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# CHAPTER 1

Objectives
Demonstrate knowledge of statistical terms. Differentiate between the two branches of

## The Nature of Probability and Statistics

statistics. Identify types of data. Identify the measurement level for each variable.

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Objectives (contd.)
Identify the four basic sampling techniques. Explain the difference between an observational and an experimental study. Explain how statistics can be used and misused. Explain the importance of computers and calculators in statistics.

Introduction
Statistics is the science of conducting studies to collect, organise, summarise, analyse, and draw conclusions from data.

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Some Examples
IRELAND FACTS
Population: 4 million (official figure, 2003) Capital: Dublin Major languages: English, Irish Major religion: Christianity Life expectancy: 74 years (men), 80 years (women) (UN) (BBC Website)

## Use of Statistics in Business

Quality control. Statistical quality-control procedures assure high product quality and enhance productivity. Product planning. Statistical methods are used to analyse economic factors and business trends and to prepare detailed budgets, inventory-control systems, and realistic sales quotas. Forecasting. Statistics are used to predict sales, productivity, and employment trends.

## Top Internet search sites

User in millions for March,2002

## (USA Today, 2002)

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## Descriptive and Inferential Statistics

Descriptive statistics consists of the collection, organisation, summarisation, and presentation of data. Inferential statistics
consists of generalising from samples to populations, performing estimations, hypothesis testing, determining relationships among variables, and making predictions.

Basic Vocabulary
Probability is the chance of an event occurring. A population consists of all subjects that are being studied. A sample is a group of subjects selected from a population.

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## Populations and Samples

You use inferential statistics to form conclusions about a large group a population by collecting a portion of it a sample. The analyst decides what the population is. Typically, the population is so large that it would be nearly impossible to obtain information about every item in it. In stead, we obtain information about selected members and attempt to draw a conclusion about all members. In other words, we attempt to infer something about the population using information about only some of the members of this population.

Some examples
The average cost of an airline meal in 1993 was \$4.55;
(Source: Ever Has Its Price, Richard E. Donley, Simon and Schuster)

More than 1 in 4 United States children have cholesterol levels of 180 milligrams or higher;
(Source: The American Health Foundation)

Every 10 minutes, 2 people die in car crashes and 170 are injured;
(Source: American National Safety Council estimates)

The average amount spent per gift for Mom on Mothers day is \$25.95;
(Source: The Gallup Organisation)

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More Examples
9 out of 10 on-the-job fatalities are men;
(Source: USA Weekend)

## Variables and Data

In order to gain knowledge about seemingly haphazard events, statisticians collect information for variables that describe the events. A variable is a characteristic or attribute that can assume different values. Data are the values that variables can assume.
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## Expenditures for the cable industry were \$5.66 billion on 1996;

(Source: USA Today)

## The median household income for people age 25-34 is \$35,888;

(Source: USA Today)

## Allergy therapy makes bees go away;

(Source: Prevention)

## Drinking decaffeinated coffee can raise cholesterol levels by 7%;

(Source: American Heart Association)

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## Variables and Data (contd.)

A data set is a collection of data values. Each value in the data set is called a data value or a datum. Random variables have values that are determined by chance.

## Variables and Types of Data

Qualitative variables can be placed into distinct categories according to some characteristic or attribute. Quantitative variables are numerical in nature and can be ordered or ranked.

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Some Examples
Qualitative -----Colours of cars Gender

## Variables and Types of Data (contd.)

Quantitative variables can be further classified into two groups. Discrete variables assume values that can be counted. Continuous variables can assume all values between any two specific values.

classroom

--

by fisher men

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## Variables and Types of Data (contd.)

Rounding of the continuous values: Usually, continuous data are rounded to the nearest given unit. For example, heights might be rounded to the nearest inch. Hence, a recorded height of 73 inches could mean any measure from 72.5 inches up to but NOT including 73.5 inches, which would be rounded to 74 inches.
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Some Examples

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Measurement Scales
In addition to being classified as qualitative or quantitative, variables can be classified by how they are categorised, counted or measured. For example, can the data be organised into specific categories, such as area of residence (rural or urban)? Can the data values be ranked, such as heights or IQs? This type of classification - i.e. how variables are categorised, counted, or measured - use measurement scales, and four common types of scales are used: nominal, ordinal, interval and ratio.
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Levels of Measurement
Nominalclassifies data into mutually exclusive (nonoverlapping), exhausting categories in which no order or ranking can be imposed on the data. For example, Zip code, Gender (M or F), Eye colour (blue, brown, green, hazel), Political affiliation, Religious affiliation, Study field (mathematics, computers, etc.), Nationality.
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## Levels of Measurement (contd.)

Ordinalclassifies data into categories that can be ranked; however, precise differences between the ranks do not exist. For example, Grade (A,B,C,D,F), Judging (first place, second place, etc.), Rating scale (poor, good, excellent), Ranking of tennis player.

## Levels of Measurement (contd.)

Intervalranks data, and precise differences between units of measure do exist; however, there is no meaningful zero. For example, IQs, Temperatures

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## Levels of Measurement (contd.)

Ratiopossesses all the characteristics of interval measurement, and there exists a true zero. For example, Height, Weight, Time, Salary, Age.

## Data Collection and Sampling Techniques

Surveys are the most common method of collecting data. Three methods of surveying are: Telephone surveys Mailed questionnaire surveys Personal interviews

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Sampling Methods
Investigating the whole population is often impossible due to expense, time, or size of population etc. Using samples saves time and money and, in some cases, enables the researcher to get more detailed information about a particular subject. Samples cannot be selected in haphazard ways because the information obtained might be biased. To obtain samples that are unbiased - i.e. give each subject in the population an equally likely chance of being selected statisticians use four basic methods of sampling: random, systematic, stratified, and cluster sampling.

## Sampling Methods (contd)

Random samples are selected using chance methods or random methods.

One example is to number each subject in the population. Then place numbered cards in a bowl, mix them thoroughly, and select as many cards as needed. The subjects whose numbers are selected constitute the sample.

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## Sampling Methods (contd)

Researchers obtain systematic samples by numbering each subject of the populations and then selecting every kth number.
For example, supposed there were 2000 subjects in the population and a sample of 50 subjects were needed. Since 2000/50=40, then k=40, and every 40th subject would be selected; however, the first subject (numbered between 1 and 40) would be selected at random. Suppose subject 12 were the first subject selected; then the sample would consist of the subjects whose numbers were 12, 52,92, etc. until 50 subjects were obtained.
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## Sampling Methods (contd)

Researchers select stratified samples by dividing the population into groups according to some characteristic that is important to the study, then sampling from each group.
For example, suppose the president of a 2-year college wants to learn how students feel about a certain issue. Furthermore, the president wishes to see if the opinions of the first year students differ from those of the second-year students. The president will select students from each group to use in the sample.
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## Sampling Methods (contd)

Researchers select cluster samples by using intact groups called clusters.
Suppose a researcher wishes to survey apartment dwellers in a large city. If there are 10 apartment buildings in the city, the researcher can select at random 2 buildings from 10 and interview all the residents of these buildings. Cluster sampling is used when the population is large or when it involves subjects residing in a large geographic area.

## Other Sampling Methods

In addition to the four basic sampling methods, researchers use other methods to obtain samples. One such method is called a convenience sample. Here a researcher uses subjects that are convenient. For example, the researcher may interview subjects entering a local mall to determine the nature of their visit or perhaps what stores they will be patronising. This sample is probably not representative of the general customers for several reasons. For one thing, it was probably taken at a specific time of day, so not all customers entering the mall have an equal chance of being selected since they were not there when the survey was being conducted. But convenience samples can be representative of the population. If the researcher investigates the characteristics of the population and determines that the sample is representative, then it can be used.
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## Observational and Experimental Studies

In an observational study, the researcher merely observes what is happening or what has happened in the past and tries to draw conclusions based on these observations. In an experimental study, the researcher manipulates one of the variables and tries to determine how the manipulation influences other variables.

## Uses and Misuses of Statistics

Suspect samples Very small samples Bias sample selection Volunteer samples Ambiguous averages (median, mean, mode) Changing the subject ( 3% vs. 6,000,000)

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## Uses and Misuses of Statistics (contd)

Detached statistics (compared to what?) Implied connections (may help, suggest) Misleading graphs Faulty survey questions

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## Computers and Calculators

In the past, statistical calculations were done with pencil and paper. However, with the advent of calculators, numerical computations became easier.

Statistical Packages
Excel, MINITAB, SPSS Students should realise that the computer and calculator merely give numerical answers and save time and effort of doing calculations by hand.

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Summary
The two major areas of statistics are descriptive and inferential. When the populations to be studied are large, statisticians use subgroups called samples. The four basic methods for obtaining samples are: random, systematic, stratified, and cluster.
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Summary (contd.)
Data can be classified as qualitative or quantitative. The four basic types of measurement are nominal, ordinal, interval, and ratio. The two basic types of statistical studies are observational and experimental.

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Conclusion
The applications of statistics are many and varied. People encounter them in everyday life, such as in reading newspapers or magazines, listening to the radio, or watching television.

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