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Introduction
Chapter 1
1.1 What is Statistics?
Some Basic Ideas

 Statistics as a discipline

 Questions we can answer with statistics

 Variation, patterns and models



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1.1 What is Statistics?
Statistics as a Discipline

 Science and art of extracting answers from data

 A statistic is a property of data

 Statistics can be numbers (like an average) or
graphs that display information (like a timeplot)

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1.1 What is Statistics?
Typical Questions Statistics Help to Answer

 Which customers are interested in an MP3
player?

 How much are customers willing to pay for an
MP3 player?

 Why does a shopper choose a particular box of
cereal?

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1.1 What is Statistics?
Variation, Patterns and Models

 Variation refers to differences among items /
individuals or fluctuations over time

 Patterns are systematic or predictable features in
data

 Models break down variation into a pattern and
unexplained variation

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1.1 What is Statistics?
Statistical Models

 Key to extracting answers from data

 Good models simplify reality

 Finding real patterns helps us to understand data,
plan for the future, and make better decisions

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Predicting Employment




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Predicting Employment

 Back in September 2005, how could you forecast
employment in October?

 Use monthly employment data for U.S. beginning
January 2003.

 Prepare a timeplot (a chart of values ordered in
time) to display monthly employment data
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Timeplot of Employment Data

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Linear Pattern and Region of Uncertainty


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Conclusions

 Extrapolating the pattern (line) into the future
provides a forecast for October

 Actual employment for October is less than
expected and below the anticipated range

 This surprising result breaks from the pattern and
deserves attention (the Katrina effect?)

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Pricing a Car


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Pricing a Car

 Is $22,000 too much to spend on a 2002 BMW
325i with 53,000 miles?

 Get prices for a sample of certified used BMW’s
from the Philadelphia area in November 2005

 Prepare a scatterplot (a graph showing pairs of
values) of price versus mileage for this sample

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Scatterplot of Price Versus Mileage


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Line and Region of Uncertainty


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Conclusions

 The range of uncertainty is so wide because
factors other than mileage affect price

 This model uses all of the data to answer the
question about one used car (borrowing strength)

 $22,000 isn’t too much to pay (it is less than
predicted by our line and within the range)
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1.3 How to Use This Book
The Four M’s

 Motivation: reason for answering a question or
solving a problem
 Method: plan for addressing the problem
 Mechanics: performing the calculations,
generating graphs and displays
 Message: explanation of conclusions

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