Slides Prepared by

JOHN S. LOUCKS
St. Edwards University

2002 South-Western /Thomson Learning

Chapter 3
Descriptive Statistics: Numerical
Methods

Measures of Location
Measures of Variability
Measures of Relative Location and Detecting
Outliers
Exploratory Data Analysis
Measures of Association Between Two
Variables
The Weighted Mean and
Working with Grouped Data

Measures of Location

Mean
Median
Mode
Percentiles
Quartiles

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
425
430 430 435 435 435 435 435 440 440
presented
440 440
445 445 445 445 445 450 450
in440
ascending
order.
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
4

Mean

The mean of a data set is the average of all

the data values.
xIf the data are from a sample, the mean is
denoted by
xi
.
x

If the data are from a population, the mean is

xi
denoted by m (mu).

Example: Apartment Rents

Mean

xi 34 , 356
x

490.80
n
70

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
6

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.

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.

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
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
9

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.

10

Example: Apartment Rents

Mode
450 occurred most frequently (7 times)
Mode = 450
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

11

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.

12

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 p th

percentile is 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 +1.13

13

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
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
14

Quartiles

Quartiles are specific percentiles

First Quartile = 25th Percentile
Second Quartile = 50th Percentile = Median
Third Quartile = 75th Percentile

15

Example: Apartment Rents

Third Quartile
Third quartile = 75th percentile
i = (p/100)n = (75/100)70 = 52.5 = 53
Third quartile = 525
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
16

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.

17

Measures of Variability

Range
Interquartile Range
Variance
Standard Deviation
Coefficient of Variation

18

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.

19

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

20

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.

21

Example: Apartment Rents

Interquartile Range
3rd Quartile (Q3) = 525
1st Quartile (Q1) = 445
Interquartile Range = Q3 - Q1
80
425 430 430 435 435 435 435
440 440 440 445 445 445 445
450 450 450 450 450 460 460
465 470 470 472 475 475 475
480 485 490 490 490 500 500
510 515 525 525 525 535 549
575 575 580 590 600 600 600

= 525 - 445 =
435
445
460
480
500
550
600

440
450
465
480
500
570
615

440
450
465
480
510
570
615
22

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).

23

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
2
denoted by s2.
(
x

x
)

i
s2
n 1

If the data set is a population, the variance is

denoted by 2.
2
(
x

i
2
N
24

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
s s. s 2
deviation is denoted
If the data set is a population, the standard
deviation is denoted (sigma).
2

25

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
s as follows:

(100)

If the data set is a population, the coefficient

of variation is computed
as follows:

(100)

26

Example: Apartment Rents

Variance

( xi x ) 2
n 1

2 , 996.16

Standard Deviation

s s 2 2996. 47 54. 74

Coefficient of Variation

s
54. 74
100
100 11.15
x
490.80

27

Measures of Relative Location

and Detecting Outliers

z-Scores
Chebyshevs Theorem
Empirical Rule
Detecting Outliers

28

z-Scores

The z-score is often called the standardized

value.
It denotes the number of standard deviations a
data value xi is from the
x mean.
x

zi i

A data value less than the sample mean will

have a z-score less than zero.
A data value greater than the sample mean
will have a z-score greater than zero.
A data value equal to the sample mean will
have a z-score of zero.
29

Example: Apartment Rents

z-Score of Smallest Value (425)

xi x 425 490.80
z

1. 20
s
54. 74

Standardized Values for Apartment Rents

-1.20
-0.93
-0.75
-0.47
-0.20
0.35
1.54

-1.11
-0.93
-0.75
-0.38
-0.11
0.44
1.54

-1.11
-0.93
-0.75
-0.38
-0.01
0.62
1.63

-1.02
-0.84
-0.75
-0.34
-0.01
0.62
1.81

-1.02
-0.84
-0.75
-0.29
-0.01
0.62
1.99

-1.02
-0.84
-0.56
-0.29
0.17
0.81
1.99

-1.02
-0.84
-0.56
-0.29
0.17
1.06
1.99

-1.02
-0.84
-0.56
-0.20
0.17
1.08
1.99

-0.93
-0.75
-0.47
-0.20
0.17
1.45
2.27

-0.93
-0.75
-0.47
-0.20
0.35
1.45
2.27
30

Chebyshevs Theorem
At least (1 - 1/k2) of the items in any data set
will be
within k standard deviations of the mean, where
k is
any value greater than 1.
At least 75% of the items must be within
k = 2 standard deviations of the
mean.
At least 89% of the items must be within
k = 3 standard deviations of the
mean.
At least 94% of the items must be within
k = 4 standard deviations of the
mean.
31

Example: Apartment Rents

Chebyshevs Theorem
Let k = 1.5 withx
54.74

= 490.80 and s =

At least (1 - 1/(1.5)2) = 1 - 0.44 = 0.56 or

56%
x
of the rent values must be between
x - k(s) = 490.80 - 1.5(54.74) = 409
and
+ k(s) = 490.80 + 1.5(54.74) = 573

32

Example: Apartment Rents

Chebyshevs Theorem (continued)

Actually, 86% of the rent values
are between 409 and 573.

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

33

Empirical Rule
For data having a bell-shaped distribution:

Approximately 68% of the data values will

be within one standard deviation of the
mean.

34

Empirical Rule
For data having a bell-shaped distribution:

Approximately 95% of the data values will

be within two standard deviations of the
mean.

35

Empirical Rule
For data having a bell-shaped distribution:

Almost all (99.7%) of the items will be

within three standard deviations of the
mean.

36

Example: Apartment Rents

Empirical Rule
Interval
% in Interval
Within +/- 1s 436.06 to 545.54 48/70 = 69%
Within +/- 2s 381.32 to 600.28 68/70 = 97%
Within +/- 3s 326.58 to 655.02 70/70 = 100%

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
37

Detecting Outliers

An outlier is an unusually small or unusually

large value in a data set.
A data value with a z-score less than -3 or
greater than +3 might be considered an
outlier.
It might be an incorrectly recorded data value.
It might be a data value that was incorrectly
included in the data set.
It might be a correctly recorded data value
that belongs in the data set !

38

Example: Apartment Rents

Detecting Outliers
The most extreme z-scores are -1.20 and
2.27.
Using |z| > 3 as the criterion for an outlier,
there are no outliers in this data set.

-1.20
-0.93
-0.75
-0.47
-0.20
0.35
1.54

Standardized Values for Apartment Rents

-1.11
-0.93
-0.75
-0.38
-0.11
0.44
1.54

-1.11
-0.93
-0.75
-0.38
-0.01
0.62
1.63

-1.02
-0.84
-0.75
-0.34
-0.01
0.62
1.81

-1.02
-0.84
-0.75
-0.29
-0.01
0.62
1.99

-1.02
-0.84
-0.56
-0.29
0.17
0.81
1.99

-1.02
-0.84
-0.56
-0.29
0.17
1.06
1.99

-1.02
-0.84
-0.56
-0.20
0.17
1.08
1.99

-0.93
-0.75
-0.47
-0.20
0.17
1.45
2.27

-0.93
-0.75
-0.47
-0.20
0.35
1.45
2.27
39

Exploratory Data Analysis

Five-Number Summary
Box Plot

40

Five-Number Summary

Smallest Value
First Quartile
Median
Third Quartile
Largest Value

41

Example: Apartment Rents

Five-Number Summary
Lowest Value = 425
Median = 475
Third Quartile = 525
615
425 430 430 435 435 435
440 440 440 445 445 445
450 450 450 450 450 460
465 470 470 472 475 475
480 485 490 490 490 500
510 515 525 525 525 535
575 575 580 590 600 600

First Quartile = 450

Largest Value =
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
42

Box Plot

A box is drawn with its ends located at the first

and third quartiles.
A vertical line is drawn in the box at the
location of the median.
Limits are located (not drawn) using the
interquartile range (IQR).
The lower limit is located 1.5(IQR) below Q1.
The upper limit is located 1.5(IQR) above
Q3.
Data outside these limits are considered
outliers.
continued
43

Box Plot (Continued)

Whiskers (dashed lines) are drawn from the

ends of the box to the smallest and largest
data values inside the limits.
The locations of each outlier is shown with the
symbol * .

44

Example: Apartment Rents

Box Plot
Lower Limit: Q1 - 1.5(IQR) = 450 - 1.5(75)
= 337.5
Upper Limit: Q3 + 1.5(IQR) = 525 + 1.5(75)
= 637.5
There are no outliers.

37
5

40
0

42
5

45
0

47
5

50
0

52 550 575 600 625

5

45

Measures of Association
Between Two Variables

Covariance
Correlation Coefficient

46

Covariance

The covariance is a measure of the linear

association between two variables.
Positive values indicate a positive relationship.
Negative values indicate a negative
relationship.

47

Covariance

If the data sets are samples, the covariance is

denoted by sxy.
( xi x )( yi y )
sxy
n 1

If the data sets are populations, the covariance

xy
is denoted
by
.

xy

( xi x )( yi y )

48

Correlation Coefficient

The coefficient can take on values between -1

and +1.
Values near -1 indicate a strong negative linear
relationship.
Values near +1 indicate a strong positive linear
relationship.
If the data sets are samples,
sxy the coefficient is rxy.

rxy

xy

sx s y
xy
x y

xy

If the data sets are populations, the coefficient is

.
49

The Weighted Mean and

Working with Grouped Data

Weighted Mean
Mean for Grouped Data
Variance for Grouped Data
Standard Deviation for Grouped Data

50

Weighted Mean

When the mean is computed by giving each

data value a weight that reflects its
importance, it is referred to as a weighted
mean.
In the computation of a grade point average
(GPA), the weights are the number of credit
hours earned for each grade.
When data values vary in importance, the
analyst must choose the weight that best
reflects the importance of each value.

51

Weighted Mean
x = wi xi
wi
where:
xi = value of observation i
wi = weight for observation i

52

Grouped Data

The weighted mean computation can be used

to obtain approximations of the mean,
variance, and standard deviation for the
grouped data.
To compute the weighted mean, we treat the
midpoint of each class as though it were the
mean of all items in the class.
We compute a weighted mean of the class
midpoints using the class frequencies as
weights.
Similarly, in computing the variance and
standard deviation, the class frequencies are
used as weights.
53

Mean for Grouped Data

Sample Data

fM

x
f
i

Population Data

fM

where:
fi = frequency of class i
Mi = midpoint of class i

54

Example: Apartment Rents

Given below is the previous sample of monthly
rents
for one-bedroom apartments presented here as
grouped
Rent ($) Frequency
data in the form of
a frequency
420-439
8 distribution.
440-459
460-479
480-499
500-519
520-539
540-559
560-579
580-599
600-619

17
12
8
7
4
2
4
2
6
55

Example: Apartment Rents

Mean for Grouped Data

Rent ($)
fi
Mi
f iMi
34 , 525
420-439
8
429.5
3436.0
x
493. 21
440-459
17
449.5
7641.5
70
460-479
12
469.5This5634.0
approximation
480-499
8
489.5
differs
by
$2.41 3916.0
from
500-519
7
509.5
3566.5
actual sample
520-539
4
529.5the 2118.0
of $490.80.
540-559
2mean549.5
1099.0
560-579
4
569.5
2278.0
580-599
2
589.5
1179.0
600-619
6
609.5
3657.0
Total
70
34525.0
56

Variance for Grouped Data

Sample Data
2
f
(
M

x
)

i
i
s2
n 1

Population Data
2
f
(
M

i
i
2
N

57

Example: Apartment Rents

Variance for Grouped Data

s 2 3, 017.89

Standard Deviation for Grouped Data

s 3, 017.89 54. 94
This approximation differs by only $.20
from the actual standard deviation of $54.74.

58

End of Chapter 3

59