BUSINESS

STATISTICS
LECTURE 2
A REVIEW OF THE PREVIOUS LECTURE

• Introduction to statistics
• Types of statistics
• Types of variables
TYPES OF STATISTICS

Descriptive Statistics - methods of organizing,

summarizing, and presenting data in an informative way.

Inferential Statistics - A decision, estimate, prediction,

or generalization about a population, based on a
sample.
TYPES OF VARIABLES
TODAY’S LECTURE

• The Four Levels of Measurement

• Data Types as How It is Recorded
• Data Representation for Different Types
• Frequency Tables and Bar Charts
• Frequency Distributions and Histograms

• Time Series Data and Line Charts

• Panel Data and Line Charts
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

Consider the following example:

the patient is given a form to fill on his arrival to the hospital, In addition to other queries,
he notices the following four.

What is your Gender? Rate your discomfort from 0 – 10

State your body temperature State your body weight
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? live?
preference?

1 – Independent a). Suburbs

M – Male
2 – Democrat b). City
F – Female
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 order to different elements of
data

2 – Satisfied 1 – Neutral 0 – Unsatisfied

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

https://www.questionpro.com
DATA TYPES

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.

5 variables on one instance in time

Cross-sectional Data
DATA TYPES

• Cross-sectional Data
• Frequency Tables and Bar Charts
• Frequency Distributions and Histograms

• Time Series Data

• Line Charts

• Panel Data
• Line Chart Comparisons
DESCRIPTIVE STATISTICS

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.
FREQUENCY TABLES

A grouping of qualitative data

into mutually exclusive and
collectively exhaustive classes
showing the number of
observations in each class.
RELATIVE CLASS FREQUENCIES

• You can convert class frequencies to relative class frequencies to show the fraction of
total observations in each class. A relative frequency captures the relationship between a
class frequency and the total number of observations. But why?
BAR CHART

• Why is graphical representation

important?
• A graph that shows qualitative classes on
the horizontal axis and the class
frequencies on the vertical axis. The class
frequencies are proportional to the
heights of the bars.

• Always gaps between bars

• Is the order on the horizontal axis
important?
PIE CHART

• In terms of vehicle type, 40% of the

total sales were Sedans, 30% were
SUVs, 15% were compacts, 10%
were trucks and 5% were hybrids
• A chart that shows the proportion or
percentage that each class represents
of the total number of frequencies.
FREQUENCY DISTRIBUTION

• A grouping of quantitative data into mutually exclusive

and collectively exhaustive classes showing the number of
observations in each class.

• Collectively exhaustive
• Mutually exclusive
FREQUENCY DISTRIBUTION

• Class limits
• Lower and upper class limits

• Class width / Class interval

• Class boundaries
• Class midpoint
STEPS TO CREATE A FREQUENCY DISTRIBUTION

• Determine the number of observations

• Decide on the number of classes.

• The rule
• Determine the class interval.

• Set the individual class limits.

• Count the number of observations in each class.