Meaning of Statistics

• Term STATISTICS derived from Latin word

STATUS which means Political State
• In the 17th century Prof. Gottfried Achenwall
recognized Statistics, a specialized branch of
human knowledge
• The development of theory of probability
added importance for Statistics
• The development of Modern Statistics started
after Industrial revolution
DIMENSION OF STATISTICS

• The word Statistics is used in two

senses.
• Plural form :
Data (Values)
• Singular form :
Science
Definition of Statistics as a
Science

• “ The collection, presentation,

analysis and interpretation of
numerical data”

by
Croxton and Cowden
 Definition of Statistics
• “ Aggregate of facts affected to a marked extent by
multiplicity of causes, numerically expressed, enumerated
or estimated according to reasonable standards of
accuracy, collected in systematic manner for a
predetermined purpose and placed in relation to each
other”

By
Prof Horce Secrist
• Statistics are :
Aggregate of facts
• Effected to a marked extent by
multiplicity of causes
• Numerically expressed
• Enumerated or estimated according
to reasonable standards of
accuracy
• Collected in a systematic manner
for a predetermined purpose
 Functions of Statistics
• It simplifies complex data
• It facilitates comparison
• It facilitates the study relationship between
different facts
• It enhances an individual’s knowledge
• It facilitates in formulation policies
• It tests the hypothesis
• It facilitates forecasting
Scope of Statistics
Statistics in
• Business
• Economics
• Banking and Finance
• Engineering
• Medicine
• Biology
• Simply everywhere
 Limitations
• It deals with only quantitative data
• It is true on an average only
• It does not deal with an individual
• It can mislead if it is handled by an in experienced
person
• Statistical results are correct only in general sense. For
better results a large number of observations required
• Different results are obtained by different people
• The laws of statistics are not exact like the laws of
sciences.
• Statistics collected for a given purpose must be used
for that purpose only.
Comments on Statistics

• “Tons of Statistics will produce ounce of

truth”
• “ Statistics can prove any thing”
• There are three types of lies,- lies, damned
lies, Statistics
Compliments

• “ Without Statistics there is no life ”

Data

• Data are the facts and figures

that are collected, summarized,
analyzed, and interpreted.
• The data collected in a
particular study are referred to
as the data set.
• Elements, Variables, and
Observations
• Scales of Measurement
• Qualitative and Quantitative
Data
• Cross-Sectional and Time Series
Data
• The elements are the entities on
which data are collected.
• A variable is a characteristic of
interest for the elements.
• The set of measurements collected
for a particular element is called an
observation.
• The total number of data values in a
data set is the number of elements
multiplied by the number of variables.
Data, Data Sets,
Elements, Variables, and
Observations
Observation
Variables
Stock Annual Earn/
Company Exchange Sales($M) Sh.($)
Dataram AMEX 73.10 0.86
EnergySouth OTC 74.00 1.67
Keystone NYSE 365.70 0.86
LandCare NYSE 111.40 0.33
Psychemedics AMEX 17.60 0.13

Elements Data Set Datum

• Scales of measurement include:
• Nominal
• Ordinal
• Interval
• Ratio
• The scale determines the amount of
information contained in the data.
• The scale indicates the data
summarization and statistical
analyses that are most appropriate.
• Nominal
• Data are labels or names used to
identify an attribute of the
element.
• A nonnumeric label or a numeric
code may be used.
• Nominal
• Example:
Students of a university are classified by
the school in which they are enrolled
using a nonnumeric label such as
Business, Humanities, Education, and so
on.
Alternatively, a numeric code could be
used for the school variable (e.g. 1
denotes Business, 2 denotes Humanities,
3 denotes Education, and so on).
• Ordinal
• The data have the properties of
nominal data and the order or rank
of the data is meaningful.
• A nonnumeric label or a numeric
code may be used
• Ordinal
• Example:
Students of a university are classified
by their class standing using a
nonnumeric label such as Freshman,
Sophomore, Junior, or Senior.
Alternatively, a numeric code could be
used for the class standing variable (e.g.
1 denotes Freshman, 2 denotes
Sophomore, and so on).
• Interval
• The data have the properties of
ordinal data and the interval
between observations is
expressed in terms of a fixed unit
of measure.
• Interval data are always numeric.
• Interval
• Example:
Melissa has an SAT score of 1205,
while Kevin has an SAT score of 1090.
Melissa scored 115 points more than
Kevin.
• Ratio
• The data have all the properties of
interval data and the ratio of two
values is meaningful.
• Variables such as distance, height,
weight, and time use the ratio scale.
• This scale must contain a zero value
that indicates that nothing exists for
the variable at the zero point
• Ratio
• Example:
Melissa’s college record shows 36
credit hours earned, while Kevin’s
record shows 72 credit hours earned.
Kevin has twice as many credit hours
earned as Melissa.
Classification of Data
• The process of arranging the things in
groups or classes according to their
resemblances
• Modes of classification:
1 Qualitative
2 Quantitative
3 Variable
4 Discrete Variable
5 Continuous Variable
6 Temporal
7 Spatial
Tools of Business Statistics
• Descriptive statistics

• Inferential statistics
Descriptive Statistics
• Collect data
• e.g. Survey, Observation,
Experiments

• Present data
• e.g. Charts and graphs

• Characterize data
• e.g. Sample mean =
x i

n
Types of Data

• Quantitative
E.g..
Weight,
Length,
Time,
Temperature etc.
Contd….

• Qualitative Data
E.g..
Kindness
Honesty
Satisfaction
Perception etc.
Inferential Statistics

• Drawing conclusions and/or making

decisions concerning a population
based only on sample data
Data

• Elements, Variables, and

Observations
• Scales of Measurement
• Qualitative and Quantitative
Data
• Cross-Sectional and Time Series
Data
Data and Data Sets

• Data are the facts and figures

that are collected, summarized,
analyzed, and interpreted.
• The data collected in a
particular study are referred to
as the data set.
Elements, Variables, and Observations

• The elements are the entities on which data are

collected.
• A variable is a characteristic of interest for the
elements.
• The set of measurements collected for a
particular element is called an observation.
• The total number of data values in a data set is
the number of elements multiplied by the
number of variables.
Data, Data Sets,
Elements, Variables, and Observations
Observation
Variables
Stock Annual Earn/
Company Exchange Sales($M) Sh.($)
Dataram AMEX 73.10 0.86
EnergySouth OTC 74.00 1.67
Keystone NYSE 365.70 0.86
LandCare NYSE 111.40 0.33
Psychemedics AMEX 17.60 0.13

Elements Data Set Datum

Data Types
Data

Qualitative Quantitative
(Categorical) (Numerical)

Examples:
 Marital Status
 Political Party Discrete Continuous
 Eye Color
Examples: Examples:
(Defined categories)
 Number of Children  Weight
 Defects per hour  Voltage
(Counted items) (Measured
characteristics)
Data Sources
Primary Secondary
Data Collection Data Compilation

Print or Electronic
Observation Survey

Experimentation
 Survey Design Steps
• Define the issue
• what are the purpose and objectives of the
survey?
• Define the population of interest
• Formulate survey questions
• make questions clear and unambiguous
• use universally-accepted definitions
• limit the number of questions
Survey Design Steps (continued)

• Pre-test the survey

• pilot test with a small group of participants
• assess clarity and length
• Determine the sample size and sampling
method
• Select Sample and administer the survey
Types of Questions
• Closed-end Questions
• Select from a short list of defined choices
Example: Major: __business __liberal arts
__science __other
• Open-end Questions
• Respondents are free to respond with any value, words, or
statement

Example: What did you like best about this course?

• Demographic Questions
• Questions about the respondents’ personal characteristics
Example: Gender: __Female __ Male
DIAGRAMMATIC
REPRESENTATION
• Presentation of data by using diagrams is
called “Diagrammatic Representation
• There are a large number of diagrammatic
which can be used for presentation of data.
The selection of particular diagram depend
upon the nature of data, objective of
presentation
Types of Diagrams

DIAGRAMS

ONE DIMENSIONAL TWO DIMENSIONAL PICTOGRAMS CARTOGRAMS

1.Line diagram
2.Simple Bar Diagram
3.Multiple Bar Diagram
4.Sub-divided Bar
5.Percentage Bar
6. Pie-diagram
Utility and advantages

• Attractive and impressive

• Diagram simplify the data
• Diagrams give more information
• Diagrams useful in making comparison
• They have universal applicability
• Diagrams save time and labor
Limitations
• They give only a vague idea of the problem
• The level of precision of values indicated
by diagrams is very low
• They are helpful only when comparisons
are desired
• diagrams can represent limited number of
characteristics