Chapter 1 What Is Statistics? Basic Statistics for Business and Economics Fifth Edition Chapter 1 What Is Statistics? Douglas William Samuel Irwin/McGraw-Hill 1 1 1 2 1 1

Topics Covered Why we study statistics? Statistics definition. Qualitative and quantitative variables Discrete and continuous variables Nominal, ordinal, interval, and ratio levels of measurements. Mutually exclusive and exhaustive. 2 2 2 2 3 2

Why we study statistics? Why is statistics required in so many majors? 1- Numerical information is everywhere. Examples: the average salary of new college graduates in UAE is 40,000 dirham. Abu Dhabi Islamic bank holds 7.3 percent of the Islamic banking Industry.

Why we study statistics? 2- Statistical techniques are used to make decisions that affect our daily lives. Examples: Insurance companies use statistical analysis to set rates for homes, automobile, life, and health insurance. Medical researches, environmental protection agencies and others use statistical analysis.

Why we study statistics? 3- The knowledge of statistical methods will help you understand how decisions are made and give you a better understanding of how they affect you. Determine if the existing information is adequate or not. Gather additional information Summarize and analyze the available information Draw conclusions and make contingency plans.

Statistics definition Statistics; is a collection of numerical information. Statistics : The science of collecting, organizing, presenting, analyzing, and interpreting data to assist in making more effective decisions. The first step starts by collecting data, then organize and present the data, may be in graph or chart, in order to analyze and interpret it.

Types of Statistics Tow types of statistics; 1- Descriptive Statistics Methods of organizing, summarizing, and presenting data in an informative way. Example: UAE government reports the population of the country was 1.4 million in 1985, 2.4 million in 1995, and 4.5 million in 2005. Figure 1 If we said that the population of the country in 2010 would be 6 million, then the statistics will not be descriptive, because the descriptive statistics should be summarizing the past information.

Descriptive statistics millions year Figure 1 UAE Population

Types of Statistics Tow types of statistics; 2- Inferential Statistics The methods used to determine something about a population on the basis of sample. A population an entire set of individuals or objects of interest. A sample is a portion or a part of population. Example; recent study suggests that a survey of 1000 individuals ( sample), who read the newspaper in the country (population). Figure 2 26% of them buy Gulf news. 24% buy Al Ittihad news. 29% Alkhaleej news. 21% other newspapers.

Inferential Statistics 21%% Other Newspapers 26% Golf news 29% Al khaleej news 24% Ittihad news Figure 2

Types of Variables Two types of Variables 1- Qualitative or an attribute; nonnumeric Example; gender, religion, nationality… 2- Quantitative; numeric Example; balance in your checking account ( answer may be 10,000 dirham). Quantitative variables are two categories; (a) Discrete ; result from counting. We have 27 students in section A, and 26 students in section B (b) Continuous; result from measuring. The duration of flight from Dubai to Bahrain is about one to two hours.

Levels of Measurement Data can be classified according to levels of measurement. The level of measurement of the data often dictates the calculations that can be done to summarize and present data. It will also determine the statistical tests that should be performed. Four level of measurements; 1- Nominal- level data 2- Ordinal- level data 3- Interval- level data 4- Ratio-level data

Levels of Measurement Four level of measurements; 1- Nominal- level data Qualitative variable that can be classified and counted Example; World oil supply by country or region Country/region USA Persian gulf OAPEC OPEC Millions of Barrels Per day 9.05 18.84 19.5 28.00 75.39 Percent 12 25 26 37 100

Levels of Measurement Four level of measurements; 1- Nominal- level data - Data are mutually exclusive ; should fit only in one category, as you can’t produce particular barrel of oil in the US and the Persian Gulf region in the same time. And Exhaustive ;means every member must appear in one of the categories. - Data categories have no logical order, means you can start with any country or region.

Levels of Measurement Four level of measurements; 2- Ordinal- level data - The data classifications are mutually exclusive and exhaustive - Data classifications are ranked Example; Rating of a finance professor Rating Superior Good Average Poor Inferior Frequency 6 28 25 12 3

Levels of Measurement Four level of measurements; 3- Interval- level data - Data are mutually exclusive and Exhaustive ; - Data classifications are ranked - Equal differences in the characteristics are represented by equal differences in the measurements. Example; Suppose the high temperature on three consecutive winter days in Dubai are 23,26,and 15 degrees. The three temperature can be ranked. Zero degree does not mean no heat, but it’s cold.

Levels of Measurement Four level of measurements; 4- Ratio- level data Quantitative data are the ratio level of measurement It includes Interval-level , but in addition zero point is meaningful. - Data are mutually exclusive and Exhaustive ; - Data classifications are ranked - Equal differences in the characteristics are represented by equal differences in the measurements. - The zero point is the absence of characteristics.

Levels of Measurement Four level of measurements; 4- Ratio- level data Example; wages, changes in stock prices. So if you have zero dollar, it means that you have no money If you have to travel 30 Kilo’s to get to the Institution and I have to travel 60 kilo’s to get to the same place, then the ratio is 2/1, if you convert the kilometers to miles the distance will stay the same.

Statistics, Graphics and ethics Abuses of statistics mislead the reader by emphasizing data that are support their position. Also charts and graphs can also misleading if they are not drawn appropriately. There are many associations set code of ethics and guidelines when we use statistics.