Note 4 of 5E Statistics with Economics and Business Applications Chapter 2 Describing Sets of Data Descriptive Statistics – Numerical Measures

Note 4 of 5E Review Review I. What’s in last lecture? Descriptive Statistics – tables and graphs. Chapter 2. II. What's in this lecture? Descriptive Statistics – Numerical Measures. Read Chapter 2.

Note 4 of 5E Describing Data with Numerical Measures Graphical methods may not always be sufficient for describing data. populations samples.Numerical measures can be created for both populations and samples. parameter population –A parameter is a numerical descriptive measure calculated for a population. statistic sample –A statistic is a numerical descriptive measure calculated for a sample.

Note 4 of 5E Measures of Center center A measure along the horizontal axis of the data distribution that locates the center of the distribution.

Note 4 of 5E Some Notations We can go a long way with a little notation. Suppose we are making a series of n observations. Then we write as the values we observe. Read as “x-one, x-two, etc” Example: Suppose we ask five people how many hours of they spend on the internet in a week and get the following numbers: 2, 9, 11, 5, 6. Then

Note 4 of 5E Arithmetic Mean or Average mean The mean of a set of measurements is the sum of the measurements divided by the total number of measurements. where n = number of measurements

Note 4 of 5EExample Time spend on internet: 2, 9, 11, 5, 6 population mean  If we were able to enumerate the whole population, the population mean would be called  (the Greek letter “mu”).

Note 4 of 5E medianThe median of a set of measurements is the middle measurement when the measurements are ranked from smallest to largest. position of the medianThe position of the median is Median.5(n + 1) once the measurements have been ordered.

Note 4 of 5E Example The set: 2, 4, 9, 8, 6, 5, 3n = 7 Sort:2, 3, 4, 5, 6, 8, 9 Position:.5(n + 1) =.5(7 + 1) = 4 th Median = 4 th largest measurement The set: 2, 4, 9, 8, 6, 5n = 6 Sort:2, 4, 5, 6, 8, 9 Position:.5(n + 1) =.5(6 + 1) = 3.5 th Median = (5 + 6)/2 = 5.5 — average of the 3 rd and 4 th measurements

Note 4 of 5EMode modeThe mode is the measurement which occurs most frequently. The set: 2, 4, 9, 8, 8, 5, 3 8 –The mode is 8, which occurs twice The set: 2, 2, 9, 8, 8, 5, 3 82bimodal –There are two modes—8 and 2 (bimodal) The set: 2, 4, 9, 8, 5, 3 no mode –There is no mode (each value is unique).

Note 4 of 5E Example Mean? Median? Mode? (Highest peak) The number of quarts of milk purchased by 25 households:

Note 4 of 5E The mean is more easily affected by extremely large or small values than the median. Extreme Values The median is often used as a measure of center when the distribution is skewed.

Note 4 of 5E Extreme Values Skewed left: Mean < Median Skewed right: Mean > Median Symmetric: Mean = Median

Note 4 of 5E Measures of Variability spreadA measure along the horizontal axis of the data distribution that describes the spread of the distribution from the center.

Note 4 of 5E The Range range, R,The range, R, of a set of n measurements is the difference between the largest and smallest measurements. Example:Example: A botanist records the number of petals on 5 flowers: 5, 12, 6, 8, 14 The range is R = 14 – 5 = 9. Quick and easy, but only uses 2 of the 5 measurements.

Note 4 of 5E The Variance varianceThe variance is measure of variability that uses all the measurements. It measures the average deviation of the measurements about their mean. Flower petals:Flower petals:5, 12, 6, 8,

Note 4 of 5E variance of a populationThe variance of a population of N measurements is the average of the squared deviations of the measurements about their mean  The Variance variance of a sampleThe variance of a sample of n measurements is the sum of the squared deviations of the measurements about their mean, divided by (n – 1) 

Note 4 of 5E In calculating the variance, we squared all of the deviations, and in doing so changed the scale of the measurements. standard deviationTo return this measure of variability to the original units of measure, we calculate the standard deviation, the positive square root of the variance. The Standard Deviation

Note 4 of 5E Two Ways to Calculate the Sample Variance Sum45060 Use the Definition Formula:

Note 4 of 5E Two Ways to Calculate the Sample Variance Sum45465 Use the Calculational Formula:

Note 4 of 5E ALWAYSThe value of s is ALWAYS positive. The larger the value of s 2 or s, the larger the variability of the data set. Why divide by n –1?Why divide by n –1? s   –The sample standard deviation s is often used to estimate the population standard deviation  Dividing by n –1 gives us a better estimate of  Some Notes

Note 4 of 5E Measures of Relative Standing p th percentile. How many measurements lie below the measurement of interest? This is measured by the p th percentile. p-th percentile (100-p) % x p %

Note 4 of 5EExamples 90% of all men (16 and older) earn more than $319 per week. BUREAU OF LABOR STATISTICS 2002 $319 90%10% 50 th Percentile 25 th Percentile 75 th Percentile  Median  Lower Quartile (Q 1 )  Upper Quartile (Q 3 ) $319 is the 10 th percentile.

Note 4 of 5E lower quartile (Q 1 )The lower quartile (Q 1 ) is the value of x which is larger than 25% and less than 75% of the ordered measurements. upper quartile (Q 3 )The upper quartile (Q 3 ) is the value of x which is larger than 75% and less than 25% of the ordered measurements. interquartile range,The range of the “middle 50%” of the measurements is the interquartile range, IQR = Q 3 – Q 1 Quartiles and the IQR

Note 4 of 5E lower and upper quartiles (Q 1 and Q 3 ),The lower and upper quartiles (Q 1 and Q 3 ), can be calculated as follows: position of Q 1The position of Q 1 is Calculating Sample Quartiles.75(n + 1).25(n + 1) position of Q 3The position of Q 3 is once the measurements have been ordered. If the positions are not integers, find the quartiles by interpolation.

Note 4 of 5E Example The prices ($) of 18 brands of walking shoes: Position of Q 1 =.25(18 + 1) = 4.75 Position of Q 3 =.75(18 + 1) = Q 1 is 3/4 of the way between the 4 th and 5 th ordered measurements, or Q 1 = ( ) = 65.

Note 4 of 5E Example The prices ($) of 18 brands of walking shoes: Position of Q 1 =.25(18 + 1) = 4.75 Position of Q 3 =.75(18 + 1) = Q 3 is 1/4 of the way between the 14 th and 15 th ordered measurements, or Q 3 = ( ) = and IQR = Q 3 – Q 1 = = 10.25

Note 4 of 5E Using Measures of Center and Spread: The Box Plot The Five-Number Summary: Min Q 1 Median Q 3 Max The Five-Number Summary: Min Q 1 Median Q 3 Max Divides the data into 4 sets containing an equal number of measurements. A quick summary of the data distribution. box plotshape outliers Use to form a box plot to describe the shape of the distribution and to detect outliers.

Note 4 of 5E Constructing a Box Plot The definition of the box plot here is similar, but not exact the same as the one in the book. It is simpler. Calculate Q 1, the median, Q 3 and IQR. Draw a horizontal line to represent the scale of measurement. Draw a box using Q 1, the median, Q 3. Q1Q1Q1Q1m Q3Q3Q3Q3

Note 4 of 5E Constructing a Box Plot Q1Q1Q1Q1m Q3Q3Q3Q3 Isolate outliers by calculating Lower fence: Q IQR Upper fence: Q IQR Measurements beyond the upper or lower fence is are outliers and are marked (*). *

Note 4 of 5E Constructing a Box Plot Q1Q1Q1Q1m Q3Q3Q3Q3 * Draw “whiskers” connecting the largest and smallest measurements that are NOT outliers to the box.

Note 4 of 5E Example Amount of sodium in 8 brands of cheese: m = 325 Q 3 = 340 m Q 1 = Q3Q3Q3Q3 Q1Q1Q1Q1

Note 4 of 5E Example IQR = = 47.5 Lower fence = (47.5) = Upper fence = (47.5) = m Q3Q3Q3Q3 Q1Q1Q1Q1 * Outlier: x = 520

Note 4 of 5E Interpreting Box Plots Median line in center of box and whiskers of equal length—symmetric distribution Median line left of center and long right whisker—skewed right Median line right of center and long left whisker—skewed left

Note 4 of 5E Key Concepts I. Measures of Center 1. Arithmetic mean (mean) or average a. Population mean:  b. Sample mean of size n: 2. Median: position of the median .5(n  1) 3. Mode 4. The median may be preferred to the mean if the data are highly skewed. II. Measures of Variability 1. Range: R  largest  smallest

Note 4 of 5E Key Concepts 2. Variance a. Population of N measurements: b. Sample of n measurements: 3. Standard deviation

Note 4 of 5E Key Concepts IV. Measures of Relative Standing 1. pth percentile; p% of the measurements are smaller, and (100  p)% are larger. 2. Lower quartile, Q 1 ; position of Q 1 .25(n  1) 3. Upper quartile, Q 3 ; position of Q 3 .75(n  1) 4. Interquartile range: IQR  Q 3  Q 1 V. Box Plots 1. Box plots are used for detecting outliers and shapes of distributions. 2. Q 1 and Q 3 form the ends of the box. The median line is in the interior of the box.

Note 4 of 5E Key Concepts 3. Upper and lower fences are used to find outliers. a. Lower fence: Q 1  1.5(IQR) b. Outer fences: Q 3  1.5(IQR) 4. Whiskers are connected to the smallest and largest measurements that are not outliers. 5. Skewed distributions usually have a long whisker in the direction of the skewness, and the median line is drawn away from the direction of the skewness.