented or
overrepresented in the samples whereby
these groups either less likely or more
likely to respond
Measurement error
➔ Incorrect measurement of the
characteristics of interest, questions that
are ambiguous or difficult for
respondents to answer and responses are
not accurately reflecting the intended
answers of the respondents. Included
also are interviewer’s errors and
processing errors done during the
interview, recording or data preparation
Unit 2 Data Presentation and the categories are mutually
Data presentation techniques exclusive or non overlapping
3 ways of presenting data Relative frequency distribution
1. Tabular ➔ Lists the categories and the proportion
2. Graphical which each occurs
3. Textual ➔ Frequency of each category is divided
by the total frequency the sum of which
Things to remember when using tabular equals to 1.00
techniques ➔ Formula = f/total
All tabular presentations have the following Percentage distribution
● Table number ➔ Lists the categories and the percentage
● Table title with which each occurs
● Totals (row & column) ➔ Relative frequency multiplied by 100
● Box headings (row & column heading) and the sum is which 100%
○ Variable of interest ➔ Formula = rf*100
○ Categories Ex:
○ Frequency (f) Table 1 frequency distribution of respondents by
○ Relative frequency (rf) sex
○ Percentage (%)
Ex:
Table 1 frequency distribution of respondents by
category

Cross tabulation/contingency table

Tabular Data Presentation
Categorical/Qualitative
● Frequency distribution table or
univariate table
● Relative distribution
● Percentage distribution
● Cross tabulation or cross classification
or contingency table or multivariate
table
Frequency distribution table
➔ Univariate
➔ Presents the categories and the counts of
1 variable
➔ Minimum number of categories is two
or dichotomous and maximum is twenty
➔ Presents the categories and the counts of
two or more variables or relationship
between two or more variables and
likewise compare two or more sets of
data
➔ For presentation purposes only the
column is used for the variables with
less categories
➔ For establishing relationships the
column is used for the independent or
explanatory variable and the row is for
the dependent variable
Ex:
Table 2. Frequency Distribution of Respondents
by Sex & Location of Residence
Numerical/Quantitative
Array
➔ Arranging the data in ascending or
descending order (vertical or horizontal)
Frequency distribution table
➔ presents the classes and the counts of a
single or only one variable; minimum
number of classes or class intervals is
five and maximum is twenty classes and
the classes must be mutually exclusive
Steps in creating a frequency distribution table
for numerical or quantitative data
1. Determine the number of class intervals
or classes
➔ Use the sturges formula
➔ 1.3.3*log(N)
➔ Round up if it is in fraction
Ex:
2. Determine the class width
➔ range /number of classes
➔ Range = highest value - lowest value
3. Determine the class limits. Class limits
must be chosen so that each data
item belongs to one and only one class.
The lower class limit identifies the
smallest possible data value assigned to
the class while the upper class limit
identifies the highest possible data value
assigned to the class.
Relative frequency distribution
➔ lists the classes and the proportion with
which each occurs
➔ frequency of each category divided by
the total frequency; the sum of which is
equals to 1.00
Percent or percentage distribution
➔ lists the classes and the percentage with
which each occurs
➔ relative frequency multiplied by 100; the
sum of which is equals to 100%
Cumulative Frequency distribution/cf
➔ presents the classes and the accumulated
counts (either in ascending or
descending order) of a single or only
one variable
➔ Formula: f+previous cf
Cumulative Relative frequency distribution/crf
➔ lists the classes and the accumulated
proportion (either in ascending or
descending order) with which each
occurs
➔ Formula: crf+previous crf
Cumulative Percent or percentage distribution or
cpf or c%
➔ lists the classes and the accumulated
percentage (either in ascending or
descending order) with which each
occurs
➔ Formula: %+previous c%
Cross tabulation or contingency table or
Multivariate table
➔ presents the classes and the counts of
two or more variables or relationships
between two or more variables and
likewise compares two or more sets of
data.
➔ For presentation purposes only, the
column is used for the variable with less
classes
➔ For establishing relationships, the
column is used for the independent or
explanatory variable and the row is used
for the dependent variable.
Simpson’s Paradox
➔ can happen for cross tabulations of
qualitative or quantitative or mixture of
qualitative & quantitative data.
➔ It happens when conclusions drawn
from two or more separate cross
tabulations are reversed when the data
are aggregated into a single cross
tabulation
Graphical Data Presentation
Categorical/Quantitative
● Pie chart
● Bar chart
○ Simple bar
○ component/stacked
○ compound/side by side
● Pictogram
● Mapgraphs/Cartogram
Things to remember when using graphical
techniques
All graphical presentations have the following
parts
● Chart or figure number
● Chart of figure title (centered or
left-aligned)
Categorical Or Qualitative
Pie chart
➔ A graphical device for presenting
categorical data summaries based on
subdivision of a circle into sectors that
correspond to the relative frequency or
percent frequency for each class
➔ It is best used to represent percentage
distribution since the pie represents a
100%
Ex:
Bar Graph
Simple bar graph
➔ A graphical device for depicting
categorical data that have been
summarized in a frequency distribution
table wherein the emphasis is on the
frequency of actual count for each
category
➔ usually used for univariate tables
Component/stacked bar graph
➔ Bar chart in which each bar is broken
into rectangular segments of a different
color showing the relative frequency of
each category or class in a manner
similar to pie chart
Ex: Ex:

Compound/side by side bar graph

➔ A graphical display for depicting Numerical/Quantitative
multiple subcategories per class on the ● Stem and leaf display
same display ● Dot plots
Ex: ● Scatter diagram
● Line graph or trendline
● Histogram
● Pareto diagram
● Polygon
● Ogive

Stem and leaf display

Component and compound bar graph are used
➔ A graphics display used to show
for cross-tabulation/multivariate tables
simultaneously the rank order, and shape
of a distribution of data
Pictogram
Ex:
➔ Picture graphs
➔ Picture symbols are used to represent
values
Ex:

Dot plot
➔ A graphical device that summarizes
Map graphs data by the number of dots above each
➔ a map is drawn and divided into the data value on the horizontal axis
desired regions. Each region may be Ex:
distinguished from other regions using
varied lines, shadings with different
colors, or other symbols.
➔ It is always accompanied by a legend
which tells the meaning of the lines,
colors, or other symbols used
Scatter Diagram Ex:
➔ A graphical display of the relationship
between two quantitative variables. The
independent variable on the x axis and
the dependent variable on the y axis
Ex:

Pareto Diagram
➔ A type of chart that contains both bars
and line graph where individual values
are represented in descending order by
bars and the cumulative total is
represented by time
Line graph/trendline Ex:
➔ A line that provides an approximation of
the relationship between two variables
or the changes in a particular variable
over a span of time
Ex:

Polygon
➔ the line graph in the histogram or pareto
diagram representing the values of the
frequency distribution itself.
Ex:

Histogram
➔ A graphical display of the frequency,
Ogive
relative frequency or percent frequency
➔ the line graph in the histogram or pareto
constructed by placing the class
diagram representing the cumulative
intervals on the horizontal axis and the
percent frequency distribution
frequency distribution on the vertical
Ex:
axis

Graphical Excellence
➔ It is the term we apply to techniques that
are informative and concise and that
impart information clearly to their
viewers.
➔ We discuss an equally important
concept: Graphical Integrity and its
enemy graphical deception
5 Characteristics that should be applied to
achieve Graphical Excellence
1. The graph presents large data sets
concisely and coherently.
2. The ideas & concepts the statistics
practitioner wants to deliver are clearly
understood by the viewer.
3. The graph encourages the viewer to
compare two or more variables.
4. The display induces the viewer to
address the substance of the data and not
the forms of the graph.
5. There is no distortion of what the graph
reveals.
Edward Tufte (professor of Statistics in Yale
University) summarized graphical excellence
this way:
➔ It is the well-designed presentation of
interesting data – a matter of substance,
of statistics, and of design.
➔ It is that which gives the viewers the
greatest number of ideas in the shortest
time with the least ink in the smallest
space.
➔ It is nearly always multivariate.
➔ It requires telling the truth about the
data.
General guidelines on how to increase the
likelihood that the display will effectively
convey the key information in the data.
1. Give the display a clear and concise title
2. Keep the display simple. Do not use
three dimensions if two dimensions are
sufficient.
3. Clearly label each axis and provide the
units of measure
4. If color is used to distinguish categories,
make sure that the colors are distinct.
5. If multiple colors or line types are used,
use a legend to define how they are used
and place the legend close to the
representation of the data.
GRAPHICAL DECEPTION:
1. Graph without a scale on one axis. No
label or variable to measure on the
y-axis although the x axis is time period.
So what variable is being measured on
the y-axis, is it sales, profit, expenses,
what ??????
2. Same graph with different captions.
Your impression of the trend might
differ depending on which caption you
read.
3. Perspectives of the chart are often
distorted by the changes in absolute
values rather than percentage changes.
4. Distortions on the chart can be made by
drastic stretching of the vertical or
horizontal axis or expanded scale on
either axis
5. Be on the lookout for size distortions as
in the case of pictograms to enhance the
appeal such that the increase in sales is
manifested by increase in height and
width - bigger size of the bottle of the
soft drink over the years. One is less
likely to be misled if the focus is on the
numerical values rather than the graph
representing the value
Unit 3 Data Interpretation
DESCRIPTIVE MEASURES
● Measures of Central Tendency or Location
● Measures of Relative Location
● Measures of Dispersion or Spread or Variability
● Measures of Shape
● Measures of Association or Linear Relationship
Measures of central tendency
Mean
➔ The sum of observations divided by the number of observations
Formula:
Ungrouped Grouped

Population sample Population sample

µ = Σ𝑥/𝑁 𝑥 = Σ𝑥/𝑛 µ = Σ𝑓𝑥/𝑁 𝑥 = Σ𝑓𝑥/𝑛

Median
➔ Middle value of observed ordered observations
➔ Data must be in array
Formula:
Ungrouped Grouped

Population sample Population sample

Med = (N + 1) / 2 Med = (n + 1) / 2 Med = L + {[(N/2) – F] / Med = L + {[(n/2) – F] /

fm} * c fm} * c
Where F = sum of the Where fm = frequency of
frequencies up to but not the median class c = class
including the median class size or width
L = lower limit of the
median class

Mode
➔ Most frequent observation
Formula:
Ungrouped Grouped

Population sample Population sample

The most frequently occurring value. Mode = L + [d1 / (d1 + d2)] * c Where d1 = frequency
of modal class less frequency of preceeding class while
d2 = frequency of modal class less frequency of the
succeeding class L = lower limit of the modal class
Midhinge
Formula:
(Q1 + Q3) / 2
Midrange
Formula:
(LV+ HV) / 2

Measures of Relative Location

Q1/Quartile 1
Formula:
Ungrouped

Population sample

the value that lies on the (N or n+ 1) / 4

Q3/Quartile 3
Formula:
Ungrouped

Population sample

the value that lies on the 3 * (N or n+ 1) / 4

Deciles
➔ the distribution is divided into 10 parts
Percentiles
➔ the distribution is divided into 100 parts
➔
FIVE NUMBER SUMMARY & BOX-AND-WHISKER PLOT
➔ The five number summary summarizes the data set by identifying the minimum value, Q1,
median, Q3 , maximum value.
➔ The box-and-whisker plot is the graphical display of the five number summary. Comparative
boxplots can also be used to provide two or more groups and facilitate visual comparisons among
the groups.
Ex:
Measures of spread, dispersion, or variability
Range
Formula:
Highest Value – Lowest Value
Interquartile Range
Formula:
Q3 – Q1
Variance
Formula:
Ungrouped Grouped

Population sample Population sample

2 2 2 2 2 2 2 2
σ = Σ(𝑋 − µ) /𝑁 σ = Σ(𝑋 − 𝑥) /𝑛-1 σ = Σ𝑓(𝑋 − µ) /𝑁 σ = Σ𝑓(𝑋 − 𝑥) /𝑛-1
Standard deviation
Formula:
Ungrouped Grouped

Population sample Population sample

2 2 2 2
σ = Σ(𝑋 − µ) /𝑁 σ = Σ(𝑋 − 𝑥) /𝑛-1 σ = Σ𝑓(𝑋 − µ) /𝑁 σ = Σ𝑓(𝑋 − 𝑥) /𝑛-1
Coefficient of variation
Formula:
Ungrouped Grouped

Population sample Population sample

V = σ/µ V = σ/𝑥 V = σ/µ V = σ/𝑥

Empirical rule
➔ When data are believed to have a symmetrical or bell-shaped distribution
➔ can be used to determine the percentage of data values that must be within a specified number of
standard deviations of the mean.
➔ If the skewness is equal to zero, then the basis of interpreting the standard deviation is the
Empirical Rule. For the Empirical Rule get the 1st up to the 3rd std dev values before making the
interpretations.
◆ Approximately 68.26% of the data values will be within one std deviation of the mean.
◆ Approximately 95.44% of the data values will be within two std deviations of the mean.
◆ Approximately 97.74% or Almost all of the data values will be within three std deviations
of the mean.
Ex:
negative 1st std dev positive 1st std dev 497.24 519.76 Approximately 68.26% of the students
= (Mean - Std dev) = (Mean + Std. dev) have Math scores within 497.24 to
519.76 points which fall on the 1st std
deviation from the mean.

negative 2nd std dev positive 2nd std dev 485.98 531.14 Approximately 95.44% of the students
= Mean - (2*std = Mean + (2*std have Math scores within 485.99 to
dev) dev) 531.015 points which fall on the 2nd
std deviation from the mean

negative 3rd std dev positive 3rd std dev 474.72 542.27 Approximately 97.74% of the students
= Mean - (3*std = Mean + (3*std have Math scores within 474.73 to
dev) dev) 542.27 points which fall on the 3rd std
deviation from the mean.

Chebyshev’s theorem
➔ It enables us to make statements about the proportion of data values that must be within a
specified number of standard deviations of the mean to any data set regardless of the shape of the
distribution.
➔ If the skewness is not equal to zero, then the basis of interpreting the standard deviation is
Chebyshev's theorem. For Chebyshev's theorem, get the 2nd up to the 4th std dev values before
making the interpretations.
◆ At least 75% of the data must be within two std deviations of the mean.
◆ At least 89% of the data must be within three std deviations of the mean.
◆ At least 94% of the data must be within four std deviations of the mean.
Ex:
negative 2nd std dev positive 2nd std dev 485.98 531.14 At least 75% of the students have Math
= Mean - (2*std = Mean + (2*std scores between 485.99 to 531.015
dev) dev) points which fall on the 2nd std
deviation from the mean.

negative 3rd std dev positive 3rd std dev 474.72 542.27 At least 89% of the students have Math
= Mean - (3*std = Mean + (3*std scores between 474.73 to 542.27
dev) dev) points which fall on the 3rd std
deviation from the mean.

negative 4th std dev positive 4th std dev 463.47 553.53 At least 94% of the students have Math
= Mean - (4*std = Mean + (4*std scores between 463.47 to 553.53
dev) dev) points which fall on the 4th std
deviation from the mean.

Determining Outliers
3 approaches to determine outliers:
1. The IQR approach for both symmetrical and asymmetrical data distributions.
➔ Formula for the Lower Limit = Q1-(1.5*IQR) & for the Upper Limit = Q3+(1.5*IQR)
➔ any value beyond the lower and upper limits is considered an Outlier.
2. The Empirical rule for symmetrical data. Any value beyond the 3rd std deviation is considered an
Outlier.
3. Chebyshev's theorem for asymmetrical data. Any value beyond the 4th std deviation is considered
an Outlier.
Kurtosis
➔ peakedness of the distribution
◆ ku =3 = normal or mesokurtic
◆ ku >3 = Leptokurtic/positive(thin)
◆ ku <3 = Platykurtic/negative (flat)
Skewness
➔ symmetry of the distribution.
➔ If SK = 0, the distribution is symmetrical or normally distributed with bell-shaped distribution;
➔ it is asymmetrical, if sk > 0, + or right-skewed and if sk < 0, - or left-skewed.

Measures of association or linear relationship

Covariance
➔ It shows the manner of linear association or relationship of two variables whether the variables
are positively or directly related OR negatively or inversely related.
➔ However, the main problem of using Covariance as a measure of strength of the linear
relationship is that the value depends on the units of measurement of the variables
Correlation coefficient
➔ This measures the relationship between two variables that is not affected by the units of
measurement of X and Y.
➔ It can measure both the manner and degree of strength of a relationship.
The degree of strength can be:
➔ none or no relationship (0)
➔ very weak or very low(0.01-0.19)
➔ weak or low (0.2-0.39); moderate (0.4- 0.59)
➔ strong or high (0.6-0.79)
➔ very strong or very high (0.8-0.99)
➔ perfect relationship (1.0)
➔ The values can range from -1 to +1, inclusive of zero.

Interpretation examples:

MATH-SCORE is measured in interpretation

points

Mean 508.5 the students or respondents got an average math

score of 508.5 points or the students or
respondents got more or less 508.5 points in their
math scores

Standard Error 1.453322708

Median or Q2 505 half or 50% of the students or respondents got a

math score of 505 points or less and the remaining
half or 50% of the students or respondents got a
math score higher than 505 points

Mode 502 Majority or most or many of the respondents or

students got a math score of 502 points

Standard Deviation 11.25738929

Sample Variance 126.7288136

Kurtosis 4.15186183 The data distribution of math scores is leptokurtic
because the value of kurtosis is greater than 3.

Skewness 2.222002828 the data distribution of math scores is

asymmetrical and right-skewed or
positively-skewed because the value of skewness
is more than zero and positive

Range 49 the difference between the highest and lowest math

scores is 49 points

Minimum 496 the lowest math score is 496 points

Maximum 545 the highest math score is 545 points

Sum 30510

Count 60 there are 60 respondents or students who have

math scores or 60 elements

Confidence Level(95.0%) 2.908092021

Q1 502 one-fourth or 25% of the students or respondents

got a math score of 502 points or less and the
remaining three-fourths or 75% of the students or
respondents got a math score higher than 502
points

Q3 509 three-fourths or 75% of the students or respondents

got a math score of 509 points or less and the
remaining one-fourth or 25% of the students or
respondents got a math score higher than 509
points

midhinge 505.5

midrange 520.5

Interquartile range (IQR) 7

correlation of Math & Science
0.19 the manner of linear relationship or linear
association between Math and Science scores is
positive or direct since the correlation coefficient
is a positive value but the degree is very weak or
very low since the correlation value falls between
0.01-0.19.
 correlation of Math & Language
0.12 the manner of linear relationship or linear
association between Math and Language scores is
positive or direct since the correlation coefficient
is a positive value but the degree is very weak or
very low since the correlation value falls between
0.01-0.19.

covariance of Math & Science 27.18 the manner of linear relationship or linear
association between Math & Science scores is
positive or direct since the sign of the coefficient
of covariance is positive.

covariance of Math & Language 21.78 the manner of linear relationship or linear
association between Math & Language scores is
positive or direct since the sign of the coefficient
of covariance is positive.

coefficient of variation 0.022138425 the data distribution of Math scores is

homogeneous since the coefficient value is less
than 0.5. - (meaning that the Math scores are
relatively the same or similar to each other)

Note:
➔ To interpret the Standard deviation - you need to look at the value of the skewness
➔ When asked to interpret the default std dev - use the 1st std dev rule for Empirical rule and use
the 2nd std. dev rule for the Chebyshev's theorem.
➔ When asked if there are outlier values and identify the outlier values - identify the rule that is
being used before answering Yes or No and what are the outlier values.
Unit 4 - Probability distributions

● Discrete
● Continuous

Discrete:
● The variables are countable
● The probability function f(x) provides the probability that the random variable x assumes various
values.
● Types
○ Uniform or Univariate
○ Bivariate
○ Binomial
○ Poisson
○ Hypergeometric

1. Uniform or Univariate
- Distribution of a single variable
- Ex. Develop the probability distribution of the number of televisions per household
2. Bivariate
- About the relationship of two variables
- Provides probabilities of combinations of two variables
- Ex. After analyzing several months of sales the owner of an appliance store produces the
probability distribution of the number of refrigerators and stoves sold daily
- Financial Portfolios - amount of investment and interest rate/rate of return
3. Binomial
- The binomial experiment consists of a fixed number of trials represented by n
- Each trial has two possibilities failure or success
- The probability of success is p and failure is 1-p
- The trials are independent which means that the outcome of one trial does not affect the outcomes
of any other trials
- If properties 2, 3, and, 4 are present then each trial is a bernoulli process
- Ex. The leading brand of dishwasher detergent has a 30% market share. A sample of 25
dishwasher detergent customers was taken, what is the probability that 10 or fewer customers
chose the leading brand?
 4. Poisson
- The number of successes that occur in a period of time or an interval or space
- The number of successes that occur in any interval is independent of the number of successes that
occur in any other interval
- The probability of success in an interval is the same for all equal size intervals
- The probability of more than one success in an interval approaches 0 as the interval becomes
smaller
- Ex. The number of students who seek assistance with their statistics assignments is distributed
with a mean of 2 per day, what is the probability that no student seeks assistance tomorrow? Find
the probability that 10 students seek assistance in a week.
5. Hypergeometric
- The trials are not independent and the probability of success changes from trial to trial
Ex.
More and more shoppers prefer to do their holiday shopping online from companies, suppose that there is
a group of 10 shoppers, 7 prefer to do their holiday shopping online while 3 prefer to do their holiday
shopping in stores =, a random sample of 3 of these shoppers is selected for a more in depth study of how
the economy has impacted their shopping behavior. What is the probability that exactly 2 prefer shopping
online.

Continuous
● The variables are uncountable
● In fraction or decimal form
● The probability density function f(x) does not provide the probability values directly. Instead,
probabilities are given by areas under the curve or graph of the probability density function f(x).
● Types
○ Uniform
○ Normal
○ Exponential
○ Others

1. Uniform
- Range
- The following requirements apply to probability density function whose range is 𝑎 ≤ 𝑥 ≤ 𝑏
- 𝑓(𝑋) ≥ 0 for all x between a and b
- The total are under the curve between a and b is equal to 1.0
2. Normal
- The curve is symmetric about its mean and random variable ranges between
- − ∞ 𝑎𝑛𝑑 + ∞ there is a two parameter distribution
- Has mean and standard deviation
 3. Exponential
- This is a one parameter distribution, the distributions is completely specified once the value of the
lambda (λ) is known
- The mean and standard dev are equal to each other
- Ex. The time between breakdown of aging machines is known to be distributed with a mean of 25
hours, the machine has just been repaired. Determine the probability that the next breakdown
occurs more than 50 hours from now
4. Others
- T distribution
- Chi-square distribution
- F distribution

UNIT 5

Inferential statistics - concerned with empirical verification (trying to evaluate or verify if your
hypothesis is true, valid, and correct)
hypothesis - uneducated guess/theory/hula
- has to be validated ; true = accept false = reject

Hypothesis testing
- the general goal of a hypothesis test it to rule out chance (sampling error) as a plausible
explanation for the results from a research study
- is a technique to infer that what is true to a part is true to a whole (inductive reasoning)
- we should minimize sampling error and non-sampling error, sampling error emanates from the
incorrect computation of sample size and incorrect application of sampling
methodology/technique

STEPS IN HYPOTHESIS TESTING

STEP #1 DETERMINE THE TYPE OF STATISTICAL TEST TO BE USED

- Determine which statistical test is to be used based on whether it is a test of comparison or test of
relationship, the number of groupings and the level of measurement scale
- determining the statistical test is important cause if you use the wrong one it is GIGO

Test of comparisons
- the default is population standard deviation, if not sample standard deviation or variances will be
given/stated explicitly

Test variable One group Two group Three or more groups

Independent Related Independent Related

measures measures

Mean - T-test T-test Paired T-test Anova single Randomized

 Population assuming factor or block design
standard equal one-way or two-factor
deviation is variances Anova or Anova without
unknown completely replication
(sample std is T-test randomized
given) assuming design
unequal
variances fisher LSD
multiple
Mean - Z-test Z-test Pooled Z-test pairwise
Population comparisons or
standard Tukey-Kramer
deviation is pairwise
known comparison

Factorial
design or
two-way
Anova or
two-factor
Anova with
replication

sample size - depends on the groups

● if the population standard deviation is unknown but sample is more than 100/200 Z-test will be
used (when there are too many observations it approximates to population
● if the population standard deviation is is known even if sample size if very small Z-test will be
used
● if the sample standard deviation is known and sample size is more than 100/200 you can use
Z-test
● T-test is used when the sample standard deviation/variance is given and sample size is small/less
than 100

Mean - Ration data therefore the test variables are a ratio data
ex: GWA, Income, Prices, Height, etc,
Medians - Interval and Ordinal data

Test of comparison groups

One group - Comparing the variable to a standard
Two Group - Comparing a variable to another variable

Independent
- having different number of observations
Related measures
- Matched/paired (partnered with another group)
 - post test and pre test
- Repeated measures

Test variable One group Two group Three or more groups

Independent Related Independent Related

measures measures

Variance X^2 F-test for levene's test of

(Chi-square) variances homogeneity

Proportion Z-test Z-test Pooled Z-test X^2

(Chi-square)

Maracuillo
pairwise
comparison
procedure

Median Wilcoxon Wilcoxon Kruskal-wallis Freidman test

sum-rank test Sign-rank test test
(mann whitney
U test)

- Related measure for 2 groups or 3 or more groups means that the groups are either paired of
matched and post test happened or a case of before and after scenarios
- multiple pairwise comparisons - statistical procedures that can be used to conduct comparisons
between pairs such as in the case of fisher’s LSD or tukey kramer or maracuillo procedures

Test or relationship

Test Variables Test to be used

Test for independence of 2 categorical variables X^2 (Chi-square)

assuming that the expected frequency is atleast 5
for each category

Goodness of fit test for multinomial probability X^2 (Chi-square)

distribution or normal probability distribution
assuming that the expected frequency is at least 5
for each category

linear association between two variables that are pearsons’s correlation coefficient
continuous (when variables are ratio)

non-parametric alternative to test the association spearman’s rank correlation coefficient

of two variables (when variables are interval/ordinal)
Parametric – data set is numerical ratio
Non-parametric - data set may be numerical/non-numerical but uses interval/ordinal data

- you are testing the goodness of it for multinomial/normal probability distribution or we test the
parametric linear association between two ratio variables