Definition of Statistics
In the more common usage (layman definition),
statistics refers to a collection of numerically
expressed facts or data.
Examples:
The number of colleges in a city;
The number of students in a college;
Per capita income statistics;
Statistics of imports, exports, consumption, etc;
But the subject statistics has a much broader
meaning than just collecting and publishing
numerical information.
11/14/2023 1
Cont’
statistics is the science of collecting, organizing,
presenting, analyzing, and interpreting numerical data
to assist in making more effective decisions.
According to Dominick Salvatore and Derrick Reagle
“statistics refers to collection, presentation, analysis and
utilization of numerical data to make inferences and
reach decisions in the face of uncertainty in economics,
business and other social and physical sciences.”
11/14/2023 2
Cont’
As the definition suggests:
The first step in investigating a problem is to collect
data.
The data must be organized in some way and perhaps
presented in a chart.
Only after the data have been organized and
presented, we can analyze and interpret it.
Types of Statistics
The study of statistics is usually divided in to two
categories:
11/14/2023 3
Cont’..
Descriptive Statistics
It is a statistical method that deals with describing
(summarizing) given set of data without making
conclusions about the larger data.
It consists of collection, organization and presentation
of data in an informative way.
Tables, graphs and numerical summary measures may
be used to describe data.
In descriptive statistics, the statistician tries to
describe a situation.
11/14/2023 4
Examples on descriptive statistics:
A survey found that 49% of the populations in
Ethiopia are males. (impels that The statistic 49
describes the number out of every 100 persons who are
males.)
According to Consumer Reports, Sony TV owners
reported 2 defective TVs per 100 TVs (2%) in 2001.
( Implies that The statistic 2(2%) describes the number
of problems out of every 100 TVs.)
11/14/2023 5
Cont’
Inferential Statistics
It is also called statistical inference or inductive
statistics.
It is a statistical method that involves taking a sample
from a population, computing the statistic based on
the sample, and inferring from the statistic about
the value of the corresponding parameter.
It is a branch of statistics that is used to determine
something about the population on the basis of a
sample taken from that specific population.
It is a decision, estimate, prediction, or generalization
about a population, based on a sample.
11/14/2023 6
Examples
The accounting department of a large firm will select a
sample of the invoices to check for accuracy for all the
invoices of the company.
Wine tasters sip a few drops of wine to make a decision
with respect to all the wine waiting to be released for
sale.
‘’population” and “sample’’
A population is a collection of all possible individuals,
objects or measurement of interest.
When a researcher gathers data from the whole population
for a given measure of interest, it is called census
(complete enumeration).
11/14/2023 7
Cont’
A sample is a portion or part of the population of interest.
parameter and statistic.
Parameter: is the calculated value of a population (say
population mean, population standard deviation, etc.)
Statistic: is the calculated value of a sample (say sample
mean, sample standard deviation, etc.).
The difference between sample statistic and its
corresponding parameter is called sampling error.
11/14/2023 8
Example
If we want to do a research on the impact of high
school GPA (transcript result) on college GPA of
economics students at a university, the population is
all economics students at university.
A researcher may select all students of economics at
Hawassa University as a sample to know the impact of
high school GPA on college GPA and infer (conclude)
something about the impacts of high school GPA on
college GPA of economics students at all Ethiopian
colleges/universities.
11/14/2023 9
Why we study Statistics?
(rationales)
Statistics is required for many college programs like
business,economics,engineering, psychology, medicine etc.
The course content is basically the same.
The biggest difference is the examples used and level of
mathematics required.
Thus, in business and economics, we are interested in such
things as:
profits (revenue minus cost),
Gross Domestic Product (GDP),
Demand,
Supply,
Consumption,
Cost ,
Wages, etc.
11/14/2023 10
Cont’
We are studying statistics for the following reasons:
The first reason is that numerical information is
everywhere.
Students and/or professionals may be called on to
conduct research in their fields, since statistical
procedures are basic to research.
Students, like professionals, must be able to read and
understand the various statistical studies performed
in their field.
Data is everywhere and no matter what your future line
of work, you will make decisions that involve data.
11/14/2023 11
Uses of Statistics
The main functions of statistics are to enlarge our
knowledge of complex phenomena. i.e…
It presents facts in a definite and precise form.
It reduces data: i.e. it simplifies a complex mass of data
and presents it in a few, clear, and useful summaries.
It measures the magnitude of variation in data.
It furnishes with technique of comparison.
It helps to estimate the unknown population parameter
from a sample.
It helps to test and formulate hypothesis.
It helps to study the relationship between two or more
variables.
It helps to forecast future events.
11/14/2023 12
Users of Statistics
Statistical methods help people to identify and solve
many problems concerning the environment, the
economy, transportation, public health and other
matters of public concern.
Economists use statistical techniques to predict future
economic conditions, to understand economic
problems, to formulate economic policies, to do
research in the areas of economics, to do market
analysis, etc.
Doctors use such methods to determine whether certain
drugs help in the treatment of medical problems.
Weather forecasters use statistics to help them predict
the weather more accurately.
11/14/2023 13
Cont’
Engineers use it to set standards for product safety and
quality.
Statistical ideas help scientists design effective
experiments.
Lawyers are increasingly turning the statisticians to
help weigh evidence and determine reasonable doubt.
In education, the researchers might want to know if
new methods of teaching are better than the old ones.
11/14/2023 14
Application of Statistics in Business and Economics
Now-a-days the success of a particular business or industry very
much depends on the accuracy and precision of statistical analysis.
Before taking a new venture or for the purpose of
improvement of an existing venture, the business executives
must have a large number of quantitative facts.
Examples:
cost of raw materials,
demand of products in the market,
price of products in the market,
various taxes to be paid,
labor conditions,
sales forecast.
All these facts are to be analyzed statistically before stepping in for
a new enterprise or before fixing the price of a commodity.
11/14/2023 15
Cont’
Statistical methods are now used for exploring
possibilities to
advertising campaigns,
for adjustment of production methods and
as an aid to establish standards.
Statistical techniques help in forecasting future
markets.
Market research and market surveys by statistical
sampling methods are now extremely useful for
any business person.
In industry, statistics is widely used in quality control.
11/14/2023 16
Limitations of statistics
Statistics deals with only quantitative information,
i.e. information should be capable of numerically
expressed either directly or indirectly.
Statistics deals with only aggregates of facts and not
with individual data items.
Statistical data are only approximately .
Statistics can be easily misused and, therefore, should
be used only by experts.
11/14/2023 17
Misuse of statistics
Knowingly: Unknowingly:
Advertising media Lack of knowledge in
Government for political - Statistics
cause - The subject matter to
Inappropriate comparison which it is applied
11/14/2023 18
Steps of Statistical investigation
A statistical study involves the following stages:
1. Determine the objective of the study;
2. Collection of data;
3. Organizing the collected data;
4. Presenting the data;
5. Analyzing the data, and
6. Interpreting the results of the study and
recommendations.
11/14/2023 19
Types of Variables
A variable is measurable characteristics of a given
phenomenon (object, process, event, etc) which can take
different values in a given population or samples of elements.
it is a characteristic about each element of a population or a
sample.
Examples:
annual income (it can be Birr 2000, Birr 3000, Birr 4000, or
any other value),
quantity demanded (it can be 2000 units, 3000 units, 4000
units, or any other value),
price (it can be Birr 2 per unit, Birr 4 per unit, Birr 10 per unit
or any other value),
gender (female or male), etc.
11/14/2023 20
Cont’
Data are the set of values collected for the variable from each
of the elements of the sample.
are the actual measurements or observations that result from
an investigation or survey.
are the values (response) of the variable associated with
an element of a population or a sample.
Example:
The variable monthly household income of a family in a town
can assume different values (say, Birr 1000, Birr 3000, etc).
But if we collect the monthly household income of 100
households then the values are called data.
Data set: is a collection of data values (data).
eg. the monthly households’ income of 100 residents in a
town is called data set.
11/14/2023 21
Cont’
Raw data: is a data collected in an original form (not yet
organized).
Information: is a set of data corresponding to a
specific aspect of knowledge combined in an
organized way.
Information is a processed data to be used directly.
It can transfer knowledge and meanings.
11/14/2023 22
Cont’
Input (Raw data)
Process
Organize the data
Enter to the computer
Find its mean
Information
says something to the user
meaningful to the user
11/14/2023 23
variables can be broadly classified into
Qualitative Variable
It is a variable or characteristic which cannot be
measured in quantitative form but can only be
identified by name or categories.
Examples include; gender, religious affiliation, type of
automobile owned, place of birth, eye color, etc.
When the data are qualitative, we are usually interested
in how many or what portion fall in each category.
For example, what percent of the population are males?
What percent of the population owns a Nokia mobile
apparatus?
11/14/2023 24
Cont’
Although numerical codes can be assigned to the
different categories of variables, arithmetic operations
(addition, subtraction, multiplication and division) are
not applicable to qualitative data.
Quantitative Variable
It is a variable that can be measured and expressed
numerically.
Examples: balance in your checking account, minutes
remaining in class, or number of children in a family,
time taken to finish an exam, etc.
Quantitative variables can be classified as either
discrete or continuous.
11/14/2023 25
Discrete and continuous variables
Discrete variables
can only assume certain values and there are usually “gaps” between
values.
Discrete variables can be assigned values such as 0, 1, 2, 3, 4, 5, 7,9,
etc….
are said to be countable and typically discrete variables result from
counting.
Examples: the number of bedrooms in a house, or the number of
cars sold at a car market, etc.
A random variable X is said to be discrete if it can assume only a
finite or countable infinite number of distinct values.
If we are to define a random variable as the number of telephone
calls made from a large city on any given
day, for all practical purposes, this can be assumed to take values 0,
1, . . . , ∞.
11/14/2023 26
cont’
A continuous variable
can assume any value within a specified range.
Examples: The pressure in a tire, the weight of a
stone, or the height of students in a class, the distance
from Hawassa to Shashemene, age, temperature, etc.
continuous variables result from measuring
something
and therefore, variables must be rounded to the limit
of the measuring device.
11/14/2023 27
