CHAPTER 1:

INTRODUCTION
 WHAT IS STATISTICS?
 Definition
 Statistics is a group of methods used
to collect, analyze, present, and
interpret data and to make decisions.

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WHAT IS STATISTICS?
Statistics is the Collection,
Presentation, Analysis, and
Utilization of Numerical data to
make Inference and reach
Decision in the face of Uncertainty
in Business, Economics and other
Social and Natural Sciences.

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TYPES OF STATISTICS

Statistics

DESCRIPTIVE INFERENTIAL
STATISTICS STATISTICS

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 TYPES OF STATISTICS
 Definition
 Descriptive Statistics consists of
methods for organizing, displaying,
and describing data by using tables,
graphs, and summary measures.

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 TYPES OF STATISTICS
 Definition
 Inferential Statistics consists of
methods that use sample results to
help make decisions or predictions
about a population.

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 POPULATION VERSUS
SAMPLE
 Definition
 A population consists of all
elements – individuals, items, or
objects – whose characteristics are
being studied. The population that is
being studied is also called the
target population.

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 POPULATION VERSUS
SAMPLE cont.
 Definition
 A portion of the population selected
for study is referred to as a sample.

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Figure 1.1 Population and sample.

Population
Sampl
e

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 POPULATION VERSUS
SAMPLE cont.
 Definition
 A survey that includes every number
of the population is called a census.
The technique of collecting
information from a portion of the
population is called a sample
survey.

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 POPULATION VERSUS
SAMPLE cont.
 Definition
 A sample that represents the
characteristics of the population as
closely as possible is called a
representative sample.

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 POPULATION VERSUS
SAMPLE cont.
 Definition
 A sample drawn in such a way that
each element of the population has a
chance of being selected is called a
random sample. If the chance of
being selected is the same for each
element of the population, it is called
a simple random sample.
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 BASIC TERMS
Table 1.1 2001 Sales of Seven U.S. Companies

Company 2001 Sales

Variable
(millions of dollars)
Wal-Mart Stores 217,799
IBM 85,866
An element General Motors An observation
177,260 or
or a
member Dell Computer 31,168 measurement
Procter & Gamble 39,262
JC Penney 32,004
Home Depot 53,553
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 BASIC TERMS cont.
 Definition
 An element or member of a sample
or population is a specific subject or
object (for example, a person, firm,
item, state, or country) about which
the information is collected.

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 The Meaning of Data:

Data

Quantitative Data Qualitative Data

A Variable that Quantifies A variable that describes or
An element of a population Categorizes an element of a population
 EXAMPLES OF DATA
Data are collected in many aspects of everyday life.

 Statements given to a police officer or physician or psychologist during

an interview are data.

 So are the correct and incorrect answers given by a student on a final examination.

 Almost any athletic event produces data.

 The time required by a runner to complete a marathon,

 The number of errors committed by a baseball team in nine innings of play.

 And, of course, data are obtained in the course of scientific inquiry:

 The positions of artifacts and fossils in an archaeological site,

 The number of interactions between two members of an animal colony during a

period of observation,

 The spectral composition of light emitted by a star.

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 BASIC TERMS cont.
 Definition
 A variable is a characteristic under
study that assumes different values
for different elements. In contrast to a
variable, the value of a constant is
fixed.

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 BASIC TERMS cont.
 Definition
 The value of a variable for an element
is called an observation or
measurement.

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 BASIC TERMS cont.
 Definition
 A data set is a collection of
observations on one or more
variables.

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Collection of Data

Data

Primary Data
Data that have been originally
collected (raw data) and have
not undergone any sort
of statistical treatment,
Secondary Data
Data that have undergone any
sort of treatment by statistical
methods at least ONCE

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COLLECTION OF PRIMARY DATA:

One or more of the following methods are employed to collect primary data:
i) Direct Personal Investigation.
ii) Indirect Investigation.
iii) Collection through Questionnaires.
iv) Collection through Enumerators.
v) Collection through Local Sources

COLLECTION OF SECONDARY DATA:

The secondary data may be obtained from the following sources:

i) Official, e.g. the publications of the Statistical Division, Ministry of Finance,
the Federal and Provincial Bureaus of Statistics, Ministries of Food,
Agriculture, Industry, Labour, etc.
ii) Semi-Official, e.g., State Bank of Pakistan, Railway Board, Central Cotton
Committee, Boards of Economic Inquiry, District Councils, Municipalities,
etc.
iii) Publications of Trade Associations, Chambers of Commerce, etc.
iv) Technical and Trade Journals and Newspapers.
v) Research Organizations such as universities, and other institutions.

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 TYPES OF VARIABLES
 Quantitative Variables
 Discrete Variables
 Continuous Variables
 Qualitative or Categorical Variables

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 Quantitative Variables
 Definition
 A variable that can be measured
numerically is called a quantitative
variable. The data collected on a
quantitative variable are called
quantitative data.

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 OBSERVATIONS AND
VARIABLES:
In statistics, an observation often means any sort of numerical
recording of information, whether it is a physical measurement
such as height or weight; a classification such as heads or tails,
or an answer to a question such as yes or no.

Variable
A characteristic that varies with an individual or
an object, is called a variable

Quantitative
A characteristic which can be expressed numerically
such as age, weight, income or number of children
Is called Quantitative variable

Qualitative
A characteristic which can be expressed
non-numerically such as education, eye colour,
quality, intelligence, poverty, Satisfaction, etc Is
called Quantitative variable or attribute
 Quantitative Variables
cont.
 Definition
 A variable whose values are countable
is called a discrete variable. In other
words, a discrete variable can assume
only certain values with no
intermediate values.

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 Quantitative Variables
cont.
 Definition
 A variable that can assume any
numerical value over a certain interval
or intervals is called a continuous
variable.

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 Qualitative or Categorical
Variables
 Definition
 A variable that cannot assume a
numerical value but can be classified
into two or more nonnumeric
categories is called a qualitative or
categorical variable. The data
collected on such a variable are called
qualitative data.
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Types of Variable, Attributes
Variable

Quantitative, or Numerical

Discrete Variable
A quantitative variable that can assume a
countable number of values

Continuous Variable
A quantitative variable that can assume an
uncountable number of values

Qualitative, or Attributes

Nominal Variable
A qualitative variable that categorizes( or describes,
or names) an element of population

Ordinal Variable
A qualitative variable that incorporates an ordered
Position, or ranking.
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 Figure 1.2 Types of variables.

Variable

Quantitative Qualitative or
categorical (e.g.,
make of a computer,
hair color, gender)
Discrete (e.g., Continuous
number of (e.g., length,
houses, cars, age, height,
accidents) weight, time)

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CROSS-SECTION VERSUS
TIME-SERIES DATA
 Cross-Section Data
 Time-Series Data

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 Cross-Section Data
 Definition
 Data collected on different elements at
the same point in time or for the same
period of time are called cross-
section data.

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Table 1.2 2002 Net Worth of Six Persons

Name 2002 Net Worth

(billions of
dollars)
Bill Gates 43.0
Warren Buffett 36.0
Helen Walton 18.8
George Lucas 3.0
Ted Turner 2.2
Ralph Lauren 2.0
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 Time-Series Data
 Definition
 Data collected on the same element for
the same variable at different points in
time or for different periods of time are
called time-series data.

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 Table 1.3 Price of a 30-Second TV Commercial
During Super Bowl Telecast

Year Super Bowl Price of a 30-Seconf TV Commercial

(million dollars)
1993 XXVII .85
1994 XXVIII .90
1995 XXIX 1.00
1996 XXX 1.10
1997 XXXI 1.20
1998 XXXII 1.30
1999 XXXIII 1.60
2000 XXXIV 2.10
2001 XXXV 2.05
2002 XXXVI 1.90
2003 XXXVII 2.20 34
 SOURCES OF DATA
 Data may be obtained from
 Internal sources
 External sources
 Surveys and experiments

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 SUMMATION NOTATION
 Example 1-1
 Annual salaries (in thousands of
dollars) of four workers are 75, 42, 125,
and 61. Find
a) ∑x
b) (∑x)²
c) ∑x²

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 Solution 1-1
a) ∑x = x1 + x2 + x3 + x4
= 75 + 42 + 125 + 61
= 303 = $303,000
b) (∑x)² = (303)² = 91,809
c) ∑x² = (75)² + (42)² + (125)² + (61)²
= 5625 + 1764 + 15,625 + 3721
= 26,735

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 Example 1-2
The following table lists four pairs of m and f values:

m 12 15 20 30
f 5 9 10 16

Compute the following:

a) Σm
b) Σf²
c) Σmf
d) Σm²f

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 Solution 2-1
Table 1.4
m f f² mf m²f
12 5 5 x 5 = 25 12 x 5 = 60 12 x 12 x 5 = 720
15 9 9 x 9 = 81 15 x 9 = 135 15 x 15 x 9 =
20 10 10 x 10 = 100 20 x 10 = 2025
30 16 16 x 16 = 256 200 20 x 20 x 10 =
30 x 16 = 4000
480 30 x 30 x 16 =
14,400

∑m = 77 ∑f = 40 ∑f² = 462 ∑mf = 875 ∑m²f = 21,145

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