Describing data : Numerical

Measures

Dr. K. M. Salah Uddin

Associate Professor
Dept. of MIS, DU
 Contents
 Measures of central tendency, variation, and
shape
 Mean, median, mode, geometric mean
 Quartiles
 Range, interquartile range, variance and standard
deviation
 Symmetric and skewed distributions
 Population summary measures
 Mean, variance, and standard deviation
 Summary Measures
Describing Data Numerically

Central Tendency Quartiles Variation Shape

Arithmetic Mean Range Skewness

Median Interquartile Range

Mode Variance

Geometric Mean Standard Deviation

Coefficient of Variation
 Measures of Central Tendency
Overview
Central Tendency

Arithmetic Mean Median Mode Geometric Mean

X i
XG  ( X1  X 2    Xn )1/ n

X i 1
n Midpoint of Most
ranked frequently
values observed
value
 Arithmetic Mean
 The arithmetic mean (mean) is the most
common measure of central tendency

 For a sample of size n:

n

X i
X1  X 2    Xn
X i1

n n

Sample size Observed values

 Arithmetic Mean
(continued)

 The most common measure of central tendency

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

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Mean = 3 Mean = 4
1  2  3  4  5 15 1  2  3  4  10 20
 3  4
5 5 5 5
 Median
 In an ordered array, the median is the “middle”
number (50% above, 50% below)

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10

Median = 3 Median = 3

 Not affected by extreme values

 Finding the Median

 The location of the median:

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

n 1
 Note that 2 is not the value of the median, only the
position of the median in the ranked data
 Mode
 A measure of central tendency
 Value that occurs most often
 Not affected by extreme values
 Used for either numerical or categorical
(nominal) data
 There may 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

No Mode
Mode = 9
 Review Example
 Five houses on a hill by the beach
$2,000 K
House Prices:

$2,000,000
500,000 $500 K
300,000 $300 K
100,000
100,000

$100 K

$100 K
 Review Example:
Summary Statistics

House Prices:
 Mean: ($3,000,000/5)
$2,000,000 = $600,000
500,000
300,000
100,000
100,000
 Median: middle value of ranked data
Sum $3,000,000
= $300,000

 Mode: most frequent value

= $100,000
Which measure of location
is the “best”?
 Mean is generally used, unless
extreme values (outliers) exist
 Then median is often used, since
the median is not sensitive to
extreme values.
 Example: Median home prices may be
reported for a region – less sensitive to
outliers
 Quartiles
 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
observations are smaller and 75% are larger
 Q2 is the same as the median (50% are smaller, 50% are
larger)
 Only 25% of the observations are greater than the third
quartile
 Quartile Formulas

Find a quartile by determining the value in the

appropriate position in the ranked data, where

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

Second quartile position: Q2 = (n+1)/2 (the median position)

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

where n is the number of observed values

 Quartiles

 Example: Find the first quartile

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 use the value half way between the 2nd and 3rd values,

so Q1 = 12.5
Q1 and Q3 are measures of noncentral location
Q2 = median, a measure of central tendency
 Quartiles
(continued)
 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 = 12.5

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 = 19.5
 Geometric Mean
 Geometric mean
 Used to measure the rate of change of a variable
over time

XG  ( X1  X 2    Xn ) 1/ n

 Geometric mean rate of return

 Measures the status of an investment over time

R G  [(1  R1 )  (1  R 2 )    (1  Rn )]1/ n  1

 Where Ri is the rate of return in time period i

 Example

An investment of $100,000 declined to $50,000 at the

end of year one and rebounded to $100,000 at end
of year two:

X1  $100,000 X 2  $50,000 X3  $100,000

50% decrease 100% increase

The overall two-year return is zero, since it started and

ended at the same level.
 Example
(continued)

Use the 1-year returns to compute the arithmetic

mean and the geometric mean:

Arithmetic ( 50%)  (100%)

mean rate X  25% Misleading result
2
of return:

Geometric R G  [(1  R1 )  (1  R 2 )    (1  Rn )]1/ n  1

mean rate
 [(1  ( 50%))  (1  (100%))]1/ 2  1 More
of return:
accurate
 [(.50)  (2)]1/ 2  1  11/ 2  1  0% result
 Measures of Variation
Variation

Range Interquartile Variance Standard Coefficient

Range Deviation of Variation

 Measures of variation give

information on the spread
or variability of the data
values.

Same center,
different variation
 Range
 Simplest measure of variation
 Difference between the largest and the smallest
values in a set of data:

Range = Xlargest – Xsmallest

Example:

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

Range = 14 - 1 = 13
 Disadvantages of the Range
 Ignores the way in which 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
 Interquartile Range

 Can eliminate some outlier problems by using

the interquartile range

 Eliminate some high- and low-valued

observations and calculate the range from the
remaining values

 Interquartile range = 3rd quartile – 1st quartile

= Q3 – Q1
 Interquartile Range

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

12 30 45 57 70

Interquartile range
= 57 – 30 = 27
 Variance

 Average (approximately) of squared deviations

of values from the mean
n
 Sample variance:
 (X  X) i
2

S 2 i1
n -1
Where X = mean
n = sample size
Xi = ith value of the variable X
 Standard Deviation
 Most commonly 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:
 (X  X)
i
2

S i1
n -1
 Calculation Example:
Sample Standard Deviation
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
 Measuring variation

Small standard deviation

Large standard deviation

 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 21 S = 0.926

Data C
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 S = 4.567
 Advantages of Variance and
Standard Deviation

 Each value in the data set is used in the

calculation

 Values far from the mean are given extra

weight
(because deviations from the mean are squared)
 Coefficient of Variation

 Measures relative variation

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

 S
CV     100%

X 
 Comparing Coefficient
of Variation
 Stock A:
 Average price last year = $50

 Standard deviation = $5

S $5
CVA     100%   100%  10%
X $50 Both stocks
 Stock B: have the same
standard
 Average price last year = $100
deviation, but
 Standard deviation = $5 stock B is less
variable relative
to its price
S $5
CVB     100%   100%  5%
X $100
 Z Scores

 A measure of distance from the mean (for example, a

Z-score of 2.0 means that a value is 2.0 standard
deviations from the mean)
 The difference between a value and the mean, divided
by the standard deviation
 A Z score above 3.0 or below -3.0 is considered an
outlier

XX
Z
S
 Z Scores
(continued)

Example:
 If the mean is 14.0 and the standard deviation is 3.0,
what is the Z score for the value 18.5?

X  X 18.5  14.0
Z   1.5
S 3.0
 The value 18.5 is 1.5 times of standard deviations
above the mean
 (A negative Z-score would mean that a value is less
than the mean)
 Shape of a Distribution

 Describes how data are distributed

 Measures of shape
 Symmetric or skewed

Left-Skewed Symmetric Right-Skewed

Mean < Median Mean = Median Median < Mean
 Numerical Measures
for a Population
 Population summary measures are called parameters
 The population mean is the sum of the values in the
population divided by the population size, N
N

X i
X1  X 2    XN
 i1

N N
Where μ = population mean
N = population size
Xi = ith value of the variable X
 Population Variance

 Average of squared deviations of values from

the mean
N
 Population variance:  (X  μ)
i
2

σ2  i1
N

Where μ = population mean

N = population size
Xi = ith value of the variable X
 Population Standard Deviation
 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
 The Empirical Rule

 If the data distribution is approximately

bell-shaped, then the interval:
 μ  1σ
contains about 68% of the values in
the population or the sample

68%

μ
μ  1σ
 The Empirical Rule

μ  2σcontains about 95% of the values in
the population or the sample
 μ  3σcontains about 99.7% of the values
in the population or the sample

95% 99.7%

μ  2σ μ  3σ
 Chebyshev 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 - 1/12) x 100% = 0% ……..... k=1 (μ ± 1σ)
(1 - 1/22) x 100% = 75% …........ k=2 (μ ± 2σ)
(1 - 1/32) x 100% = 89% ………. k=3 (μ ± 3σ)