Descriptive Statistics (3.1-3.

5)

 The central tendency is the extent to which all the

data values group around a typical or central value.

 The variation is the amount of dispersion or

scattering of values

 The shape is the pattern of the distribution of values

from the lowest value to the highest value.

Chap 3-1
 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:

Pronounced x-bar
The ith value
n

X i
X1  X 2    Xn
X i1

n n
Sample size Observed values

Chap 3-2
 Measures of Central Tendency:
The Mean
(continued)

 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

Chap 3-3
 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

 Not affected by extreme values

Chap 3-4
 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

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

Chap 3-5
 Measures of Central Tendency:
The Mode
 Value that occurs most often
 Not affected by extreme values
 Used for either numerical or categorical (nominal)
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

No Mode
Mode = 9
Chap 3-6
 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

Chap 3-7
 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 some situations it makes sense to report both the
mean and the median.

Chap 3-8
 Measures of Central Tendency:
Summary

Central Tendency

Arithmetic Median Mode

Mean
n

X i
X i 1
n Middle value Most
in the ordered frequently
array observed
value

Chap 3-9
 Measures of Variation
Variation

Range Variance Standard Coefficient of

Variation
Deviation

 Measures of variation give

information on the spread
or variability or
dispersion of the data
values.
Same center,
different variation
Chap 3-10
 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

Chap 3-11
 Measures of Variation:
Why The Range Can Be Misleading

 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

Chap 3-12
 Measures of Variation:
The Sample Variance

Low variation: more points close to the mean

High variation: more points far from the mean

So, measure the distance to the mean

Chap 1-13
 Measures of Variation:
The Sample 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 = arithmetic mean
n = sample size
Xi = ith value of the variable X
Chap 3-14
 Measures of Variation:
The Sample 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

Chap 3-15
 Measures of Variation:
Comparing Standard Deviations

Smaller standard deviation

Larger standard deviation

Chap 3-16
 Locating Extreme Outliers:
Z-Score

XX
Z
S

For a bell-shape (Normal) distribution,

|Z| < 1 for 68% of data
|Z| < 2 for 95% of data
|Z| < 3 for 99.7% of data

So, values X with large |Z| can be outliers.

 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.

Chap 3-18
 General Descriptive Stats Using
Microsoft Excel Functions

House Prices Descriptive Statistics

$ 2,000,000 Mean $ 600,000 =AVERAGE(A2:A6)
$ 500,000 Standard Error $ 357,770.88 =D6/SQRT(D14)
$ 300,000 Median $ 300,000 =MEDIAN(A2:A6)
$ 100,000 Mode $ 100,000.00 =MODE(A2:A6)
$ 100,000 Standard Deviation $ 800,000 =STDEV(A2:A6)
Sample Variance 640,000,000,000 =VAR(A2:A6)
Kurtosis 4.1301 =KURT(A2:A6)
Skewness 2.0068 =SKEW(A2:A6)
Range $ 1,900,000 =D12 - D11
Minimum $ 100,000 =MIN(A2:A6)
Maximum $ 2,000,000 =MAX(A2:A6)
Sum $ 3,000,000 =SUM(A2:A6)
Count 5 =COUNT(A2:A6)

Chap 3-19
 General Descriptive Stats Using
Microsoft Excel Data Analysis Tool

1. Select Data.

2. Select Data Analysis.

3. Select Descriptive
Statistics and click OK.

Chap 3-20
 General Descriptive Stats Using
Microsoft Excel

4. Enter the cell

range.
5. Check the
Summary
Statistics box.
6. Click OK

Chap 3-21
 Excel output
Microsoft Excel House Prices
descriptive statistics output,
Mean 600000
using the house price data: Standard Error 357770.8764
House Prices: Median 300000
Mode 100000
$2,000,000 Standard Deviation 800000
500,000 Sample Variance 640,000,000,000
300,000 Kurtosis 4.1301
100,000 Skewness 2.0068
100,000 Range 1900000
Minimum 100000
Maximum 2000000
Sum 3000000
Count 5

Chap 3-22
 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.

Chap 3-23
 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  X 2    XN
 i1

N N
Where μ = population mean
N = population size
Xi = ith value of the variable X
Chap 3-24
 Numerical Descriptive Measures
For A Population: The Variance σ2

 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
Chap 3-25
 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 
 2
(X μ)
σ i1
N

Chap 3-26
 Sample statistics versus
population parameters

Measure Population Sample

Parameter Statistic
Mean
 X
Variance
2 S2
Standard
 S
Deviation

Chap 3-27
 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% of the observations
are smaller and 50% are larger)
 Only 25% of the observations are greater than the third
quartile

Chap 3-28
 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

Chap 3-29
 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.

Chap 3-30
 Quartile Measures
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
Chap 3-31
 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

Chap 3-32
 Calculating The 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

Chap 3-33
 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

Chap 3-34
 Five Number Summary and
The Boxplot

 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

Chap 3-35
 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

Chap 3-36
 Distribution Shape and
The Boxplot

Left-Skewed Symmetric Right-Skewed

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3

Chap 3-37
 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

Chap 3-38
 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
Chap 3-39
 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

Chap 3-40
 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
n n n
 (X  X)(Y  Y)
i i  (X  X)
i
2
 i
(Y  Y ) 2

cov (X , Y)  i1
SX  i1
SY  i 1
n 1 n 1 n 1

Chap 3-41
 Features of the
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
 Ranges 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

Chap 3-42
 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
Chap 3-43
 The Coefficient of Correlation Using
Microsoft Excel Function

Test #1 Score Test #2 Score Correlation Coefficient

78 82 0.7332 =CORREL(A2:A11,B2:B11)
92 88
86 91
83 90
95 92
85 85
91 89
76 81
88 96
79 77

Chap 3-44
 The Coefficient of Correlation Using
Microsoft Excel Data Analysis Tool
1. Select Data
2. Choose Data Analysis
3. Choose Correlation &
Click OK

Chap 3-45
 The Coefficient of Correlation
Using Microsoft Excel

4. Input data range and select

appropriate options
5. Click OK to get output

Chap 3-46
 Excel

Excel function: =correl

Or use the Data Analysis Tool, “covariance” and

“correlation”.

Chap 1-47