Introduction to statistics

Definition of statistics
Importance of statistics in the modern world
Importance of statistics in business studies
How statistics can be dangerous?
Definition

A Statistic (noun) is just a numerical

fact, communicating a very limited piece
of information that is not very useful by
itself.

Example: According to a report by

Forbes, Bill Gates’ net worth was $86.0
billion in 2017.
Definition

Statistics (verb) is the science of

collecting, organizing, presenting,
analyzing, and interpreting numerical
data to assist in making more effective
decisions.
Definition

Example: According to a report by

Forbes, Bill Gates’ net worth was $86.0
billion in 2017, and he was the richest
man in the USA

The journey from different statistics to a

conclusion is called statistics
Importance of statistics in the modern
world

Optimization requires analysis. Anything that can be measured can be optimized.

Google’s data handling
Recommendations for videos on YouTube
Analysis of DNA and plants
Wind speeds for wind energy and sunlight for solar energy production
Most importantly, the Messi and Ronaldo debate
Who uses statistics?

Prediction • Insurance
Doctors, engineers, artists… • Financial Market
Weather Forecast • Business Statistics
Emergency Preparedness • Emergency Preparedness
Political Campaigns • Computer Science
Sports • Robotics
Research • Aerospace
Education • Data Science & Machine Learning
Quality Testing
Importance of statistics in business studies

Accounting
Audits
Finance
Marketing Investment recommendations
Production
Economics Marketing research applications
Information Systems
Quality control

Forecasting the future economic behavior

Monitoring data communication systems

Why is statistics important to you?

Data are collected everywhere and require statistical knowledge to make the information useful
Statistical techniques are used to make professional and personal decisions. No matter what your career, you will need a knowledge of statistics to understand the world and to be conversant in your career.
More effective personal and professional decisions
How statistics can be dangerous?

To explain this, we can say that media houses use wrong statistics to show their biased opinions. They can justify their claims from the data. But that’s not the whole truth.

For example: In 2007 in the UK, Colgate released an ad claiming, “80% of dentists recommend Colgate.” However, the UK's advertising standard authority ordered them to abandon this claim because although it was true, they knew people would not understand its meaning.
The actual data was something like this:
 How statistics can be dangerous?

Dentist 1 2 3 4 5
Recommendation Colgate Colgate Crest Colgate Colgate
Crest Crest Oral B Crest Crest
Oral B Sensodyne Oral B Oral B
Sensodyne Sensodyne
Pepsodent

• Yes, 80% recommend Colgate

• But 100% recommend Crest and 80% recommend Oral-B as well

• https://www.youtube.com/watch?v=sxYrzzy3cq8
Types of statistics

Descriptive Statistics - methods of organizing, summarizing,

and presenting data in an informative way.
EXAMPLE: A Gallup poll found that 49% of the people in a
survey knew the name of the first book of the Bible. The statistic
49 describes the number out of every 100 persons who knew the
answer.
Types of statistics

EXAMPLE 2: According to Consumer Reports, General Electric washing machine owners reported 9 problems per 100 machines during 2001. The statistic 9 describes the number of problems out of every 100 machines.

Inferential Statistics - A decision, estimate, prediction, or generalization about a population, based on a sample.
Types of statistics

A population is a collection of all possible individuals, objects, or

measurements of interest.
A sample is a portion, or part, of the population of interest
Examples: Descriptive vs Inferential Statistics

EXAMPLE: A Gallup poll found that 49% of the people in a survey knew the name of the first book of the Bible.
EXAMPLE: Based on a recent sample, I am 95% certain that the average age of my customers is between 32 and 35 years

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Examples: Descriptive vs Inferential Statistics

Consider two hospitals. Out of each hospital’s last 1000 patients, 900 survived at hospital A, while 800 survived at hospital B.
Which hospital is the better choice?

worse:better Low health level Better health level

Hospital/Patients Total survived health level survived survived
A 900 100:900 30 (30%) 96.6%
B 800 400:600 210 (52.5%) 98.3%
Types of Variables

Consider a one-month sale dataset of the

Applewood Auto Group in the USA. In this
period, the Applewood Auto Group sold
180 vehicles at their four dealerships.
A variable is any characteristics, number, or
quantity that can be measured or counted.
There are five variables for each vehicle sale: age
of the buyer, amount of profit, dealership that
made the sale, type of vehicle sold, and number of
previous purchases by the buyer.
Types of Variables

A. Qualitative or Categorical variable - the characteristic being studied is nonnumeric.

EXAMPLES: Gender, religious affiliation, type of automobile owned, state of birth, eye color are examples.

B. Quantitative variable - information is reported numerically.

EXAMPLES: balance in your checking account, minutes remaining in class, or number of children in a family.
Quantitative Variables - Classifications

Quantitative variables can be classified as either discrete or continuous.

A. Discrete variables can only assume certain (a finite number of) values and there are usually “gaps” between values.
EXAMPLE: the number of bedrooms in a house, or the number of hammers sold at the local Home Depot (1,2,3,…,etc).
B. Continuous variable can assume any value within a specified range.
EXAMPLE: The pressure in a tire, the weight of a chicken, or the height of students in a class.
Summary of Types of Variables
Level of Measurement

Consider a one-month sale dataset of the

Applewood Auto Group in the USA. In this
period, the Applewood Auto Group sold
180 vehicles at their four dealerships.

There are five variables for each vehicle sale: age

of the buyer, amount of profit, dealership that
made the sale, type of vehicle sold, and number of
previous purchases by the buyer.
Four Levels of Measurement

Nominal level - data that is classified into categories

and cannot be arranged in any particular order.
EXAMPLES: eye color, gender, religious
affiliation.
To tag elements with a name or status

What is your
What is your Where do you
Political
Gender? preference? live?

1 – Independent a). Suburbs

M – Male
F – Female 2 – Democrat b). City
3 – Republican c). Town
Four Levels of Measurement

Ordinal level – involves data arranged in some order, but the differences between data values cannot
be determined or are meaningless.
EXAMPLE: During a taste test of 4 soft drinks, Mellow Yellow was ranked number 1, Sprite
number 2, Seven-up number 3, and Orange Crush number 4.
Relating to the order of something in a series. Used to give
2 – Satisfied
order to different
1 – Neutral 0 – Unsatisfied
elements of data
How satisfied are you with our services?
Four Levels of Measurement

Interval level - similar to the ordinal level, with the additional property that meaningful amounts of differences between data values can be determined. There is no natural zero point.
EXAMPLE: Temperature on the Fahrenheit scale.
Space in between, not multiples

Ratio level - the interval level with an inherent zero starting point. Differences and ratios are meaningful for this level of measurement.
EXAMPLES: Monthly income, or distance traveled.
Space between, zero exists and multiple values mean they are the multiples
Four Levels of Measurement

Gender, temperature, weight and the positions of race participants

Order? If no, it’s nominal level

Equally spaced? If no, ordinal level
Zero means none? If no, interval level
Otherwise, ratio level
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