What is Statistics

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-2 Lecture Goals After completing this theme, you should be able to: Explain how decisions are often based on incomplete information Explain key definitions: Population vs. Sample Parameter vs. Statistic Descriptive vs. Inferential Statistics Describe random sampling Explain the difference between Descriptive and Inferential statistics

What is Statistics Most people become familiar with probability and statistics through radio, television, newspapers, and magazines. For example, you can find and hear the following statements in a newspaper or magazine: Barack Obama wants to restrict banks that are too big to fail, limiting the size of a bank to holding no more than 10% of the share of insured deposits

What is Statistics Public debt average annual rate of growth was nearly 10 per cent during last decade Interest rates on deposits of individuals in foreign countries are below 3%, while in Russia, these rates on average are higher than 6%

What is Statistics Nearly one in 10 people in the USA wears contact lenses Statistics is used in almost all fields of human endeavor. In education, for example, the researcher might want to know if new methods of teaching are better than old ones

What is Statistics In other areas, such as public health, an administrator would be concerned with the number of residents who contract a new strain of flu virus during a certain year. There are a few examples of how statistics can be used in various occupations. Furthermore, statistics is used to analyze the results of surveys and as tool in scientific research to make decisions based on controlled experiments. Other uses of statistics include operations research, quality control, estimation, and prediction

What is Statistics The word "statistics" comes from the Latin word status - the status, the status quo

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-8 Dealing with Uncertainty Everyday decisions are based on incomplete information Consider: The price of IBM stock will be higher in six months than it is now. If the federal budget deficit is as high as predicted, interest rates will remain high for the rest of the year

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-9 Dealing with Uncertainty Because of uncertainty, the statements should be modified: The price of IBM stock is likely to be higher in six months than it is now. If the federal budget deficit is as high as predicted, it is probable that interest rates will remain high for the rest of the year

Students study statistics for several reasons: 1-The student as well as the professional person must be able to read and understand the various statistical studies performed in his or her field. To have this understanding, the person must be knowledgeable about the vocabulary, symbols, concepts, and statistical procedures used in these studies

Students study statistics for several reasons: 2-The student or professional person might be called upon to conduct research in his or her field; and science statistical procedures are basic to all research, such statistical knowledge will be necessary

Students study statistics for several reasons: 3 - In doing statistical studies, the researcher must be able to summarize the data, draw general conclusions, and, if necessary, make reliable predictions or forecasts for future use

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-13 Key Definitions A роpulation A sample A parameter A statistic

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-14 Key Definitions A роpulation A parameter A sample A statistic

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-15 Key Definitions A population is the collection of all items of interest or under investigation. A population is the totality of all subjects possessing certain common characteristics that are being studied N represents the population size A sample is an observed subset of the population. A sample is a subgroup or subset of the population n represents the sample size

English plus Russian Russian for A population is Генеральная совокупность Russian for A sample is Выборка, выборочная совокупность

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-17 Key Definitions A parameter is a specific characteristic of a population A statistic is a specific characteristic of a sample

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-18 Population vs. Sample a b c d ef gh i jk l m n o p q rs t u v w x y z PopulationSample b c g i n o r u y Values calculated using population data are called parameters Values computed from sample data are called statistics

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-19 Examples of Populations Names of all registered voters in the United States Incomes of all families living in Daytona Beach Annual returns of all stocks traded on the New York Stock Exchange Grade point averages of all the students in our university

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-20 Random Sampling Simple random sampling is a procedure in which each member of the population is chosen strictly by chance, each member of the population is equally likely to be chosen, and every possible sample of n objects is equally likely to be chosen The resulting sample is called a random sample

Descriptive vs. Inferential Statistics Statistics includes two main areas: inferential statistics and descriptive statistics

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-22 Two branches of statistics Descriptive statistics: Organizing, collecting, summarizing, and processing data to transform data into information (presentation of data) In descriptive statistics the statistician tries to describe a situation, using statistical and mathematical methods

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-23 Two branches of statistics Inferential statistics: provide the bases for predictions, forecasts, and estimates that are used to transform information into knowledge

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-24 Descriptive Statistics Collect data e.g., Survey Present data e.g., Tables and graphs Summarize data e.g., Sample mean =

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-25 Inferential Statistics Inferential or analytic statistics consists of generalizing from samples to populations, performing hypothesis testing, determining relationships among variables, and making prediction Here, the statistician tries to make inferences from samples to populations

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-26 Inferential Statistics Estimation e.g., Estimate the population mean weight using the sample mean weight Hypothesis testing e.g., Test the claim that the population mean weight is 120 pounds Inference is the process of drawing conclusions or making decisions about a population based on sample results

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-27 The Decision Making Process Begin Here: Identify the Problem Data Information Knowledge Decision Descriptive Statistics, Probability, Computers Experience, Theory, Literature, Inferential Statistics, Computers

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 1-28 Chapter Summary Reviewed incomplete information in decision making Introduced key definitions: Population vs. Sample Parameter vs. Statistic Descriptive vs. Inferential statistics Described random sampling Examined the decision making process

The End Thank you for your kind attention