PRINCIPLES OF STATISTICS

AND STATISTICS FOR

BUSINESS AND ECONOMICS

Lecturer: MSc. Le Thu Hang

Faculty of Business and Administration
Foreign Trade University
 CHAPTER 1

INTRODUCTION TO STATISTICS
POINTS TO HIGHLIGHT

1/ Define the nature of Statistics / Answer

the key question: “What is statistics?”
2/ Key concepts in statistics
3/ Data analysis process

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I. WHAT IS STATISTICS?
1. Why study statistics?
●Being informed

Example: According to Vietnam EC market 2020, Mobile

application becomes the dominant media to enjoy online
shopping (59% use mobile app the most, which is the huge
increase from 47% of the previous year)

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I. WHAT IS STATISTICS?

1. Why study statistics?

●Being informed

Your ability to be informed thoroughly

 Extract information from tables, charts, and graphs
 Follow numerical arguments
 Understand the basics of how data should be gathered,
summarized and analyzed to draw statistical conclusions

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I. WHAT IS STATISTICS?

1. Why study statistics?

●Making informed judgments

Example:
●How should you select an online seller in Ebay based on their

feedback scores and detailed ratings?

●If you know the rate of being unemployed of new graduate

students of a particular major, will you choose that major?

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I. WHAT IS STATISTICS?
1. Why study statistics?
● Making informed Judgments
Your ability to make informed judgments
 Decide whether existing information is adequate or
whether additional information is required
 If necessary, collect more information in a reasonable
and thoughtful way
 Summarize the available data in a useful and informative
manner
 Analyze the available data
 Draw conclusion, make decision, and assess the risk of7 an
incorrect information
I. WHAT IS STATISTICS?

1. Why study statistics?

● Evaluating Decisions that Affect your Life
Example:
University financial aid offices survey students on the cost of
going to school and collect data on family income, savings,
and expenses. These data are used to set criteria for
deciding who receives financial aids.

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I. WHAT IS STATISTICS?

1. Why study statistics?

● Evaluating Decisions that Affect your life
Your ability to Evaluate decisions that Affect your life

 Understand statistical methods used to make decisions

that affect your life

 Be able to evaluate whether such important decisions are

being made in a reasonable way
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I. WHAT IS STATISTICS?

interest rates, population, stock market prices,

unemployment rate…

2. Understand the nature of statistics

- In a very general way:
Statistics numerical information

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I. WHAT IS STATISTICS?
- Furthermore:

Statistics Statistical methods

- Collect
- describe
- summarize
- present
- analyze
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 STATISTICAL ANALYSIS PROCESS
Pose a question/ Decide what to
problem measure and Collecting data
how to measure?

Summarizing
data

Interpreting Analyzing
12
results data
EXAMPLES
● Customers’ satisfaction toward a product/service
provided by a company
● Customers’ online shopping behavior
● Emotional intelligence and Job performance

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APPLICATIONS IN BUSINESS AND ECONOMICS

Economics
Economists use statistical information in
making forecasts about the future of the
economy or some aspects of it.

Economists use statistical models to

help explain and predict variables such as
inflation rate, unemployment rate, and
changes in the gross domestic product.

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APPLICATIONS IN BUSINESS AND
ECONOMICS
Marketing
 Electronic point-of-sale scanners at retail
checkout counters are used to collect data for
a variety of marketing research applications.

 A market researcher who surveys consumers

and converts the responses into useful
information for research purpose.

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 APPLICATIONS IN BUSINESS AND
ECONOMICS
 Example: one Midwest grocery chain analyze
local buying patterns. They discovered that
when men bought diapers on Thursdays and
Saturdays, they also tended to buy beer. The
grocery chain could use this information in
various ways to increase revenue. For
example, they could move the beer display
closer to the diaper display

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APPLICATIONS IN BUSINESS AND
ECONOMICS

 Finance
 Financial advisors use price-earnings ratios and dividend yields
to guide their investment recommendations.

 A financial analyst develops stock portfolios based on historical

rate of return

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JOBS OF STATISTICS

 Making sense of numerical information

 Dealing with uncertainty
 Sampling
 Analyzing relationships
 Forecasting
 Decision making in an uncertain environment

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MAKING SENSE OF NUMERICAL INFORMATION

Decision-makers require as much information as possible to

make decision
●However, after being collected numerical information is under
the raw form.

Hence, these information need to be summarized,

organized and analyzed so that important features
emerges

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DEALING WITH UNCERTAINTY

● In statistics we have to deal with the question what might

be, what could be… not what is
● One task of statistics is to estimate the level of uncertainty
● Examples:
- Estimate the number of students might attend a
conference tomorrow.
- What might the weather like tomorrow

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SAMPLING
 E.g: Before bringing a new product to market, market
research survey about the likely level of demand of this
product maybe undertaken?
should the survey cover all potential buyers (population)?

Absolutely impossible due to

the huge costs of time,
money, people…

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Sampling
ANALYZING RELATIONSHIPS
● Let’s consider some examples below:
(i) Does the growth rate of money supply influence the inflation
rate?
(ii) If the price of a product rise by 5%, what is the effect on the
sales of this product?

- The relationships between variables will be analyzed in a

quantitative way not qualitative way based on the past
behaviors of these variables

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FORECASTING

 Reliable predictions play a key role in management and

making decision
 For example: investment decisions must be made well ahead
of the time at which a new product can be brought to
market;
 Forecasts of future values are obtained through the
information of past behaviors
 The analysis of this information suggests future trend

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DECISION MAKING IN AN UNCERTAIN
ENVIRONMENT

● A particular problem for management: making decisions

in the condition of incomplete information
● Risks of making decisions?

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II/ KEY CONCEPTS IN STATISTICS

1/ Elementary units vs The Frame

 Elementary units
 The persons or objects that have characteristics of interest to
statisticians

 The frame
 A complete listing of all elementary units relevant to a statistical
investigation

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II/ KEY CONCEPTS IN STATISTICS
2/ Variables and Data
 Variables
 Characteristics of interest of elementary units

 Data
 A single observation about a specified characteristic of interest is
called a datum.
 Any collection of observations about one or more characteristics of
interest, for one or more elementary units, is called a data set.
 A data set may be univariate, bivariate, multivariate
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EXAMPLE: ASEAN COUNTRIES (2016 DATA)
Population GDP GDP per
Total Area
Country (million (billion capital
(km2)
persons) USD) (USD)
Vietnam 92.701 202.62 2371 332.698
Laos 6.758 15.90 1921 237.955
Malaysia 31.187 296.36 12127 330.803
Thailand 68.864 406.84 5938 513.120
Singapore 5.607 296.97 53053 719,1
Phillipines 103.320 304.90 3280 300.000
Indonesia 261.115 932.26 3635 1.904.569

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II/ KEY CONCEPTS IN STATISTICS
3/ Population vs Sample

 Population
 is the WHOLE group of all elementary units of interest

 Sample
 is a subset of data drawn from the population.

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 Population vs. Sample

Population Sample

a b cd b c
ef gh i jk l m n gi n
o p q rs t u v w o r u
x y z y

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3
0

4/ DESCRIPTIVE STATISTICS AND

INFERENTIAL STATISTICS

Statistics

Descriptive Statistics Inferential Statistics

DESCRIPTIVE STATISTICS

● Methods used to organize, summarize, describe and

present data in a convenient and informative way.
● Tabular, graphical, and numerical methods (mean,
median, variance, standard deviation…)

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DESCRIPTIVE STATISTICS

- Collect data

e.g., Survey, Observation, Experiments

- Present data
e.g., Charts and graphs

- Characterize data x i
e.g., Calculate mean = n
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INFERENTIAL STATISTICS
● Procedures used to draw conclusions or inferences about
the characteristics of a population from information
obtained from the sample.
● Making estimates, testing hypothesis…
● Used when we can not enumerate the whole population

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INFERENTIAL STATISTICS

Population parameters
Sample statistics
(unknown, but can be
(known) estimated from sample
Inference
evidence

Sample Population

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INFERENTIAL STATISTICS
Drawing conclusions and/or making decisions
concerning a population based on sample results.

● Estimation

○ e.g., Estimate the population mean

weight using the sample mean weight
● Hypothesis Testing

○ e.g., Use sample evidence to test the

claim that the population mean
weight is 120 pounds 35
5/ QUANTITATIVE AND QUALITATIVE DATA

Data
Data can
can be
be classified
classified as
as being
being qualitative
qualitative or
or quantitative.
quantitative.

Depends
Depends on
on whether
whether the
the data
data are
are qualitative
qualitative or
or quantitative,
quantitative,
we
we choose
choose the
the most
most appropriate
appropriate statistical
statistical methods
methods

In general, there are more statistical analysis for

quantitative data
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QUALITATIVE OR QUANTITATIVE DATA?
Marital Status
Qualitative

Gender

Height

Ages Quantitative

Student Evaluation
Grades
QUALITATIVE DATA

 Data that is normally described in words, labels or names

rather than numerically
 Often be referred to as categorical data
 Nominal or ordinal scale of measurement will be applied to
summarize this kind of data
 Qualitative variables can, in turn, be binomial or multinomial

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3
9

EXAMPLES
● Gender:
1. Male 2. Female
● Eye colors:
1.Brown 2.Black 3.Blue 4.Green
● Marital status:
1. Single
2. Married
3. Divorced
4. Widowed
QUANTITATIVE DATA

● Quantitative
●
Quantitativedata
dataisisdata
datathat
thatisisnormally
normallyexpressed
expressednumerically.
numerically.ItItindicates
indicateshow
howmany
manyor
orhow
howmuch:
much:

There are two types of quantitative data:

Discrete quantitative data: Continuous quantitative data:

- integer numbers - decimal numbers,
- can be measured precisely. - can not be measured
- Only a finite number of precisely
values is possible. - An infinite number of values
- Obtained when measuring is possible.
how many. - Obtained when measuring
how much 40
QUANTITATIVE DATA

E.g.
(i) The number of students in a class
(ii) The number of correct answers in a test
(iii)People’s height, weight; students’ GPA

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4/ SCALES OF MEASUREMENT

 Scales
Scales of
of measurement
measurement include:
include:
Nominal Interval

Ordinal Ratio

The
The scale
scale determines
determines thethe amount
amount of
of information
information
contained
contained inin the
the data.
data.

The
The scale
scale indicates
indicates the
the data
data summarization
summarization and
and
statistical
statistical methods
methods that
that are
are most
most appropriate.
appropriate.
4/ SCALES OF MEASUREMENT

● In statistics, for convenient summarization, we typically

assign numbers to various characteristics of elementary units
(people, objects, or concepts).

● These types of measure are called scale of measurement.

● These scales of measurement gradually develop, from the

simplest form (nominal scale) to the most sophisticated one
(interval/ratio scale).
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 Level of measurements

Highest Level
Measurements
Ratio/Interval Scale Complete Analysis

Rankings Higher Level

Ordered Categories Ordinal Scale Mid-level Analysis

Categorical Codes Lowest Level

ID Numbers Nominal Scale Basic Analysis
Category
Names
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SCALES OF MEASUREMENT

Data
Data are
are labels
labels or
or names
names used
used to
to identify
identify aa
characteristic
characteristic of
of the
the elementary
elementary units.
units.
 Nominal
There
There isis no
no relative
relative order
order or
or rank
rank between
between these
these
data
data categories
categories

Numeric
Numeric codes
codes are
are assigned
assigned for
for each
each data
data category.
category.
SCALES OF MEASUREMENT
 Nominal

ItIt never
never makes
makes sense
sense to
to add,
add, subtract,
subtract, multiply,
multiply,
divide,
divide, rank,
rank, average
average or
or manipulate
manipulate

Used
Used to
to count
count frequency
frequency of
of variables
variables outcomes
outcomes

E.g:
E.g: Numbers
Numbers assigned
assigned for
for aa person’s
person’s gender
gender
Or
Or numbers
numbers assigned
assigned for
for aa person’s
person’s marital
marital status
status
EXAMPLE

Students
Students of
of aa university
university are
are classified
classified by
by the
the school
school in
in which
which
they
they are
are enrolled
enrolled such
such as
as Business,
Business, Humanities,
Humanities, Education,
Education, and
and
so
so on.
on.

AA numeric
numeric code
code could
could be
be used
used for
for the
the school
school variable
variable (e.g.
(e.g. 11
denotes
denotes Business,
Business, 22 denotes
denotes Humanities,
Humanities, 33 denotes
denotes Education,
Education,
and
and so
so on).
on).

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8

SCALES OF MEASUREMENT
 Ordinal

The
The data
data have
have the
the properties
properties of of nominal
nominal data
data and
and
the
the order
order or
or rank
rank of
of the
the data
data isis meaningful.
meaningful.

Numeric
Numeric codes
codes may
may be
be used
used which
which do
do indicate
indicate the
the
rank
rank // order
order of
of data
data categories.
categories.

The
The gap
gap between
between numbers
numbers or
or units
units on
on this
this scale
scale
doesn’t
doesn’t mean
mean equal
equal magnitude
magnitude between
between variable
variable
outcomes
outcomes
SCALES OF MEASUREMENT
 Ordinal

Just like nominal data, it never makes sense to

add, subtract, multiply, divide, rank, average
or manipulate

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EXAMPLE

In
In aa running
running or
or swimming
swimming competition
competition or or race,
race, finishers
finishers are
are
ranked
ranked from
from the
the first
first place
place to
to the
the last
last place.
place. Let’s
Let’s assume
assume
that
that there
there were
were six
six people
people attending
attending this
this contest.
contest.

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EXAMPLE
Let
Let 11 denotes
denotes thethe first
first place
place finishers,
finishers, 22 denotes
denotes thethe second
second
place
place finisher,
finisher, 33 denotes
denotes thethe third
third place
place finisher
finisher and
and so
so on
on
The
The gap
gap between
between these
these numbers
numbers does
does not
not indicate
indicate equal
equal
absolute
absolute magnitude
magnitude (especially
(especially number
number 11 and and number
number 2,2,
number
number 33 andand number
number 4) 4)

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SCALES OF MEASUREMENT
 Interval

Have
Have the
the properties
properties of of ordinal
ordinal data,
data, and
and
the
the intervals
intervals between
between numbers
numbers or or units
units on
on the
the scale
scale
are
are equal
equal over
over all
all level
level of
of the
the scale
scale

Interval
Interval scales
scales provide
provide more
more quantitative
quantitative
information
information

There
There isis no
no zero
zero value
value that
that indicates
indicates
that
that nothing
nothing exists
exists for
for the
the variable
variable at
at the
the zero
zero point.
point. 52
SCALES OF MEASUREMENT
 Interval
Addition
Addition and
and subtraction
subtraction are
are permissible
permissible but
but
multiplication
multiplication and
and division
division continue
continue to
to make
make nono
sense
sense
Example: Melissa has an SAT score of 1205, while Kevin has an
SAT score of 1090. Melissa scored 115 points more than
Kevin.

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EXAMPLE
● Consider the centigrade scale for measuring temperature. This
scale has properties of interval scale due to the following
reasons:
- Each value on the scale can be ranked as larger or smaller than
any other value.
- It has the equal intervals property because the scale is made up
of equal units.
- It has no zero point (water freezes at zero degrees centigrade,
but temperatures can get colder than that).

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SCALES OF MEASUREMENT
 Ratio

Have
Have all
all the
the properties
properties of
of interval
interval data
data
and
and the
the ratio
ratio of
of two
two values
values isis meaningful.
meaningful.

This
This scale
scale must
must contain
contain aa zero
zero value
value that
that indicates
indicates
that
that nothing
nothing exists
exists for
for the
the variable
variable at
at the
the zero
zero point.
point.

Variables
Variables such
such as
as distance,
distance, height,
height, weight,
weight, and
and time
time
use
use the
the ratio
ratio scale.
scale.
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SCALES OF MEASUREMENT
 Ratio

All
All types
types of
of arithmetic
arithmetic operations,
operations, even
even multiplication
multiplication and
and
division
division can
can be
be performed
performed with
with such
such data
data

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EXAMPLE

Melissa’s college record shows 36 credit hours earned,

while Kevin’s record shows 72 credit hours earned. Kevin
has twice as many credit hours earned as Melissa.

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EXAMPLE
Survey “Students’ opinion on having two canteens inside university campus”
1/ Gender
☐ Male ☐ Female
2/ Your major
☐ Business administration ☐ Banking and Finance
☐ International Commerce ☐ Commercial Law
3/ Your monthly expenditure:
☐ < 1000K VND ☐ 1000K – 2000K VND
☐ 2000K – 5000K VND ☐ >= 5000K VND
4/ With the scores from 1-10, can you rate the services provided by FTU corner
Your score: ….

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5/ Do you agree that having two canteens is not necessary in FTU

☐ ☐ ☐ ☐ ☐
Strongly Agree Neutral Disagree Strongly
agree Disagree

6/ Your average expenses each time you visit a canteen in FTU:

……………

Requirements:
1/ Answer the questions on your own
2/ Identify the scale of measurement used for each question?
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III/ DATA ANALYSIS PROCESS

Step 1: Understand the Understand the goal of the research

nature of the problem Identify the questions to answer

 Decide what information needed to

answer questions
Step 2: Decide what to
 Define the variables to study
measure and how to
 Develop appropriate methods for
measure
determining variables’ values
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III/ DATA ANALYSIS PROCESS
Decide whether using existing data
or collect new data
If existing data be used, understand
how they were collected and for
what purpose
If new data are required, a careful
plan of collecting data must be
designed
Step 3: Data collection

Statistical Methods:
Finding existing data: from print to
Internet
Generating new data: observation,
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experiment, survey
III/ DATA ANALYSIS PROCESS
After being collected, data should be
preliminarily analyzed
Summarizing data graphically and
numerically

Step 4: Data summarization

Statistical Methods:
Presenting data: Tables, Charts
and Graphs
Presenting data: descriptive
62 statistic
III/ DATA ANALYSIS PROCESS

Select and apply appropriate

inferential statistical methods to
analyze data

Step 5: Formal data analysis

Statistical Methods:
Estimation, Hypothesis testing,
Variance analysis, Regression and
Correlation, Time series and Forecasti
Index numbers…

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III/ DATA ANALYSIS PROCESS
Several questions should be addressed
Step 6: Interpretation of What conclusion can be drawn from th
analysis?
results
How do the results inform us about the
research problem or question?
How the results guide future research?

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LEARN TO VIEW STATISTICS WITH A CRITICAL
EYE
● There are three kinds of lies…..

○ Lies

○ Damn Lies

○ Statistics
● You need to make statistics work for you, not lie for
you!

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LEARN TO VIEW STATISTICS WITH A CRITICAL EYE

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LEARN TO VIEW STATISTICS WITH A CRITICAL EYE

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LEARN TO VIEW STATISTICS WITH A CRITICAL EYE

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END OF CHAPTER 1

THANK YOU!
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