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Lecture 9.6_Discrete random variable-Standard deviation

The document covers the concept of standard deviation of a random variable, including its definition, properties, and applications. It explains how to calculate the standard deviation and variance, and provides examples involving family bonuses and lawyer's fees. The learning objectives include understanding random variables, probability mass functions, and cumulative distribution functions.

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5 views28 pages

Lecture 9.6_Discrete random variable-Standard deviation

The document covers the concept of standard deviation of a random variable, including its definition, properties, and applications. It explains how to calculate the standard deviation and variance, and provides examples involving family bonuses and lawyer's fees. The learning objectives include understanding random variables, probability mass functions, and cumulative distribution functions.

Uploaded by

bat1batttt4
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Statistics for Data Science -1

Statistics for Data Science -1


Lecture 9.6: Standard deviation of a random variable

Usha Mohan

Indian Institute of Technology Madras

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Statistics for Data Science -1

Learning objectives

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Statistics for Data Science -1

Learning objectives

1. Define what is a random variable.

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Statistics for Data Science -1

Learning objectives

1. Define what is a random variable.


2. Types of random variables: discrete and continuous.

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Statistics for Data Science -1

Learning objectives

1. Define what is a random variable.


2. Types of random variables: discrete and continuous.
3. Probability mass function, graph, and examples.

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Statistics for Data Science -1

Learning objectives

1. Define what is a random variable.


2. Types of random variables: discrete and continuous.
3. Probability mass function, graph, and examples.
4. Cumulative distribution function, graphs, and examples.

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Statistics for Data Science -1

Learning objectives

1. Define what is a random variable.


2. Types of random variables: discrete and continuous.
3. Probability mass function, graph, and examples.
4. Cumulative distribution function, graphs, and examples.
5. Expectation and variance of a random variable.

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Standard deviation of a random variable

Standard deviation of a random variable

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Standard deviation of a random variable

Standard deviation of a random variable

Definition p
The quantity SD(X ) = Var (X ) is called the standard deviation
of X .

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Statistics for Data Science -1
Standard deviation of a random variable

Standard deviation of a random variable

Definition p
The quantity SD(X ) = Var (X ) is called the standard deviation
of X .
Hence, the standard deviation (SD) is the positive square root of
the variance.

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Standard deviation of a random variable

Standard deviation of a random variable

Definition p
The quantity SD(X ) = Var (X ) is called the standard deviation
of X .
Hence, the standard deviation (SD) is the positive square root of
the variance.
Remark
The standard deviation, like the expected value, is measured in the
same units as is the random variable.

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Standard deviation of a random variable

Properties of standard deviation

Proposition
Let X be a random variable, let c be a constant, then

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Statistics for Data Science -1
Standard deviation of a random variable

Properties of standard deviation

Proposition
Let X be a random variable, let c be a constant, then
I SD(cX ) = cSD(X )

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Standard deviation of a random variable

Properties of standard deviation

Proposition
Let X be a random variable, let c be a constant, then
I SD(cX ) = cSD(X )
I SD(X + c) = SD(X )

1. If Var (X ) = 4, what is SD(3X )?

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Statistics for Data Science -1
Standard deviation of a random variable

Properties of standard deviation

Proposition
Let X be a random variable, let c be a constant, then
I SD(cX ) = cSD(X )
I SD(X + c) = SD(X )

1. If Var (X ) = 4, what is SD(3X )? Answer: 6.


2. If Var (2X + 3) = 16, what is SD(X )?

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Statistics for Data Science -1
Standard deviation of a random variable

Properties of standard deviation

Proposition
Let X be a random variable, let c be a constant, then
I SD(cX ) = cSD(X )
I SD(X + c) = SD(X )

1. If Var (X ) = 4, what is SD(3X )? Answer: 6.


2. If Var (2X + 3) = 16, what is SD(X )? Answer: 2.

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Standard deviation of a random variable

Application: family bonus


Sanjay and Anitha are a married couple who work for the same
company. Anitha’s Diwali bonus is a random variable whose
expected value is |15,000 and standard deviation is |3,000.
Sanjay’s bonus is is a random variable whose expected value is
|20,000 and standard deviation is |4,000. Assume the earnings of
Sanjay and Anitha are independent of each other. What is the
expected value and standard deviation of the total family bonus.

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Statistics for Data Science -1
Standard deviation of a random variable

Application: family bonus


Sanjay and Anitha are a married couple who work for the same
company. Anitha’s Diwali bonus is a random variable whose
expected value is |15,000 and standard deviation is |3,000.
Sanjay’s bonus is is a random variable whose expected value is
|20,000 and standard deviation is |4,000. Assume the earnings of
Sanjay and Anitha are independent of each other. What is the
expected value and standard deviation of the total family bonus.
I Let X denote Anita’s bonus. Given
E (X ) = 15, 000, SD(X ) = 3, 000.
I Let Sanjay’s bonus be Y . Given
E (Y ) = 20, 000, SD(Y ) = 4, 000

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Statistics for Data Science -1
Standard deviation of a random variable

Application: family bonus


Sanjay and Anitha are a married couple who work for the same
company. Anitha’s Diwali bonus is a random variable whose
expected value is |15,000 and standard deviation is |3,000.
Sanjay’s bonus is is a random variable whose expected value is
|20,000 and standard deviation is |4,000. Assume the earnings of
Sanjay and Anitha are independent of each other. What is the
expected value and standard deviation of the total family bonus.
I Let X denote Anita’s bonus. Given
E (X ) = 15, 000, SD(X ) = 3, 000.
I Let Sanjay’s bonus be Y . Given
E (Y ) = 20, 000, SD(Y ) = 4, 000
I E (X + Y ) = E (X ) + E (Y )= |35,000
p
I SD(X + Y ) = Var (X ) + Var (Y )= |5,000
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Standard deviation of a random variable

Application: Lawyer’s fees

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Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).
I Determine the expectation and standard deviation of her fee if

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).
I Determine the expectation and standard deviation of her fee if
a She charges a fixed fee.

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).
I Determine the expectation and standard deviation of her fee if
a She charges a fixed fee. E (X ) = 25, 000, SD(X ) = 0

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).
I Determine the expectation and standard deviation of her fee if
a She charges a fixed fee. E (X ) = 25, 000, SD(X ) = 0
b She charges a contingency fee.

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Statistics for Data Science -1
Standard deviation of a random variable

Application: Lawyer’s fees

I A lawyer must decide whether to charge a fixed fee of |25,000


or to take a contingency fee of |50,000 if she wins the case
(and |0 if she loses).
I She estimates that her probability of winning is 0.5 ( equal
chance of winning or losing).
I Determine the expectation and standard deviation of her fee if
a She charges a fixed fee. E (X ) = 25, 000, SD(X ) = 0
b She charges a contingency fee.
E (X ) = 25, 000, SD(X ) = 25, 000

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Statistics for Data Science -1
Standard deviation of a random variable

Section summary

I Notion of standard deviation of a random variable.


I Properties of standard deviation.
I Applications.

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