Chapter 1 Introduction

STA191-Probability & Statistics

Chapter 1
INTRODUCTION

1.1 Statistics and Types of Statistics

1.1.1 What is Statistics?
The word statistics has two meanings. In the more common usage, statistics refers to
numerical facts. The numbers that represent the income of a family, the age of a student,
and the starting salary of a typical college graduate are examples of statistics in this sense
of the word. Here statistics refers to numbers.

The second meaning of statistics refers to the field or discipline of study. In this sense of the
word, statistics is defined as follows.

Definition
Statistics: Statistics is the science of collecting, analyzing, presenting, and interpreting data,
as well as of making decisions based on such analyses.

Like all other fields of study, statistics has two aspects: Theoretical or Mathematical
Statistics and Applied Statistics. Theoretical statistics deal with the development,
derivation, and proof of statistical theorems, formulas, rules, and laws. On the other hand,
applied statistics involves the applications of those theorems, formulas, rules, and laws to
solve real-world problems.

1.1.2 Types of Statistics

Broadly speaking, statistics can be divided into two areas: descriptive statistics and
inferential statistics.

Descriptive Statistics
Let us suppose that we have information on the test scores of students enrolled in a
statistics class. In statistical terminology, the whole set of numbers that represents the
scores of students is called a data set, the name of each student is called an element, and the
score of each student is called an observation.

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Chapter 1 Introduction

Many data sets in their original forms are usually very large. Consequently, such data sets
are not very helpful in drawing conclusions or making decisions. It is easier to draw
conclusions from summary tables and diagrams than from the original version of a data set.
For this reason, we need to reduce data to a manageable size by constructing tables,
drawing graphs, or calculating summary measures such as averages. The branch of
statistics that helps us to do this type of statistical analysis is called descriptive statistics.

Definition
Descriptive Statistics: Descriptive statistics consists of methods for organizing, displaying,
and describing data by using tables, graphs, and summary measures.

Inferential Statistics
In statistics, the collection of all elements of interest is called a population. The selection of
a number of elements from this population is called a sample.
A major portion of statistics deals with making decisions, inferences, predictions, and
forecasts about populations based on results obtained from samples. For example, we may
make some decisions about the political views of all college and university students based
on the political views of 1000 students selected from a few colleges and universities. As
another example, we may want to find the starting salary of a typical university graduate.
To do so, we may select 2000 recent university graduates, find their starting salaries, and
make a decision based on this information. The area of statistics that deals with such
decision-making procedures is referred to as inferential statistics. This branch of statistics
is sometimes called inductive reasoning or inductive statistics.

Definition
Inferential Statistics: Inferential statistics consists of methods that use sample results to
help make decisions or predictions about a population.

EXERCISES
1.1 Briefly describe the two meanings of the word statistics.
1.2 Briefly explain the types of statistics.

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Chapter 1 Introduction

1.2 Population versus Sample

Let us suppose a statistician is interested in knowing the following:
1. The percentage of all voters in a city who will vote for a particular candidate in an
election.
2. Gross sales of all companies in Dhaka City in 2023.
3. The prices of all houses in Chittagong.
In these examples, the statistician is interested in all voters in a city, all companies in Dhaka
City, and all houses in Chittagong. Each of these groups is called the population for the
respective example. In statistics, a population does not necessarily mean a collection of
people. It can, in fact, be a collection of people or of any kind of item such as houses, books,
television sets, or cars. The population of interest is usually called the target population.

Definition
Population or Target Population: 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.

Most of the time, decisions are made based on portions of populations. For example, the
election polls conducted in the United States to estimate the percentages of voters who
favor various candidates in any presidential election are based on only a few hundred or a
few thousand voters selected from across the country. In this case, the population consists
of all registered voters in the United States. The sample is made up of a few hundred or few
thousand voters who are included in an opinion poll. Thus, the collection of a number of
elements selected from a population is called a sample. Figure 1.1 illustrates the selection
of a sample from a population.

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Chapter 1 Introduction

Figure 1.1 Population and sample.

Definition
Sample: A portion of the population selected for study is referred to as a sample.

The collection of information from the elements of a population or a sample is called a

survey. A survey that includes every element of the target population is called a census.
Often the target population is very large. Hence, in practice, a census is rarely taken because
it is expensive and time-consuming. In many cases, it is even impossible to identify each
element of the target population. Usually, to conduct a survey, we select a sample and
collect the required information from the elements included in that sample. We then make
decisions based on this sample information. Such a survey conducted on a sample is called
a sample survey. As an example, if we collect information on the 2022 incomes of all
families in Dhaka, it will be referred to as a census. On the other hand, if we collect
information on the 2022 incomes of 50 families from Dhaka, it will be called a sample
survey.

Definition
Census and Sample Survey: A survey that includes every member of the population is
called a census. On the other hand, the technique of collecting information from a portion of
the population is called a sample survey.

Definition
Representative Sample: A sample that represents the characteristics of the population as
closely as possible is called a representative sample.

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Chapter 1 Introduction

Definition
Random Sample: 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 all samples of the same size selected from a population have the same chance of being
selected, we call it simple random sampling. Such a sample is called a simple random
sample.

One way to select a random sample is by lottery or draw. For example, if we are to select 5
students from a class of 50, we write each of the 50 names on a separate piece of paper.
Then we place all 50 slips in a box and mix them thoroughly. Finally, we randomly draw 5
slips from the box. The 5 names drawn give a random sample. On the other hand, if we
arrange all 50 names alphabetically and then select the first 5 names on the list, it is a non-
random sample because the students listed 6th to 50th have no chance of being included in
the sample.

A sample may be selected with or without replacement. In sampling with replacement,

each time we select an element from the population, we put it back in the population before
we select the next element. Thus, in sampling with replacement, the population contains
the same number of items each time a selection is made.

Sampling without replacement occurs when the selected element is not replaced in the
population. In this case, each time we select an item, the size of the population is reduced
by one element. Thus, we cannot select the same item more than once in this type of
sampling. Most of the time, samples taken in statistics are without replacement. Consider
an opinion poll based on a certain number of voters selected from the population of all
eligible voters. In this case, the same voter is not selected more than once. Therefore, this is
an example of sampling without replacement.

EXERCISES
1.3 Briefly explain the terms population, sample, representative sample, random sample, sampling
with replacement, and sampling without replacement.
1.4 Give one example each of sampling with and sampling without replacement.
1.5 Briefly explain the difference between a census and a sample survey. Why is conducting a
sample survey preferable to conducting a census?

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Chapter 1 Introduction

1.6 Explain whether each of the following constitutes data collected from a population or a sample.
(a) Opinions on a certain issue obtained from all adults living in a city.
(b) The price of a gallon of regular unleaded gasoline on a given day at each of 28 gas stations in
an area of a city.
(c) Credit card debts of 100 families selected from a given city.
(d) The percentage of all US registered voters in each state who voted in the 2012 Presidential
election.
(e) The number of left-handed students in each of 50 classes selected from a given university.
1.7 Explain whether each of the following constitutes data collected from a population or a sample.
(a) The number of pizzas ordered on Fridays during 2012 at all of the pizza parlors in your
town.
(b) The dollar values of auto insurance claims filed in 2012 for 200 randomly selected policies.
(c) The opening price of each of the 50 stocks in the S&P 500 stock index on January 3, 2012.
(d) The total home attendance for each of the 18 teams in Major Soccer during the 2012 season.
(e) The living areas of 80 houses listed for sale on March 7, 2016 in Dhaka city.

1.3 Basic Terms

This section explains the meaning of an element (sometimes called member), a variable, an
observation (sometimes called measurement), and a data set.
Table 1.1 gives information on the total revenues (in millions of US dollars) for the year
2010 of the top six revenue-earning companies in the world. We can call this group of
companies a sample of six companies. Each company listed in this table is called an element
or a member of the sample. Table 1.1 contains information on six elements. Note that
elements are also called observational units.

Definition
Element or Member: 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.

Consider the following Table.

Table 1.1 Total Revenues for 2010 of Six Companies

Sl. Name of Company 2010 Total revenue (millions of dollars)

No.
1 Wal-Mart Stores 421,849
2 Royal Dutch Shell 378,152
3 Exxon Mobil 354,674
4 BP 308,928
5 Sinopec Group 273,422
6 China National Petroleum 240,192

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Chapter 1 Introduction

In the above Table 1.1, Exxon Mobil, for example, is an element or a member and the
corresponding revenue 354,674 million dollars is an observation or measurement.

The 2010 revenue in the example is called a variable. The 2010 revenue is a characteristic
of companies on which we are collecting information.

Definition
Variable: 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.

A few other examples of variables are household incomes, the number of houses built in a
city per month during the past year, the makes of cars owned by people, the gross profits of
companies, and the number of insurance policies sold by a salesperson per day during the
past month.

In general, a variable assumes different values for different elements, as do the 2010
revenues for the six companies in Table 1.1.

A variable is often denoted by x, y, or z. For instance, in Table 1.1, the 2010 revenue for
companies may be denoted by any one of these letters.

Each of the values representing the 2010 revenues of the six companies in Table 1.1 is
called an observation or measurement.

Definition

Observation or Measurement: The value of a variable for an element is called an

observation or measurement.

From Table 1.1, the 2010 revenue of Exxon Mobil was $354,674 million. The value $354,674
million is an observation or measurement. Table 1.1 contains six observations, one for each
of the six companies (elements).

The information given in Table 1.1 on the 2010 revenues of companies is called the data or
a data set.

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Chapter 1 Introduction

Definition

Data Set: A data set is a collection of observations on one or more variables.

Other examples of data sets are a list of the prices of 25 recently sold homes, test scores of
30 students, opinions of 100 voters, and ages of all employees of a company.

EXERCIISES
1.8 Explain the meaning of an element, a variable, an observation, and a data set.
1.9 The following table gives the number of dog bites reported to the police last year in six cities.

City Number of Dog Bites

Center City 47
Elm Grove 32
Franklin 51
Bay City 44
Oakdale 12
Sand Point 3
Briefly explain the meaning of a member, a variable, a measurement, and a data set with reference
to this table.

1.10 The following table lists the number of billionaires in eight countries as of February 2011, as
reported in the New York Times of July 27, 2011.
Country Number of Billionaires
United States 413
China 115
Russia 101
India 55
Germany 52
Britain 32
Brazil 30
Japan 26
Source: Forbes, International Monetary Fund.
Briefly explain the meaning of a member, a variable, a measurement, and a data set with reference
to this table.
1.11 Refer to the data set in Exercise 1.9.
(a) What is the variable for this data set?
(b) How many observations are in this data set?
(c) How many elements does this data set contain?
1.12 Refer to the data set in Exercise 1.10.
(a) What is the variable for this data set?
(b) How many observations are in this data set?
(c) How many elements does this data set contain?

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Chapter 1 Introduction

1.4 Types of Variables

A variable may be classified as quantitative or qualitative.

1.4.1 Quantitative Variables

Some variables (such as the price of a home) can be measured numerically, whereas others
(such as hair color) cannot. The first is an example of a quantitative variable and the second
that of a qualitative variable.

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

Incomes, heights, gross sales, prices of homes, number of cars owned, and number of
accidents are examples of quantitative variables because each of them can be expressed
numerically. For instance, the income of a family may be $81,520.50 per year, the gross
sales for a company may be $567 million for the past year, and so forth. Such quantitative
variables may be classified as either discrete variables or continuous variables.

Discrete Variables
The values that a certain quantitative variable can assume may be countable or
noncountable. For example, we can count the number of cars owned by a family, but we
cannot count the height of a family member. A variable that assume countable values is
called a discrete variable. Note that there are no possible intermediate values between
consecutive values of a discrete variable.

Definition
Discrete Variable: 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.

For example, the number of cars sold on any given day at a car dealership is a discrete
variable because the number of cars sold must be 0, 1, 2, 3, ….., and we can count it. The
number of cars sold cannot be between 0 and 1, or between 1 and 2. Other examples of
discrete variables are the number of people visiting a bank on any day, the number of cars
in a parking lot, the number of cattle owned by a farmer, and the number of students in a
class.

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Chapter 1 Introduction

Continuous Variables
Some variables cannot be counted, and they can assume any numerical value between two
numbers. Such variables are called continuous variables.

Definition
Continuous Variable: A variable that can assume any numerical value over a certain
interval or intervals is called a continuous variable.

The time taken to complete an examination is an example of a continuous variable because

it can assume any value, let us say, between 30 and 60 minutes. The time taken may be 42.6
minutes, 42.67 minutes, or 42.647 minutes. Similarly, the height of a person can be
measured to the tenth of an inch or to the hundredth of an inch. However, neither time nor
height can be counted in a discrete fashion. Other examples of continuous variables are
weights of people, amount of soda in a 12-ounce can, and yield of potatoes per acre. Note
that any variable that involves a large number of values is typically treated as a continuous
variable.

1.4.2 Qualitative or Categorical Variables

Variables that cannot be measured numerically but can be divided into different categories
are called qualitative or categorical variables.

Definition
Qualitative or Categorical Variable: 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.

For example, the status of an undergraduate college student is a qualitative variable

because a student can fall into any one of four categories: freshman, sophomore, junior, or
senior. Other examples of qualitative variables are the gender of a person, the brand of a
computer, the opinions of people, and the maker of a car.

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Chapter 1 Introduction

EXERCISES
1.13 Explain the meaning of the following terms.
(a) Quantitative variable.
(b) Qualitative variable.
(c) Discrete variable.
(d) Continuous variable.
(e) Quantitative data.
(f) Qualitative data
1.14 Indicate which of the following variables are quantitative and which are qualitative.
(a) Number of persons in a family.
(b) Color of a car.
(c) Marital status of a person.
(d) Time to commute from home to work.
(e) Number of errors in a person’s credit report.
1.15 Indicate which of the following variables are quantitative and which are qualitative.
(a) The amount of time a student spent studying for an exam.
(b) The amount of rain last year in 30 cities.
(c) The arrival status of an airline flight (early, on time, late, canceled) at an airport.
(d) A person’s blood type.
(e) The amount of gasoline put into a car at a gas station.
1.16 Classify the quantitative variables in Exercise 1.14 as discrete or continuous.
1.17 Classify the quantitative variables in Exercise 1.15 as discrete or continuous.

1.5 Cross-Section versus Time-Series Data

Based on the time over which they are collected, data can be classified as either cross-
section or time-series data.

1.5.1 Cross-Section Data

Cross-section data contain information on different elements of a population or sample for
the same period of time. The information on incomes of 100 families for 2012 is an example
of cross-section data.

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

Table 1.1 is reproduced here as Table 1.2 and shows the 2010 revenues of the six top
revenue earning companies in the world. Because this table presents data on the revenues
of six companies for the same period (2010), it is an example of cross-section data.

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Chapter 1 Introduction

Table 1.2 Total Revenues for 2010 of Six Companies

Sl. Name of Company 2010 Total revenue (millions of dollars)

No.
1 Wal-Mart Stores 421,849
2 Royal Dutch Shell 378,152
3 Exxon Mobil 354,674
4 BP 308,928
5 Sinopec Group 273,422
6 China National Petroleum 240,192

1.5.2 Time-Series Data

Time-series data contain information on the same element at different points of time.
Information on U.S. exports for the years 1983 to 2012 is an example of time-series data.

Definition

Time-Series Data: Data collected on the same element for the same variable at different
points in time or for different periods of time is called time-series data.

The data given in Table 1.3 is an example of time-series data. This table lists the money
recovered by federal agents from health care fraud judgments during the budget years
2006 to 2010.

Table 1.3 Money Recovered from Health Care Fraud Judgments

Year Money Recovered (billions of dollars)
2006 2.2
2007 1.8
2008 1.0
2009 1.6
2010 2.5

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Chapter 1 Introduction

1.6 Sources of Data

The availability of accurate and appropriate data is essential for deriving reliable results.
Data may be obtained from internal sources, external sources, or surveys and experiments.
Many times, data comes from internal sources, such as a company’s personnel files or
accounting records. For example, a company that wants to forecast the future sales of its
products may use the data of past periods from its records. For most studies, however, all
the data that are needed are not usually available from internal sources. In such cases, one
may have to depend on outside sources to obtain data. These sources are called external
sources. For instance, the statistical Abstract of the United States (published annually),
which contains various kinds of data on the United States, is an external source of data.

A large number of government and private publications can be used as external sources of
data. The following is a list of some government publications.
1. Statistical abstract of Bangladesh
2. Employment and Earnings
3. Handbook of Labor Statistics
4. Source Book of Criminal Justice Statistics
5. Economic Report of the President
6. County and City Data Book
7. State and Metropolitan Area Data Book
8. Digest of Education Statistics
9. Agricultural Statistics

Most of the data contained in these books can be accessed on Internet. Beside these
government publications, a large number of private publications can be used as external
data sources.
Sometimes the needed data may not be available from either internal or external sources.
In such cases, the investigator may have to conduct a survey or experiment to obtain the
required data.

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Chapter 1 Introduction

EXERCISES
1.18 Explain the difference between cross-section and time-series data. Give an example of each of
these two types of data.
1.19 Briefly describe internal and external sources of data.
1.20 Classify the following as cross-section or time-series data.
(a) Food bill of a family for each month of 2012
(b) Number of armed robberies each year in a city from 1998 to 2012
(c) Number of supermarkets in 40 cities on December 2011
(d) Gross sales of 200 ice cream parlors in July 2012
1.21 Classify the following as cross-section or time-series data.
(a) Average prices of houses in 100 cities
(b) Salaries of 50 employees
(c) Number of cars sold each year by General Motors from 1980 to 2012
(d) Number of employees employed by a company each year from 1985 to 2012

1.7 Summation Notation

Sometimes, mathematical notation helps express a mathematical relationship concisely.
This section describes the summation notation that is used to denote the sum of values.
Suppose a sample consists of five books, and the prices of these five books are $175, $80,
$165, $97, and $88, respectively. The variable price of a book can be denoted by x. The
prices of the five books can be written as follows: Price of the first book = = $175. The
subscript 1 on x denotes the number of the book.

Similarly,
Price of the second book = = $80,
Price of the third book = = $165,
Price of the fourth book = = $97,
Price of the fifth book = = $88.
In this notation, x represents the price, and the subscript denotes a particular book.
Now, suppose we want to add the prices of all the five books. We obtain
+ + + + = $175 + $80 + $165 + $97 + $88 = $605.
The uppercase Greek Letter ∑ (pronounced sigma) is usually used to denote the sum of all
the values. Using ∑ notation, we can write the foregoing sum as follows:
∑x= + + + + = $605.
The notation ∑ x in this expression represents the sum of all values of x and is read as
“sigma x” or “sum of all values of x”.

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Chapter 1 Introduction

Example 1.1
Annual salaries (in thousands of dollars) of four workers are 75, 90, 125, and 61
respectively. Find the followings:
(a)  x
(b) (  x )2
(c)  x 2

Solution:
Let x1 = 75 , x 2 = 90 , x3 = 125 , and x 4 = 61 .

(a)
 x = x1 + x2 + x3 + x 4 = 75 + 90 + 125 + 61 = 351 = $351 ,000 .
(b)
( x )2 = (351)2 = 123 ,201 .
(c)
 x 2 = x12 + x22 + x32 + x 42 = (75)2 + (90)2 + (125)2 + (61)2
= 5625 + 8100 + 15625 + 3721
= 33 ,071.

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) m (b)  f2 (c) mf (d)  m2 f

Solution:
We can write
m1 = 12 m2 = 15 m3 = 20 m4 = 30
f1 = 5 f2 = 9 f3 = 10 f 4 = 16

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Chapter 1 Introduction

(a)
 m = m1 + m2 + m3 + m4 = 12 + 15 + 20 + 30 = 77 .
(b)
 f 2 = f12 + f22 + f32 + f 42 = (5)2 + (9)2 + (10)2 + (16)2
= 25 + 81 + 100 + 256
= 462 .
(c) To compute  m f , we multiply the corresponding values of m and f and then add
the products as follows:
 m f = m1 f1 + m2 f2 + m3 f3 + m4 f 4 = 12( 5 ) + 15( 9 ) + 20( 10 ) + 30( 16 )
= 60 + 135 + 200 + 480
= 875 .
(d) To calculate  m2 f , we square each m value, then multiply the corresponding m2
and f values, and add the products. Thus,
 m2 f = (m1 )2 f1 + (m2 )2 f2 + (m3 )2 f3 + (m4 )2 f 4
= (12)2(5) + (15)2(9) + (20)2(10) + (30)2(16)
= 720 + 2025 + 4000 + 14400
= 21 ,145 .
The calculations done in parts (a) through (d) to find the values of  m ,  f 2 ,  m f ,
and  m2 f can be performed in tabular form, as shown in Table 1.4.

Table 1.4

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Chapter 1 Introduction

EXERCISES
1.22 The following table lists five pairs of m and f values.

m 5 10 17 20 25
f 12 8 6 16 4
Compute the values of each of the following:
Compute the following:

2 2
(a)  m , (b)  f , (c)  m f , (d)  m f .
1.23 The following table lists six pairs of m and f values.

m 3 6 25 12 15 18
f 16 11 16 8 4 14
Compute the values of each of the following:
Compute the following:

(a) f , (b)  m2 , (c) 2

 m f , (d)  m f .
1.24 The following table contains information on the NCAA Men’s Basketball Championship
Tournament Final Four teams for the 33-year period from 1979 to 2011. The table shows how many
teams with each seeding qualified for the Final Four during these 33 years. For example, 54 of the
132 Final Four teams were seeded number 1, 28 of the 132 Final Four teams were seeded number
2, and so on.

Seed 1 2 3 4 5 6 7 8 9 11
Number of Teams in
54 28 16 11 7 6 1 5 1 3
Men’s Final Four
Letting y denote the seed and x denote the number of teams having that seed, calculate the
following:
(a) x , (b)  y , (c) xy , (d)
 y 2 , (e) (
  y )2 .
1.25 The following table contains the same kind of information as the table in Exercise Q1.7.3 but
for the NCAA Women’s Basketball Championship Tournament Final Four teams for the 30-year
period from 1982 to 2011.

Seed 1 2 3 4 5 6 7 8 9
Number of Teams in
63 29 13 9 1 2 1 1 1
Women’s Final Four
Letting y denote the seed and x denote the number of teams having that seed, calculate the
following:
(b) x , (b) y , (c) xy , (d)
 y 2 , (e) ( y )2 .
 

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Chapter 1 Introduction

1.26 Eight randomly selected customers at a local grocery store spent the following amounts on
groceries in a single visit. Tk 216, Tk 184, Tk 35, Tk 92, Tk 144, Tk 175, Tk 11, and Tk 57,
respectively. Let m denote the amount spent by a customer on groceries in a single visit. Find

2 2
(a)  m , (b) ( m ) , (c)  m .
1.27 The number of pizzas delivered to a college campus on six randomly selected nights is 48, 103,
95, 188, 286, and 136, respectively. Let x denote the number of pizzas delivered to this college
campus on any given night. Find:
(a) x , (b) ( x )2 , (c)
  x2 .

1.28 Nine randomly selected customers at a local fast-food restaurant ordered meals having the
following calorie counts: 975, 520, 1560, 872, 1105, 437, 910, 785, and 1335. Let y denote the
calorie content of a meal ordered at this restaurant. Find:
(a)  y , (b) ( y )2 , (c)
  y2 .

1.29 A car was filled with 16 gallons of gas on seven occasions. The number of miles that the car
was able to travel on each thankful was 387, 414, 404, 396, 410, 422, and 414. Let x denote the
distance traveled on 16 gallons of gas. Find:
(b)  x , (b) ( x )2 , (c)
  x2 .

**********************

Notes compiled based on the book “Introductory Statistics”

by
Prem S. Mann
8th Edition

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