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Chapter Two
Descriptive Statistics

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McGraw-Hill/Irwin

Copyright 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Descriptive Statistics
2.1
2.2
2.3
2.4
2.5
*2.6
*2.7

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Describing the Shape of a Distribution

Describing Central Tendency
Measures of Variation
Percentiles, Quartiles, and Box-and-Whiskers
Displays
Describing Qualitative Data
Using Scatter Plots to Study the Relationship
Between Variables
Misleading Graphs and Charts

2.1 Stem and Leaf Display: Car Mileage

Example 2.1: The Car Mileage Case
1 29 8
5
12
21
(11)
17

30 1344
30 5666889
31 001233444
31 55566777889
32 0001122344

7 32 556788
1 33 3

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Stem and Leaf Display:

Payment Times

Example 2.2: The Accounts

Receivable Case

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1 10 0
2 11 0
4 12 00
7 13 000
11 14 0000
18 15 000000
0
27 16 00000000
0
(8) 17 00000000
30 18 000000
24 19 00000
19 20 000
16 21 000
13 22 000
10 23 00
8 24 000
5 25 00
3 26 0
2 27 0
1 28
1 29 0

Histograms
Example 2.2: The Accounts Receivable Case

Frequency Histogram

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Relative Frequency Histogram

The Normal Curve

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Skewness

Left Skewed

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Symmetric

Right Skewed

Dot Plots
Scores on Exams 1 and 2

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2.2 Population Parameters and

Sample Statistics
A population parameter is number calculated
from all the population measurements that
describes some aspect of the population.
The population mean, denoted , is a
population parameter and is the average of
the population measurements.
A point estimate is a one-number estimate of
the value of a population parameter.
A sample statistic is number calculated using
sample measurements that describes some
aspect of the sample.
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Measures of Central Tendency

Mean, The average or expected value
Median, Md
The middle point of the ordered
measurements
Mode, Mo
The most frequent value

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The Mean
Population X1, X2, , XN

Population Mean
N

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Sample x1, x2, , xn

Sample Mean
n

Xi

i =1

x
i =1

The Sample Mean

isx defined as

The sample mean

n

x
i 1

x1 x2 ... xn

and is a point estimate of the population mean .

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Example: Car Mileage Case

Example 2.5:
Sample mean for first five car mileages from
Table 2.1
30.8, 31.7, 30.1, 31.6, 32.1

x
i 1

x1 x2 x3 x4 x5

5
30.8 31.7 30.1 31.6 32.1 156.5

31.26
5
5

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The Median
The population or sample median is a value such that 50% of all
measurements lie above (or below) it.
The median Md is found as follows:
1. If the number of measurements is odd, the median
is the
middlemost measurement in the ordered
values.
2. If the number of measurements is even, the median is the
average of the two middlemost measurements
in the ordered
values.

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Example: Sample Median

Example 2.6: Internists Salaries (x$1000)
127 132 138 141 144 146 152 154 165 171 177 192 241
Since n = 13 (odd,) then the median is the middlemost or 7th
measurement, Md=152

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The Mode
The mode, Mo of a population or sample of measurements is the
measurement that occurs most frequently.

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Example: Sample Mode

Example 2.2: The Accounts
Receivable Case

The value 16 occurs 9 times therefore:

Mo = 16

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1
2
4
7
11
18
27
(8)
30
24
19
16
13
10
8
5
3
2
1
1

10 0
11 0
12 00
13 000
14 0000
15 0000000
16 000000000
17 00000000
18 000000
19 00000
20 000
21 000
22 000
23 00
24 000
25 00
26 0
27 0
28
29 0

Relationships Among Mean, Median and

Mode

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2.3 Measures of Variation

Range
Largest minus the smallest measurement
Variance
The average of the sum of the squared
deviations from the mean
Standard Deviation
The square root of the variance

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The Range
Range = largest measurement - smallest measurement

Example:
Internists Salaries (in thousands of dollars)
127 132 138 141 144 146 152 154 165 171 177 192 241
Range = 241 - 127 = 114 ($114,000)

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The Variance
Population X1, X2, , XN

Population Variance
N

2
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i=1

Sample x1, x2, , xn

(X i - ) 2
N

Sample Variance
n

s2 =

(x i - x ) 2

i =1

n -1

The Standard Deviation

Population Standard Deviation, :

Sample Standard Deviation, s:

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2
s s2

Example: Population Variance/Standard

Deviation
Population of annual returns for five junk bond mutual funds:
10.0%, 9.4%, 9.1%, 8.3%, 7.8%

10.0+9.4+9.1+8.3+7.8 = 44.6 = 8.92%

5
50
2
2
2
2
2
(
10
.
0

8
.
92
)

(
9
.
4

8
.
92
)

(
91
.

8
.
92
)

(
8
.
3

8
.
92
)

(
7
.
8

8
.
92
)
2
5

2 .6136 .7833
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Example: Sample
Variance/Standard Deviation)
Example 2.11:
Sample variance and standard deviation for first five
car mileages from Table 2.1
30.8, 31.7, 30.1, 31.6, 32.1

x 31.26

s2 =

(x

- x)2

i =1

5 -1

(30.8 31.26) 2 (31.7 31.26) 2 (30.1 31.26) 2 (31.6 31.26) 2 (32.1 31.26) 2
s =
4
2

s2 = 2.572 4 = 0.643
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s s 2 .643 0.8019

The Empirical Rule for Normal

Populations
If a population has mean and standard deviation and is described
by a normal curve, then
68.26% of the population measurements lie within one standard
deviation of the mean: [
95.44% of the population measurements lie within two standard
deviations of the mean: [22
99.73% of the population measurements lie within three standard
deviations of the mean: [33
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Example: The Empirical Rule

Example 2.13: The Car Mileage Case

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Chebyshevs Theorem
Let and be a populations mean and standard deviation, then for
any value k>1,

At least 100(1 - 1/k2 )% of the population measurements lie in the

interval:
[kk

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2.4 Percentiles and Quartiles

For a set of measurements arranged in increasing order, the pth
percentile is a value such that p percent of the measurements fall at or
below the value and (100-p) percent of the measurements fall at or above
the value.
The first quartile Q1 is the 25th percentile
The second quartile (or median) Md is the 50th percentile
The third quartile Q3 is the 75th percentile.
The interquartile range IQR is Q3 - Q1

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Example: Quartiles
20 customer satisfaction ratings:
1 3 5 5 7 8 8 8 8 8 8 9 9 9 9 9 10 10 10 10

Md = (8+8)/2 = 8
Q1 = (7+8)/2 = 7.5
IRQ = Q3 - Q1 = 9 - 7.5 = 1.5
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Q3 = (9+9)/2 = 9

Box and Whiskers Plots

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2.5 Describing Qualitative Data

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Population and Sample

Proportions
Population X1, X2, , XN

Sample x1, x2, , xn

Population Proportion

Sample Proportion
n

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i =1

xi = 1 if characteristic present, 0 if
not

Example: Sample Proportion

Example 2.16: Marketing Ethics Case
117 out of 205 marketing researchers disapproved
action taken in a hypothetical scenario

X = 117, number of researches who disapprove

n = 205, number of researchers surveyed
Sample Proportion:

X 117
p
.57
n 205
^

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of

Bar Chart
Percentage of Automobiles Sold by Manufacturer,
1970 versus 1997

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Pie Chart
Percentage of Automobiles Sold by Manufacturer,1997

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Pareto Chart
Pareto Chart of Labeling Defects

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2.6 Scatter Plots

Restaurant Ratings: Mean Preference vs. Mean Taste

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2.7 Misleading Graphs and

Charts:
Scale Break

Mean Salaries at a Major University, 1999 - 2002

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Misleading Graphs and Charts:

Horizontal Scale Effects
Mean Salary Increases at a Major University, 1999 - 2002

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Descriptive Statistics
Summary
:
2.1
2.2
2.3
2.4

2.5
*2.6
*2.7
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Describing the Shape of a Distribution

Describing Central Tendency
Measures of Variation
Percentiles, Quartiles, and Box-and-Whiskers
Displays
Describing Qualitative Data
Using Scatter Plots to Study the Relationship
Between Variables
Misleading Graphs and Charts