Slides Prepared by JOHN S. LOUCKS St.

Edwards University

2003 Thomson/South-Western

Slide 1

Chapter 3 Descriptive Statistics: Numerical Methods Part B

Measures of Relative Location and Detecting Outliers Exploratory Data Analysis Measures of Association Between Two Variables The Weighted Mean and Working with Grouped Data

2003 Thomson/South-Western

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Measures of Relative Location and Detecting Outliers

z-Scores Chebyshevs Theorem Empirical Rule Detecting Outliers

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z-Scores

The z-score is often called the standardized value. It denotes the number of standard deviations a data value xi is from the mean.

xi x zi s

A data value less than the sample mean will have a zscore less than zero. A data value greater than the sample mean will have a z-score greater than zero. A data value equal to the sample mean will have a zscore of zero.
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Example: Apartment Rents

z-Score of Smallest Value (425)

xi x 425 490.80 z 1. 20 s 54. 74

Standardized Values for Apartment Rents

-1.20 -0.93 -0.75 -0.47 -0.20 0.35 1.54

-1.11 -0.93 -0.75 -0.38 -0.11 0.44 1.54

-1.11 -0.93 -0.75 -0.38 -0.01 0.62 1.63

-1.02 -0.84 -0.75 -0.34 -0.01 0.62 1.81

-1.02 -0.84 -0.75 -0.29 -0.01 0.62 1.99

-1.02 -0.84 -0.56 -0.29 0.17 0.81 1.99

-1.02 -0.84 -0.56 -0.29 0.17 1.06 1.99

-1.02 -0.84 -0.56 -0.20 0.17 1.08 1.99

-0.93 -0.75 -0.47 -0.20 0.17 1.45 2.27

-0.93 -0.75 -0.47 -0.20 0.35 1.45 2.27

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Chebyshevs Theorem
At least (1 - 1/z2) of the items in any data set will be within z standard deviations of the mean, where z is any value greater than 1. At least 75% of the items must be within z = 2 standard deviations of the mean. At least 89% of the items must be within z = 3 standard deviations of the mean. At least 94% of the items must be within z = 4 standard deviations of the mean.

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Example: Apartment Rents

Chebyshevs Theorem Let z = 1.5 with

x = 490.80 and s = 54.74

At least (1 - 1/(1.5)2) = 1 - 0.44 = 0.56 or 56% of the rent values must be between x - z(s) = 490.80 - 1.5(54.74) = 409 and x + z(s) = 490.80 + 1.5(54.74) = 573

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Example: Apartment Rents

Chebyshevs Theorem (continued) Actually, 86% of the rent values are between 409 and 573.

425 440 450 465 480 510 575

430 440 450 470 485 515 575

430 440 450 470 490 525 580

435 445 450 472 490 525 590

435 445 450 475 490 525 600

435 445 460 475 500 535 600

435 445 460 475 500 549 600

435 445 460 480 500 550 600

440 450 465 480 500 570 615

440 450 465 480 510 570 615

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Empirical Rule
For data having a bell-shaped distribution:

Approximately 68% of the data values will be

within one standard deviation of the mean.

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Empirical Rule
For data having a bell-shaped distribution:

Approximately 95% of the data values will be

within two standard deviations of the mean.

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Empirical Rule
For data having a bell-shaped distribution:

Almost all (99.7%) of the items will be

within three standard deviations of the mean.

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Example: Apartment Rents

Empirical Rule
Within +/- 1s Within +/- 2s Within +/- 3s Interval 436.06 to 545.54 381.32 to 600.28 326.58 to 655.02
435 445 450 472 490 525 590 435 445 450 475 490 525 600 435 445 460 475 500 535 600 435 445 460 475 500 549 600

% in Interval 48/70 = 69% 68/70 = 97% 70/70 = 100%

435 445 460 480 500 550 600 440 450 465 480 500 570 615 440 450 465 480 510 570 615
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425 440 450 465 480 510 575

430 440 450 470 485 515 575

430 440 450 470 490 525 580

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Detecting Outliers

An outlier is an unusually small or unusually large value in a data set. A data value with a z-score less than -3 or greater than +3 might be considered an outlier. It might be: an incorrectly recorded data value a data value that was incorrectly included in the data set a correctly recorded data value that belongs in the data set

2003 Thomson/South-Western

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Example: Apartment Rents

Detecting Outliers The most extreme z-scores are -1.20 and 2.27. Using |z| > 3 as the criterion for an outlier, there are no outliers in this data set.

Standardized Values for Apartment Rents

-1.20 -0.93 -0.75 -0.47 -0.20 0.35 1.54 -1.11 -0.93 -0.75 -0.38 -0.11 0.44 1.54 -1.11 -0.93 -0.75 -0.38 -0.01 0.62 1.63 -1.02 -0.84 -0.75 -0.34 -0.01 0.62 1.81 -1.02 -0.84 -0.75 -0.29 -0.01 0.62 1.99 -1.02 -0.84 -0.56 -0.29 0.17 0.81 1.99 -1.02 -0.84 -0.56 -0.29 0.17 1.06 1.99 -1.02 -0.84 -0.56 -0.20 0.17 1.08 1.99 -0.93 -0.75 -0.47 -0.20 0.17 1.45 2.27 -0.93 -0.75 -0.47 -0.20 0.35 1.45 2.27
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Exploratory Data Analysis

Five-Number Summary Box Plot

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Five-Number Summary

Smallest Value First Quartile Median Third Quartile Largest Value

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Example: Apartment Rents

Five-Number Summary Lowest Value = 425 First Quartile = 450 Median = 475 Third Quartile = 525 Largest Value = 615
430 440 450 470 485 515 575 430 440 450 470 490 525 580 435 445 450 472 490 525 590 435 445 450 475 490 525 600 435 445 460 475 500 535 600 435 445 460 475 500 549 600 435 445 460 480 500 550 600 440 450 465 480 500 570 615 440 450 465 480 510 570 615
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425 440 450 465 480 510 575

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Box Plot

A box is drawn with its ends located at the first and third quartiles. A vertical line is drawn in the box at the location of the median. Limits are located (not drawn) using the interquartile range (IQR). The lower limit is located 1.5(IQR) below Q1. The upper limit is located 1.5(IQR) above Q3. Data outside these limits are considered outliers. continued

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Box Plot (Continued)

Whiskers (dashed lines) are drawn from the ends of the box to the smallest and largest data values inside the limits. The locations of each outlier is shown with the symbol * .

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Example: Apartment Rents

Box Plot Lower Limit: Q1 - 1.5(IQR) = 450 - 1.5(75) = 337.5 Upper Limit: Q3 + 1.5(IQR) = 525 + 1.5(75) = 637.5

There are no outliers.

37 5

40 0

42 5

45 0

47 5

50 0

52 5

550

575 600

625

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Measures of Association Between Two Variables

Covariance Correlation Coefficient

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Covariance

The covariance is a measure of the linear association between two variables. Positive values indicate a positive relationship. Negative values indicate a negative relationship.

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Covariance

If the data sets are samples, the covariance is denoted by sxy. ( xi x )( yi y ) sxy n 1 If the data sets are populations, the covariance is denoted by xy .

xy

( xi x )( yi y ) N

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Correlation Coefficient

The coefficient can take on values between -1 and +1. Values near -1 indicate a strong negative linear relationship. Values near +1 indicate a strong positive linear relationship. If the data sets are samples, the coefficient is rxy.

rxy

sxy sx s y
xy

If the data sets are populations, the coefficient is

xy
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xy x y

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The Weighted Mean and Working with Grouped Data

Weighted Mean Mean for Grouped Data Variance for Grouped Data Standard Deviation for Grouped Data

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Weighted Mean

When the mean is computed by giving each data value a weight that reflects its importance, it is referred to as a weighted mean. In the computation of a grade point average (GPA), the weights are the number of credit hours earned for each grade. When data values vary in importance, the analyst must choose the weight that best reflects the importance of each value.

2003 Thomson/South-Western

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Weighted Mean

x = wi xi wi

where:
xi = value of observation i wi = weight for observation i

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Grouped Data

The weighted mean computation can be used to obtain approximations of the mean, variance, and standard deviation for the grouped data. To compute the weighted mean, we treat the midpoint of each class as though it were the mean of all items in the class. We compute a weighted mean of the class midpoints using the class frequencies as weights. Similarly, in computing the variance and standard deviation, the class frequencies are used as weights.

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Mean for Grouped Data

Sample Data

fM x f
i i

Population Data
fM
i i

where: fi = frequency of class i Mi = midpoint of class i

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Example: Apartment Rents

Given below is the previous sample of monthly rents for one-bedroom apartments presented here as grouped data in the form of a frequency distribution.
Rent ($) Frequency 420-439 8 440-459 17 460-479 12 480-499 8 500-519 7 520-539 4 540-559 2 560-579 4 580-599 2 600-619 6
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Example: Apartment Rents

Mean for Grouped Data

Rent ($) 420-439 440-459 460-479 480-499 500-519 520-539 540-559 560-579 580-599 600-619 Total fi 8 17 12 8 7 4 2 4 2 6 70 Mi 429.5 449.5 469.5 489.5 509.5 529.5 549.5 569.5 589.5 609.5 f iMi 3436.0 7641.5 5634.0 3916.0 3566.5 2118.0 1099.0 2278.0 1179.0 3657.0 34525.0

34, 525 493. 21 70 This approximation differs by $2.41 from the actual sample mean of $490.80. x

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Variance for Grouped Data

Sample Data
2 f ( M x ) i i s2 n 1

Population Data
2 f ( M ) i i 2 N

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Example: Apartment Rents

Variance for Grouped Data

s2 3, 017.89

Standard Deviation for Grouped Data

s 3, 017.89 54. 94
This approximation differs by only $.20 from the actual standard deviation of $54.74.

2003 Thomson/South-Western

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End of Chapter 3, Part B

2003 Thomson/South-Western

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