Slides Prepared by JOHN S. LOUCKS St.

Edwards University

2003 Thomson/South-Western

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Chapter 3 Descriptive Statistics: Numerical Methods Part A

Measures of Location Measures of Variability

x
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Measures of Location

Mean Median Mode Percentiles Quartiles

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Example: Apartment Rents

Given below is a sample of monthly rent values ($) for one-bedroom apartments. The data is a sample of 70 apartments in a particular city. The data are presented in ascending order.

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Mean

The mean of a data set is the average of all the data values. If the data are from a sample, the mean is denoted by x. xi x

If the data are from a population, the mean is denoted by m (mu).

xi N
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Example: Apartment Rents

Mean

xi 34, 356 x 490.80 n 70

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Median

The median is the measure of location most often reported for annual income and property value data. A few extremely large incomes or property values can inflate the mean.

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Median

The median of a data set is the value in the middle when the data items are arranged in ascending order. For an odd number of observations, the median is the middle value. For an even number of observations, the median is the average of the two middle values.

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Example: Apartment Rents

Median

Median = 50th percentile i = (p/100)n = (50/100)70 = 35.5 Averaging the 35th and 36th data values: Median = (475 + 475)/2 = 475
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Mode

The mode of a data set is the value that occurs with greatest frequency. The greatest frequency can occur at two or more different values. If the data have exactly two modes, the data are bimodal. If the data have more than two modes, the data are multimodal.

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Example: Apartment Rents

Mode

450 occurred most frequently (7 times) Mode = 450

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Percentiles

A percentile provides information about how the data are spread over the interval from the smallest value to the largest value. Admission test scores for colleges and universities are frequently reported in terms of percentiles.

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Percentiles

The pth percentile of a data set is a value such that at least p percent of the items take on this value or less and at least (100 - p) percent of the items take on this value or more. Arrange the data in ascending order. Compute index i, the position of the pth percentile. i = (p/100)n

If i is not an integer, round up.

the value in the i th position. If i is an integer, the p th percentile is the average of the values in positions i and i +1.
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The p th percentile is

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Example: Apartment Rents

90th Percentile i = (p/100)n = (90/100)70 = 63 Averaging the 63rd and 64th data values: 90th Percentile = (580 + 590)/2 = 585
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Quartiles

Quartiles are specific percentiles First Quartile = 25th Percentile Second Quartile = 50th Percentile = Median Third Quartile = 75th Percentile

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Example: Apartment Rents

Third Quartile Third quartile = 75th percentile i = (p/100)n = (75/100)70 = 52.5 = 53 Third quartile = 525
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Measures of Variability

It is often desirable to consider measures of variability (dispersion), as well as measures of location. For example, in choosing supplier A or supplier B we might consider not only the average delivery time for each, but also the variability in delivery time for each.

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Measures of Variability

Range Interquartile Range Variance Standard Deviation Coefficient of Variation

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Range

The range of a data set is the difference between the largest and smallest data values. It is the simplest measure of variability. It is very sensitive to the smallest and largest data values.

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Example: Apartment Rents

Range

Range = largest value - smallest value Range = 615 - 425 = 190

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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Interquartile Range

The interquartile range of a data set is the difference between the third quartile and the first quartile. It is the range for the middle 50% of the data. It overcomes the sensitivity to extreme data values.

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Example: Apartment Rents

Interquartile Range 3rd Quartile (Q3) = 525 1st Quartile (Q1) = 445 Interquartile Range = Q3 - Q1 = 525 - 445 = 80
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Variance

The variance is a measure of variability that utilizes all the data. It is based on the difference between the value of each observation (xi) and the mean (x for a sample, for a population).

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Variance

The variance is the average of the squared differences between each data value and the mean. If the data set is a sample, the variance is denoted by s2 .
2 ( xi x ) s n 1 2

If the data set is a population, the variance is denoted by 2. 2 ( x ) i 2 N

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Standard Deviation

The standard deviation of a data set is the positive square root of the variance. It is measured in the same units as the data, making it more easily comparable, than the variance, to the mean. If the data set is a sample, the standard deviation is denoted s.

s s2

If the data set is a population, the standard deviation is denoted (sigma).

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2
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Coefficient of Variation

The coefficient of variation indicates how large the standard deviation is in relation to the mean. If the data set is a sample, the coefficient of variation is computed as follows:

s (100) x

If the data set is a population, the coefficient of variation is computed as follows:

(100)

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Example: Apartment Rents

Variance

s n 1
2

( xi x ) 2

2 , 996.16

Standard Deviation

s s2 2996. 47 54. 74

Coefficient of Variation

s 54. 74 100 100 11.15 x 490.80

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End of Chapter 3, Part A

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