LECTURE 1

What is
Statistics ?
 What is Statistics?

 Statistics is a way to get information from data. It is

a tool for creating new understanding from a set of
numbers.

 Descriptive statistics deals with methods of

organizing, summarizing, and presenting data in a
convenient and informative way.

Descriptive statistics uses graphical and tabulation techniques to

present data in ways that make it easy to extract useful
information.
 Another form of descriptive statistics uses numerical
techniques to summarize data.

Example: A class of fifty statistics students obtained an

average score of 53.5.

 Inferential statistics is a body of methods used to draw

conclusions or make inferences about
characteristics of populations based on sample data.

Example: Based on a sample of 500 subscribers, a

local cable system estimates that the proportion of all
subscribers watch a premium channel is between 0.35 to
0.48.
 Key Statistical Concepts

 Population is the group of all items (people,

objects, firms, households etc.) of interest.

 Sample is a set of data drawn from the population.

• Large populations make investigating each member

impractical and expensive. Easier and cheaper to
take a sample and make inferences about the
population from the sample.

 Parameter is a descriptive measure of population.

 Statistic is a descriptive measure of a sample.

Statistical Inference

estimate the unknown value of a

population parameter on the basis of a
sample statistic
Estimation

Hypothesis testing

evaluate or test a claim about the population

parameter based on a sample statistic
 Exercise 1

Identify each of the following as a use of descriptive

statistics or inferential statistics.

a) Finding the weights of a sample of 85

manufacturer parts.

b) Estimating the percentage of the U.S. population that

will vote for your favorite candidate in the next
presidential election.

c) Calculating the proportion of UKM students play

basketball.
d) Selecting a random sample of 190 babies born last
year and using this information to estimate the mean
birth weight of all babies born last year.

e) Tabulate the average oil consumption per day of

the top 15 countries.

f) Randomly selecting 225 cans of Coca Cola and using

their average weight to test whether the 350 ml.
label on the cans is truthful or not.

g) Graphically present the government expenditures for

public works in years 2000, 2005, 2010 and 2015.
 Exercise 2

A manufacturer of computer chips claims that less than

10% of its products are defective. When 1,000 chips were
drawn from a large production, 7.5% were found to be
defective.

i) Identify the population, sample, parameter, and

statistic in this survey.

ii) Explain briefly how the statistic can be used to make

inferences about the parameter.
 Exercise 3

The administrator of a college want to determine the

average commuting distance for their students who
commute to school. They randomly select 150 students who
commute and ask them the distance of their commute to
campus. From this group a mean of 18.2 miles is computed.

i) Describe the population and the sample.

ii) What is the parameter?

iii) What is the statistic?

 Variable, Observation, Data

 Variable is a characteristic that varies within a

population or sample
 E.g: the marks for statistic exam for students
 Represent the name of variable using upper cases

 Observation is an individual measurement

of a variable.

 Data are the actual measurements or observed

values of a variable.
 Types of Variables

 Qualitative / categorical variable is a

characteristic with observations that are nonnumeric and
can only be placed into categories.

 Quantitative / numerical variable is a numerical quantity

on each object whose observations can be ordered in terms
of the magnitude of the characteristic.
 Discrete & Continuous Variables

VARIABLES

QUANTITATIVE QUALITATIVE

Discrete (diskret) Continuous (selanjar)

observations that can take on a observations that can take on a value
countable number at any point along an interval
- refers to any value along the
of values
- refers to certain value interval
- Obtained from measuring process
- Obtained from counting
- E.g: weight, income, heights
process
 Example

A quality-assurance inspector periodically examines the

output of a machine to determine whether it is properly
adjusted. When set properly, the machine produces nails
having a mean length of 2.000 inches, with a standard
deviation of 0.070 inches.

i) Identify the variable of interest.

ii) Indicate whether the variable of interest would

be qualitative, continuous, quantitative, discrete
 Example

Researchers in a California community have asked a sample

of 175 automobile owners to select their favourite from two
popular automotive magazines. Of the 111 import owners in
the sample, 54 selected Car and Driver, and 57 selected
Road & Track. Of the 64 domestic-make owners in the
sample, 19 selected Car and Driver, and 45 selected Road &
Track.

i) Identify the variable of interest.

ii) Indicate whether the variable of interest would

be qualitative, continuous, quantitative or discrete
 Example: Types of Variables

• For each of the following, indicate whether the

appropriate variable would be qualitative or
quantitative. If the variable is quantitative,
indicate whether it would be discrete or
continuous.

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 Example
• a) Whether you own • Qualitative Variable
a Panasonic  two levels: yes/no
television set  no measurement
• b) Your status as a • Qualitative Variable
full-time or a part-time  two levels: full/part
student  no measurement
• c) Number of people • Quantitative, Discrete
who attended your Variable
school’s graduation  a countable number
last year  only whole numbers
• d) The price of • Quantitative, Discrete
your most recent Variable
haircut  a countable number
 only whole numbers
• e) Sam’s travel • Quantitative, Continuous
time from his Variable
dorm to the  any number
student union  time is measured
 can take on any value greater
than zero
 Measurement Scales

VARIABLES

QUANTITATIVE QUALITATIVE

Ratio Nominal

Interval Ordinal
 Nominal & Ordinal Scales

 Nominal scale classifies data into distinct categories

in which no ranking is implied.
 Single; married; divorced; widowed

 Ordinal scale classifies data into distinct categories in

which ranking is implied and the magnitudes of the
differences between measurements are unknown.
 Grade : A; B; C; D; E
 Poor; fair; good; very good; excellent
 Interval & Ratio Scales

 Interval (selang) scale distinguishes data by the

amount of the characteristic they possess. The numerical
quantity indicate order and differences between
measurements.

There is no absolute zero and the ratio of two

measurements is meaningless.

 Ratio scale data are similar to the interval

scale data, but has an absolute zero and the ratio of
two measurements is meaningful.
 Example 4

Indicate whether the following variables would be nominal,

ordinal, interval or ratio.

a) The number of miles joggers run per week

b) Your favorite brand of sneakers

c) The months in which a firm’s employees choose to take

their vacations

d) The final letter grades received by students in a

statistics course
e) The daily Bursa Malaysia KLCI Index

f) The size of soft drink (small, medium, or large)

ordered by a sample of McDonald’s customers

g) The number of Toyotas imported monthly by the

United States over the last 5 years

h) Fields of study (accounting, economics, finance,

management, or marketing)

i) The starting salaries of graduates of MBA programs

j) MUET Aggregated Score

 Example: Scales of Measurement

• Bill scored 1200 on the Scholastic Aptitude Test

and entered college as a physics major. As a
freshman, he changed to business because he
thought it was more interesting. Because he
made the dean’s list last semester, his parents
gave him $30 to buy a new Casio calculator.
Identify at least one piece of information in the:
 Example:
• a) nominal • 1. Bill is going to college.
scale of 2. Bill will buy a Casio
measurement. calculator.
3. Bill was a physics major.
4. Bill is a business major.
5. Bill was on the dean’s list.
 Example
• b) ordinal scale of • Bill is a freshman.
measurement

• c) interval scale of • Bill earned a 1200 on the

measurement SAT.

• d) ratio scale of • Bill’s parents gave him $30.

measurement
 Primary & Secondary Data

 Primary (primer) data: Data collected first hand for

subsequent analysis to meet a specific purpose.

It could be collected using census, sample survey,

designed experiment.

 Secondary (sekunder) data: Data that have already

been collected.

It could be obtained from the published or unpublished

sources such as online databases, government
publications, annual reports of companies, etc.
 Types of Data

 Time series data: A set of data for single entity or

country that collected over several time periods (daily,
weekly, monthly, quarterly, yearly).

Example: GDP per capita from year 2005-2013

 Cross sectional data: A set of data collected for many

entities or countries at the same point in time.

Example: Contribution to the gross output by

manufacturing groups in year 2012.
 Time
Series
Data

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-28
 Cross Sectional Data
Bank Total Assets 2000

Bank Total Asset (million)

CIMB 3.5
Bank Islam 4
Maybank 6
Hong Leong
Bank 2.5
Affin Bank 2
AmBank 1.5

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-29
 Types of Data

 Pooled Data
 A set of data collected for many entities or
countries that collected over several time periods
(daily, weekly, monthly, quarterly, yearly).

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-30
 PANEL/POOLED DATA

Year Bank Total Assets (Million)

2000CIMB 3.5
2000Bank Islam 4
2000Maybank 6

2000Hong Leong Bank 2.5

2000Affin Bank 2
2000AmBank 1.5
2001CIMB 7.2
2001Bank Islam 6
2001Maybank 9

2001Hong Leong Bank 4

2001Affin Bank 3
2001AmBank 2

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 6-31
 Statistical Packages

 SPSS, Minitab, Eviews, Stata, etc.

 Microsoft Excel – Statistical functions, Spreadsheets,

Analysis ToolPak etc.