Session 1

Numerical Descriptive
Measures

Book Chapter 3

Dr. Preeti Sharma

IMT-Hyderabad

Slide 1
Flow of Session
Measures of Central
Mean Median Mode Tendency
Covered
in MOP

Standard Measures of Dispersion

Range Variance
Deviation

Five Number Summary

Session Box Plot

1
Covariance & Correlation
Slide 2
MOP Recap

Slide 3
 Define Variables
(Measurement Scales)

Collect Data
(Data Sources)

Frequency Tables
Organizing and
Visualizing
(Tables & Charts)

Contingency Tables
Slide 4
Summary Definitions

▪ The central tendency is the extent to which the values of a numerical

variable group around a typical or central value.

▪ The variation is the amount of dispersion or scattering away from a central

value that the values of a numerical variable show.

▪ The shape is the pattern of the distribution of values from the lowest value
to the highest value.

Slide 5
Measures of Central Tendency: The Mean

◼ The arithmetic mean (often just called the “mean”) is the most common
measure of central tendency.

◼ For a sample of size n:

The ith value
Pronounced x-bar
n

X i
X1 + X2 +  + Xn
X= i=1
=
n n
Sample size Observed values
Slide 6
Measures of Central Tendency: The Mean (con’t)

◼ The most common measure of central tendency.

◼ Mean = sum of values divided by the number of values.
◼ Affected by extreme values (outliers).

11 12 13 14 15 16 17 18 19 20 11 12 13 14 15 16 17 18 19 20

Mean = 13 Mean = 14

11 + 12 + 13 + 14 + 15 65 11 + 12 + 13 + 14 + 20 70
= = 13 = = 14
5 5 5 5
Slide 7
Measures of Central Tendency: The Median

◼ In an ordered array, the median is the “middle” number (50% above, 50%
below).

11 12 13 14 15 16 17 18 19 20 11 12 13 14 15 16 17 18 19 20

Median = 13 Median = 13

◼ Less sensitive than the mean to extreme values.

Slide 8
Measures of Central Tendency: Locating the Median

◼ The location of the median when the values are in numerical order (smallest to largest):
n +1
Median position = position in the ordered data
2
◼ If the number of values is odd, the median is the middle number.

◼ If the number of values is even, the median is the average of the two middle numbers.

Note that n + 1 is not the value of the median, only the position of the median in the
2
ranked data.

Slide 9
Measures of Central Tendency: The Mode

◼ Value that occurs most often.

◼ Not affected by extreme values.
◼ Used for either numerical or categorical data.
◼ There may be no mode.
◼ There may be several modes.

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 0 1 2 3 4 5 6

Mode = 9 No Mode
Slide 10
Measures of Central Tendency: Review Example

House Prices: ▪ Mean: ($3,000,000/5)

$2,000,000 = $600,000
$ 500,000
$ 300,000
▪ Median: middle value of ranked
$ 100,000 data
$ 100,000 = $300,000
Sum $ 3,000,000 ▪ Mode: most frequent value
= $100,000

Slide 11
Measures of Central Tendency: Which Measure to Choose?

▪ The mean is generally used, unless extreme values (outliers) exist.

▪ The median is often used, since the median is not sensitive to extreme
values. For example, median home prices may be reported for a region; it
is less sensitive to outliers.

▪ In many situations it makes sense to report both the mean and the median.

Slide 12
Measures of Central Tendency: Summary

Central Tendency

Arithmetic Median Mode Geometric Mean

Mean
n

X i
XG = ( X1  X2    Xn )1/ n

X= i=1
n Middle value Most Rate of
in the ordered frequently change of
array observed a variable
value over time
Slide 13
 Measures of Variation
Variation

Range Variance Standard Coefficient

Deviation of Variation

Measures of variation give information

on the spread or variability or
dispersion of the data values.

Same center,
different variation
Slide 14
Measures of Variation: The Range
▪ Simplest measure of variation.
▪ Difference between the largest and the smallest values:

Range = Xlargest – Xsmallest

Example:

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Range = 13 - 1 = 12
Slide 15
Measures of Variation: Why The Range Can Be
Misleading

▪ Does not account for how the data are distributed.

7 8 9 10 11 12 7 8 9 10 11 12
Range = 12 - 7 = 5 Range = 12 - 7 = 5

▪ Sensitive to outliers
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
Range = 5 - 1 = 4

1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 120 - 1 = 119
Slide 16
Measures of Variation: The Sample Variance

◼ Average (approximately) of squared deviations of values from the mean.

Sample variance: n

 (X
◼

i − X) 2

S =
2 i =1
n -1

Where X = arithmetic mean

n = sample size
Xi = ith value of the variable X
Slide 17
Measures of Variation: The Sample Standard Deviation

◼ Most used measure of variation.

◼ Shows variation about the mean.
◼ Is the square root of the variance.
◼ Has the same units as the original data.

n
◼ Sample standard deviation:
 i
(X − X ) 2

S= i =1
n -1

Slide 18
Measures of Variation: The Sample Standard Deviation

Steps for Computing Standard Deviation:

1. Compute the difference between each value and the mean.

2. Square each difference.
3. Add the squared differences.
4. Divide this total by n-1 to get the sample variance.
5. Take the square root of the sample variance to get the sample
standard deviation.

Slide 19
Measures of Variation: Sample Standard Deviation
Calculation Example
Sample
Data (Xi) : 10 12 14 15 17 18 18 24
n=8 Mean = X = 16
(10 − X)2 + (12 − X)2 + (14 − X)2 +  + (24 − X)2
S=
n −1

(10 − 16)2 + (12 − 16)2 + (14 − 16)2 +  + (24 − 16)2

=
8 −1

130 A measure of the “average”

= = 4.3095
7 scatter around the mean.
Slide 20
Measures of Variation: Comparing Standard Deviations

Data A
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 S = 3.338

Data B Mean = 15.5

11 12 13 14 15 16 17 18 19 20
S = 0.926
21

Data C Mean = 15.5

S = 4.567
11 12 13 14 15 16 17 18 19 20 21

Slide 21
Measures of Variation: Comparing Standard Deviations

Smaller standard deviation

Larger standard deviation

Slide 22
Measures of Variation: Summary Characteristics

▪ The more the data are spread out, the greater the range, variance, and
standard deviation.

▪ The more the data are concentrated, the smaller the range, variance, and
standard deviation.

▪ If the values are all the same (no variation), all these measures will be zero.

▪ None of these measures are ever negative.

Slide 23
Session 2

Slide 24
Exploring Numerical Data Using Quartiles

◼ Can visualize the distribution of the values for a numerical variable by

computing:
◼ The quartiles.

◼ The five-number summary.

◼ Constructing a boxplot.

Slide 25
Quartile Measures
◼ Quartiles split the ranked data into 4 segments with an equal number of
values per segment.
25% 25% 25% 25%

Q1 Q2 Q3

◼ The first quartile, Q1, is the value for which 25% of the
values are smaller and 75% are larger.
◼ Q2 is the same as the median (50% of the values are
smaller and 50% are larger).
◼ Only 25% of the values are greater than the third quartile.

Slide 26
Quartile Measures: Locating Quartiles

Find a quartile by determining the value in the appropriate

position in the ranked data, where:

First quartile position: Q1 = (n+1)/4 ranked value.

Second quartile position: Q2 = (n+1)/2 ranked value.

Third quartile position: Q3 = 3(n+1)/4 ranked value.

where n is the number of observed values.

Slide 27
Quartile Measures: Calculation Rules

◼ When calculating the ranked position use the following rules:

◼ If the result is a whole number, then it is the ranked position to use.

◼ If the result is a fractional half (e.g., 2.5, 7.5, 8.5, etc.) then average the
two corresponding data values.

◼ If the result is not a whole number or a fractional half, then round the
result to the nearest integer to find the ranked position.

Slide 28
Calculating The Quartiles: Example

Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22

(n = 9)
Q1 is in the (9+1)/4 = 2.5 position of the ranked data,
so Q1 = (12+13)/2 = 12.5.

Q2 is in the (9+1)/2 = 5th position of the ranked data,

so Q2 = median = 16.

Q3 is in the 3(9+1)/4 = 7.5 position of the ranked data,

so Q3 = (18+21)/2 = 19.5.
Q1 and Q3 are measures of non-central location.
Q2 = median, is a measure of central tendency.
Slide 29
Quartile Measures: The Interquartile Range (IQR)

◼ The IQR is Q3 – Q1 and measures the spread in the middle 50% of the data.

◼ The IQR is also called the midspread because it covers the middle 50% of
the data.

◼ The IQR is a measure of variability that is not influenced by outliers or

extreme values.

◼ Measures like Q1, Q3, and IQR that are not influenced by outliers are called
resistant measures.

Slide 30
 Calculating The Interquartile Range

Example:
Median X
X Q1 Q3 maximum
minimum (Q2)
25% 25% 25% 25%

12 30 45 57 70

Interquartile range
= 57 – 30 = 27

Slide 31
The Five Number Summary

▪ The five numbers that help describe the center, spread and shape of data
are:
▪ Xsmallest.
▪ First Quartile (Q1).
▪ Median (Q2).
▪ Third Quartile (Q3).
▪ Xlargest.

Slide 32
Five Number Summary and The Boxplot
DCOVA
◼ The Boxplot: A Graphical display of the data based on the five-number
summary:

Xsmallest -- Q1 -- Median -- Q3 -- Xlargest

Example:

25% of data 25% 25% 25% of data

of data of data

Xsmallest Q1 Median Q3 Xlargest

Slide 33
Five Number Summary: Shape of Boxplots

◼ If data are symmetric around the median, then the box and central line are
centered between the endpoints.

Xsmallest Q1 Median Q3 Xlargest

◼ A Boxplot can be shown in either a vertical or horizontal orientation.

Slide 34
Distribution Shape and The Boxplot

Left-Skewed Symmetric Right-Skewed

Q1 Q2 Q 3 Q1 Q2 Q 3 Q1 Q2 Q3

Slide 35
 Session 2
Numerical Descriptive
Measures

Book Chapter 3

Dr. Preeti Sharma

IMT-Hyderabad

Slide 36
Box Plot- Key Points

A box plot is a graphical summary of data that is based on

a five-number summary.

A key to the creation of a box plot is the computation of

the median and the quartiles Q1 and Q3.

Box plots provide another way to identify outliers.

Slide 37
Distribution Shape and The Boxplot

Left-Skewed Symmetric Right-Skewed

Q1 Q2 Q 3 Q1 Q2 Q 3 Q1 Q2 Q3

Slide 38
Five-Number Summary
◼ Example: Apartment Rents
Lowest Value = 425 First Quartile = 445
Median = 475
Third Quartile = 525 Largest Value = 615
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

Slide 39
Box Plot
Example: Apartment Rents
• 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 (second quartile).

400 425 450 475 500 525 550 575 600 625

Q1 = 445 Q3 = 525
Q2 = 475
Slide 40
Box Plot
Limits are located (not drawn) using the interquartile
range (IQR).

Data outside these limits are considered outliers.

The locations of each outlier is shown with the symbol * .

continued

Slide 41
Box Plot
◼ Example: Apartment Rents
• The lower limit is located 1.5(IQR) below Q1.

Lower Limit: Q1 - 1.5(IQR) = 445 - 1.5(80) = 325

• The upper limit is located 1.5(IQR) above Q3.

Upper Limit: Q3 + 1.5(IQR) = 525 + 1.5(80) = 645

• There are no outliers (values less than 325 or

greater than 645) in the apartment rent data.

Slide 42
Box Plot
◼ Example: Apartment Rents

• Whiskers (dashed lines) are drawn from the ends of the box to the
smallest and largest data values inside the limits.

400 425 450 475 500 525 550 575 600 625

Smallest value Largest value

inside limits = 425 inside limits = 615
Slide 43
We Discuss Two Measures Of The Relationship Between Two
Numerical Variables

◼ Scatter plots allow you to visually examine the relationship between two
numerical variables and now we will discuss two quantitative measures of
such relationships.

◼ The Covariance.
◼ The Coefficient of Correlation.

Slide 44
The Covariance
◼ The covariance measures the strength of the linear relationship between two numerical
variables (X & Y).

◼ The sample covariance:

n

 ( X − X)(Y − Y)
i i
cov ( X , Y ) = i=1
n −1

◼ Only concerned with the strength of the relationship.

◼ No causal effect is implied.

Slide 45
Interpreting Covariance
◼ Covariance between two variables:
cov(X,Y) > 0 X and Y tend to move in the same direction.
cov(X,Y) < 0 X and Y tend to move in opposite directions.

cov(X,Y) = 0 X and Y are independent.

◼ The covariance has a major flaw:

◼ It is not possible to determine the relative strength of the relationship from the size of the
covariance.

Slide 46
Coefficient of Correlation
◼ Measures the relative strength of the linear relationship between two
numerical variables.
◼ Sample coefficient of correlation:
cov (X, Y)
r=
SX SY
Where,

 (X − X)(Y − Y)
n n
i i  (X − X)
i
2
 (Y − Y)
i
2

cov (X, Y) = i=1

SX = i=1
SY = i=1
n −1 n −1 n −1
Slide 47
Features of Coefficient of Correlation
◼ The population coefficient of correlation is referred as ρ.
◼ The sample coefficient of correlation is referred to as r.
◼ Either ρ or r have the following features:
◼ Unit free.
◼ Range between –1 and 1.
◼ The closer to –1, the stronger the negative linear relationship.
◼ The closer to 1, the stronger the positive linear relationship.
◼ The closer to 0, the weaker the linear relationship.

Slide 48
Scatter Plots of Sample Data with Various Coefficients of
Correlation
Y Y

X X
r = -1 r = -.6
Y
Y Y

X X X
r = +1 r = +.3 r=0
Slide 49
 Session 3
Numerical Descriptive
Measures

Book Chapter 3

Dr. Preeti Sharma

IMT-Hyderabad

Slide 50
Slide 51
 APPLICATION
OF
MEASURES OF CENTRAL TENDANCE
AND
DISPERSION

Slide 52
The Coefficient of Variation

◼ Measures relative variation.

◼ Always in percentage (%).
◼ Shows variation relative to mean.
◼ Can be used to compare the variability of two or more sets of
data measured in different units.

 S
CV =    100%

X 
Slide 53
Measures of Variation: Comparing Coefficients of Variation

◼ Stock A:
◼ Mean price last year = $50.

◼ Standard deviation = $5.

S $5
CVA =    100% =  100% = 10%
X $50 Both stocks have
the same standard
◼ Stock B: deviation, but
◼ Mean price last year = $100. stock B is less
◼ Standard deviation = $5. variable relative to
S $5 its mean price.
CVB =    100% =  100% = 5%
X $100
Slide 54
Measures of Variation:
Comparing Coefficients of Variation (con’t)

◼ Stock A:
◼ Mean price last year = $50.

◼ Standard deviation = $5.

S $5
 
CVA =    100% =  100% = 10%
X $50 Stock C has a
much smaller
◼ Stock C: standard
deviation but a
◼ Mean price last year = $8. much higher
coefficient of
◼ Standard deviation = $2. variation
 S  $2
CVC =    100% =  100% = 25%

X  $8
Slide 55
Z-Score : Locating Extreme Outliers
▪ To compute the Z-score of a data value, subtract the mean and divide by the
standard deviation.

▪ The Z-score is the number of standard deviations a data value is from the mean.

▪ A data value is considered an extreme outlier if its Z-score is less than -3.0 or
greater than +3.0.

▪ The larger the absolute value of the Z-score, the farther the data value is from the
mean.

Slide 56
Locating Extreme Outliers: Z-Score

Where :
X−X
X represents the data value Z=
S
X is the sample mean
S is the sample standard deviation

Slide 57
Locating Extreme Outliers: Z-Score

▪ Suppose the mean math SAT score is 490, with a standard

deviation of 100.
▪ Compute the Z-score for a test score of 620.

X − X 620 − 490 130

Z= = = = 1.3
S 100 100

A score of 620 is 1.3 standard deviations above

the mean and would not be considered an outlier.

Slide 58
Numerical Descriptive Measures for a Population

▪ Descriptive statistics discussed previously described a sample, not the

population.

▪ Summary measures describing a population, called parameters, are

denoted with Greek letters.

▪ Important population parameters are the population mean, variance, and

standard deviation.

Slide 59
Numerical Descriptive Measures for a Population:
The mean µ
◼ The population mean is the sum of the values in the population
divided by the population size, N.

X i
X1 + X2 +  + XN
= i=1
=
N N
Where μ = population mean
N = population size
Xi = ith value of the variable X
Slide 60
Numerical Descriptive Measures For A Population:
The Variance σ2
◼ Average of squared deviations of values from the mean.

◼ Population variance: N

 (X − μ)
i
2

σ2 = i=1
N

Where μ = population mean

N = population size
Xi = ith value of the variable X
Slide 61
Numerical Descriptive Measures For A Population: The
Standard Deviation σ

◼ Most commonly used measure of variation.

◼ Shows variation about the mean.
◼ Is the square root of the population variance.
◼ Has the same units as the original data.

N
◼ Population standard deviation:  i
(X − μ) 2

σ= i =1
N
Slide 62
Sample statistics versus population parameters

Measure Population Parameter Sample Statistic

Mean  X
Variance 2 S2

Standard Deviation  S

Slide 63
The Empirical Rule
◼ The empirical rule approximates the variation of data in a
symmetric mound-shaped distribution.
◼ Approximately 68% of the data in a symmetric mound shaped
distribution is within 1 standard deviation of the mean or µ ± 1σ.

68%

µ
µ ± 1σ
Slide 64
The Empirical Rule
◼ Approximately 95% of the data in a symmetric mound-shaped distribution
lies within two standard deviations of the mean, or µ ± 2σ.

◼ Approximately 99.7% of the data in a symmetric mound-shaped distribution

lies within three standard deviations of the mean, or µ ± 3σ.

95% 99.7%

μ  2σ μ  3σ
Slide 65
Using the Empirical Rule
▪ Suppose that the variable Math SAT scores is bell-shaped with a mean
of 500 and a standard deviation of 90. Then:
▪ Approximately 68% of all test takers scored between 410 and 590, (500 ± 90).

▪ Approximately 95% of all test takers scored between 320 and 680, (500 ± 180).

▪ Approximately 99.7% of all test takers scored between 230 and 770, (500 ±
270).

Slide 66
Chebyshev’s Rule
◼ Regardless of how the data are distributed, at least (1 - 1/k2) x
100% of the values will fall within k standard deviations of the
mean (for k > 1).
◼ Examples:

At least Within
(1 - 1/22) x 100% = 75% ….............. k=2 (μ ± 2σ)
(1 - 1/32) x 100% = 88.89% ……….. k=3 (μ ± 3σ)

Slide 67
Pitfalls in Numerical Descriptive Measures
◼ Data analysis is objective:
◼ Should report the summary measures that best describe and
communicate the important aspects of the data set.

◼ Data interpretation is subjective:

◼ Should be done in fair, neutral and clear manner.

Slide 68
Ethical Considerations
Numerical descriptive measures:

◼ Should document both good and bad results.

◼ Should be presented in a fair, objective and neutral manner.
◼ Should not use inappropriate summary measures to distort facts.

Slide 69
Chapter Summary
In this chapter we have discussed:
◼ Describing the properties of central tendency, variation, and
shape in numerical variables.
◼ Constructing and interpreting a boxplot.
◼ Computing descriptive summary measures for a population.
◼ Calculating the covariance and the coefficient of correlation.

Slide 70
Lunch Time
Slide 71
Shape of a Distribution
◼ Describes how data are distributed.
◼ Two useful shape related statistics are:
◼ Skewness:
◼ Measures the extent to which data values are not symmetrical.
◼ Kurtosis:
◼ Kurtosis measures the peakedness of the curve of the distribution—that is, how
sharply the curve rises approaching the center of the distribution.

Slide 72
Shape of Distribution

Slide 73
Shape of a Distribution (Skewness)

◼ Measures the extent to which data is not symmetrical.

Left-Skewed Symmetric Right-Skewed

Mean < Median Mean = Median Median < Mean

Skewness
Statistic < 0 0 >0
Slide 74
Shape of a Distribution -- Kurtosis measures how sharply the
curve rises approaching the center of the distribution

Sharper Peak
Than Bell-Shaped
(Kurtosis > 0)

Bell-Shaped
(Kurtosis = 0)
Flatter Than
Bell-Shaped
(Kurtosis < 0)

Slide 75