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ECON1203: Statistics
Chapter 4: Numerical descriptive
techniques
1. Measures of central location
a. Arithmetic mean
N
xi
xi
b. Median
Location of m edian=
n+1
2
c. Mode
Mean=Observation with highest frequency
When to use the mode
1. Objective: Describe a single set of data
2. Type of data: Nominal, ordinal, interval
ECON1203: Statistics
techniques
d. Geometric mean
Geometric mean=
i=1
( 1+ r i)1
2. Measures of variability
When to use the range, variance, standard deviation, and coefficient of
variation
1. Objective: Describe a single set of data
2. Type of data: Interval
3. Descriptive measurement: Variability
a. Range
Range=Largest observationSmallest observation
b. Variance
N
( x i )2
n
2
Sample variance :s =
( x ix )
i=1
n1
1
=
n1
2
i
x
i=1
( )
xi
c. Standard deviation
Population standard deviation: = 2
Sample standard deviation: s= s2
i=1
ECON1203: Statistics
techniques
d. Empirical Rule
1. Approximately 68% of all observations fall within one standard deviation of
the mean.
2. Approximately 95% of all observations fall within two standard deviation of
the mean.
3. Approximately 99.7% of all observations fall within three standard
deviation of the mean.
e. Chebysheffs Theorem
The proportion of observations in any sample or population that lie within
standard deviations of the mean is at least
f.
1
[ for k >1 ]
2
k
Coefficient of variation
s
x
P
100
b. Interquartile range
Interquartile range=Q3Q1
c. Box plot
ECON1203: Statistics
techniques
a. Covariance
Covariance is positive.
A large covariance indicates a strong linear relationship.
A small covariance indicates a weak linear relationship.
N
( x i x ) ( y i y )
( xi x ) ( y i y )
Sample covariance :s xy =
i=1
n1
1
=
n1
xi y i
i =1
x i y i i=1
i=1
b. Coefficient of correlation
xy
x y
s xy
sx s y
c. Coefficient of determination
ECON1203: Statistics
techniques
[ (
n
deviations
b1=
i=1
y i^y i )2
s xy
s2x
b0 = y b 1 x