ADDIS ABABA UNIVERSITY

School of Economics
Introduction to Statistics
By Minda Tesga, Lecturer, School of Economics, Addis Ababa University
BA in Economics AAU, Masters in Economic Science, MSc. In Economics, Economic
Policy AAU..

December 2022
For detail read the main reference textbooks

Addis Ababa, ETHIOPIA

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1.1 Some statistical terms

• Datum: It is an information taken from an object

• Data: The collection of observed values representing one or more
characteristics of some object.
• Sample: A representative of a certain population. It’s a subset of the
population.
• Population: The totality of an object under study.

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1.2 Definition and Classification of Statistics
1.2.1 Definition of statistics
We can define statistics in two basic senses
i. In the plural sense: statistics are the raw data themselves, like
statistics of births, statistics of deaths, statistics of students,
statistics of imports and exports, etc. Therefore,
✓Statistics are an aggregate of facts
✓Statistics are numerically expressed
✓Statistics must be placed in relation to each other

ii. In the singular sense: statistics is the subject that deals with the
collection, organization, presentation, analysis, and interpretation
of numerical data.
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1.2 Definition and Classification of Statistics
1.2.2 Stages in statistical investigation
According to the singular sense definition of statistics,
the statistical investigation involves FIVE stages.
i. Collection of data
ii. Organization of data
iii. Presentation of data
iv. Analysis of data
v. Interpretation of data

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1.2.3 Classification of Statistics
Descriptive Statistics Inferential Statistics
It is used to DESCRIBE the characteristics of It is used to DRAW INFERENCES about the
either the sample or the population by population data from the sample data by
using quantitative tools. making use of analytical tools.
Measures of central tendency and
Hypothesis testing and regression analysis
measures of dispersion are the most
are the types of inferential statistics.
important types of descriptive statistics.
It tries to make inferences about the
It is used to describe the characteristics of
population that goes beyond the known
a known dataset.
data.
Measures of inferential statistics are z
Measures of descriptive statistics are
test, f test, linear regression, ANOVA test,
mean, median, variance, range, etc.
etc. 5
AAU, School of Economics, Minda Tesga (MSc.)
1.3 Application, Uses, and Limitations of Statistics
1.3.1 Applications of statistics
i. In scientific research: In Scholarly (or noble) areas of Economics, medicine,
agriculture, education, and other fields
ii. In quality control
iii. In natural, social, and physical science
1.3.2 Uses of Statistics
a) Reduction and summarization of data
b) Facilitating and comparison of data
c) Determining the functional relationship between two or more phenomena
d) Formulation and test of hypothesis
e) Prediction
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1.3 Application, Uses, and Limitations of
Statistics Con’d
1.3.3 Limitations of statistics
i. It does not deal with a single observation, rather it
deals with the aggregate observation.
ii. Not applicable in qualitative character
iii. Statistical results are true on average: Statistics is
not an exact science, and statistical conclusions are
not universally true.
iv. Statistics are liable to misuse and misinterpretation
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1.4. Need For Data
Definition of data and its types
• Data consists of information coming from observations, counts,
measurements, or responses.
• Data are the real factors and figures seen or observed that are collected,
organized, presented, summarized, analyzed, and interpreted.
• Data set –all the data collected in a particular study. Say data on sex, age,
awareness, and so on
a) Discrete Data – refers to data obtained by counting. It assumes always
whole numbers. But the data on age is continuous data because it can
assume any real number up to the human age limit.
b) Continuous Data – refers to data gathered by measuring and can
include decimal numbers (in real numbers in practice).
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1.4. Need For Data Coun’t
c) Qualitative Data –
data in non-numeric form say data on sex (which can be either
male or female) or awareness (which can be either yes or no, or can
be measured by degree awareness), and Experience. Note that we
can present qualitative data in numeric form (say 1 to male and 0 to
female) and we can use statistical methods on the transformed
data.
It’s categorical data, dummy variable nature with artefitial value of
1 and 0.
d) Quantitative Data-
• are data expressed in numeric form say data on age, number of
people lost due to HIV, and so on.
• It’s Non-categorical data
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1.5. Scales of Measurement
The four common levels of data measurement are Nominal, Ordinal,
Interval, and Ratio levels or scales.
i. Nominal scale or variables: It is a qualitative variable, nominal scale
is simply a system of assigning number symbols to events in order to
label them. Examples: Gender (Male or Female.), religion, color,
Political party preference (EZEMA, PP, or Other), Marital
status(married, single, widow, divorced), Country code,
ii. Ordinal Scale or Variable: It is also a qualitative variable, whose
values can be ORDERED or RANKED. Examples: Academic
qualifications (i,.e., BA, MSc, Ph.D.; Grades (A,B,C,D,F); Rating scales
(Excellent, Very good, Good, Fair, poor); Military status; and others.

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1.5. Scales of Measurement Con’d
𝒊𝒊𝒊. Interval scale or Variable:
• It is a quantitative variable and identifies not only as to which category is
greater or better but also by how much. Interval scales are measurement
systems that possess the properties of Order and distance, but not the
property of fixed zero.
• Level of measurement which classifies data that can be ranked and differences
are meaningful. However, there is no meaningful zero, so ratios are
meaningless.
• All arithmetic operations except division are applicable.
• Relational operations are also possible.
• It is the stronger form of measurement but there is no true zero. Zero indicates
low than empty
• Examples: IQ, Temperature in degree Fahrenheit, exam scores …
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1.5. Scales of Measurement Con’d
𝒊𝒗. Ratio Scale or variable: This scale is the highest form of
measurement,
• It is a quantitative variable, but unlike the
interval variable, zero shows the absence of the
characteristics.
• All mathematical operations are allowed to be
operated on the values of these variables.
• Ratio scales are measurement systems that possess all
three properties: order, distance, and fixed zero.
Examples: Weight, height, income, expenditure, amount of
yield, number of students, age…..
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1.6 Types and source’s of data
There are two sources of data:
i. Primary Data: Data measured or collect by the investigator or the
user directly from the source. It’s a first hand or original data.
• Two activities involved: i.e., Planning and measuring.
a) Planning: identify the source and elements of the data. Decide
whether to consider a sample or a census. If sampling is preferred,
decide on sample size, selection method,… etc Decide measurement
procedure. Set up the necessary organizational structure.
b) Measuring or sources: there are different options. Focus Group,
Telephone Interviews, Mail Questionnaires, Door-to-Door Survey,
Mall Intercept, New Product Registration, Personal Interview and
Experiments are some of the sources for collecting the primary
data.
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1.6 Types and sources of data Con’d
𝒊𝒊) Secondary Data
❑Data gathered or compiled from published and unpublished
sources or files.
❑When our source is secondary data check that:
✓The type and objective of the situations.
✓The purpose for which the data are collected and compatible
with the present problem.
✓The nature and classification of data is appropriate to our
problem.
✓There are no biases and misreporting in the published data.
Note: Data which are primary for one may be secondary for the other.
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 End of chapter 1

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