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JOHN S. LOUCKS
St. Edward’s University
© 2006 Thomson/South-Western 1
Chapter 1
Data and Statistics
I need
■ Applications in Business and Economics help!
■ Data
■ Data Sources
■ Descriptive Statistics
■ Statistical Inference
■ Statistical Analysis
Using Microsoft Excel
© 2006 Thomson/South-Western 2
Applications in
Business and Economics
■ Accounting
Public accounting firms use statistical
sampling procedures when conducting
audits for their clients.
■ Economics
Economists use statistical information
in making forecasts about the future of
the economy or some aspect of it.
© 2006 Thomson/South-Western 3
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.
■ Production
A variety of statistical quality
control charts are used to monitor
the output of a production process.
© 2006 Thomson/South-Western 4
Applications in
Business and Economics
Finance
Financial advisors use price-earnings ratios and
dividend yields to guide their investment
recommendations.
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Data and Data Sets
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Elements, Variables, and Observations
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Data, Data Sets,
Elements, Variables, and Observations
Observatio Variable
Elemen n s
t Stock Annual Earn/
Names
Company Exchange Sales($M) Share($)
Data Set
© 2006 Thomson/South-Western 8
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 in
in the
the data.
data.
The
The scale
scale indicates
indicates the
the data
data summarization
summarization and
and
statistical
statistical analyses
analyses that
that are
are most
most appropriate.
appropriate.
© 2006 Thomson/South-Western 9
Scales of Measurement
■ Nominal
Data
Data are
are labels
labels or
or names
names used
used to
to identify
identify an
an
attribute
attribute of
of the
the element.
element.
A
A nonnumeric
nonnumeric label
label or
or numeric
numeric code
code may
may be
be used.
used.
© 2006 Thomson/South-Western 10
Scales of Measurement
■ Nominal
Example:
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 using
using aa
nonnumeric
nonnumeric label
label such
such as
as Business,
Business, Humanities,
Humanities,
Education,
Education, and
and soso on.
on.
Alternatively,
Alternatively, aa numeric
numeric code
code could
could be
be used
used for
for
the
the school
school variable
variable (e.g.
(e.g. 1
1 denotes
denotes Business,
Business,
2
2 denotes
denotes Humanities,
Humanities, 3 3 denotes
denotes Education,
Education, and
and
so
so on).
on).
© 2006 Thomson/South-Western 11
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 is
is meaningful
meaningful..
A
A nonnumeric
nonnumeric label
label or
or numeric
numeric code
code may
may be
be used.
used.
© 2006 Thomson/South-Western 12
Scales of Measurement
■ Ordinal
Example:
Example:
Students
Students of
of aa university
university are
are classified
classified by
by their
their
class
class standing
standing using
using aa nonnumeric
nonnumeric label
label such
such asas
Freshman,
Freshman, Sophomore,
Sophomore, Junior,
Junior, or
or Senior.
Senior.
Alternatively,
Alternatively, aa numeric
numeric code
code could
could be
be used
used for
for
the
the class
class standing
standing variable
variable (e.g.
(e.g. 1
1 denotes
denotes
Freshman,
Freshman, 2 2 denotes
denotes Sophomore,
Sophomore, andand so
so on).
on).
© 2006 Thomson/South-Western 13
Scales of Measurement
■ Interval
The
The data
data have
have the
the properties
properties of
of ordinal
ordinal data,
data, and
and
the
the interval
interval between
between observations
observations is
is expressed
expressed in
in
terms
terms of
of aa fixed
fixed unit
unit of
of measure.
measure.
Interval
Interval data
data are
are always
always numeric
numeric..
© 2006 Thomson/South-Western 14
Scales of Measurement
■ Interval
Example:
Example:
Melissa
Melissa has
has an
an SAT
SAT score
score of
of 1205,
1205, while
while Kevin
Kevin
has
has an
an SAT
SAT score
score of
of 1090.
1090. Melissa
Melissa scored
scored 115
115
points
points more
more than
than Kevin.
Kevin.
© 2006 Thomson/South-Western 15
Scales of Measurement
■ Ratio
The
The data
data 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 is
is meaningful
meaningful..
Variables
Variables such
such as
as distance,
distance, height,
height, weight,
weight, and
and time
time
use
use the
the ratio
ratio scale.
scale.
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.
© 2006 Thomson/South-Western 16
Scales of Measurement
■ Ratio
Example:
Example:
Melissa’s
Melissa’s college
college record
record shows
shows 36
36 credit
credit hours
hours
earned,
earned, while
while Kevin’s
Kevin’s record
record shows
shows 72
72 credit
credit
hours
hours earned.
earned. Kevin
Kevin has
has twice
twice as
as many
many credit
credit
hours
hours earned
earned asas Melissa.
Melissa.
© 2006 Thomson/South-Western 17
Qualitative and Quantitative Data
Data
Data can
can be
be further
further classified
classified as
as being
being qualitative
qualitative
or
or quantitative.
quantitative.
The
The statistical
statistical analysis
analysis that
that is
is appropriate
appropriate depends
depends
on
on whether
whether the
the data
data for
for the
the variable
variable are
are qualitative
qualitative
or
or quantitative.
quantitative.
In
In general,
general, there
there are
are more
more alternatives
alternatives for
for statistical
statistical
analysis
analysis when
when the
the data
data are
are quantitative.
quantitative.
© 2006 Thomson/South-Western 18
Qualitative Data
Labels
Labels or
or names
names used
used to
to identify
identify an
an attribute
attribute of
of each
each
element
element
Often
Often referred
referred to
to as
as categorical
categorical data
data
Use
Use either
either the
the nominal
nominal or
or ordinal
ordinal scale
scale of
of
measurement
measurement
Can
Can be
be either
either numeric
numeric or
or nonnumeric
nonnumeric
Appropriate
Appropriate statistical
statistical analyses
analyses are
are rather
rather limited
limited
© 2006 Thomson/South-Western 19
Quantitative Data
Quantitative
Quantitative data
data indicate
indicate how
how many
many or
or how
how much:
much:
discrete
discrete,, if
if measuring
measuring how
how many
many
continuous
continuous,, if
if measuring
measuring how
how much
much
Quantitative
Quantitative data
data are
are always
always numeric
numeric..
Ordinary
Ordinary arithmetic
arithmetic operations
operations are
are meaningful
meaningful for
for
quantitative
quantitative data.
data.
© 2006 Thomson/South-Western 20
Scales of Measurement
Data
Qualitative Quantitativ
e
Nomina
Nomina Ordina Nominal Ordinal Interval Ratio
ll l
© 2006 Thomson/South-Western 21
Cross-Sectional Data
Cross-sectional
Cross-sectional data
data are
are collected
collected atat the
the same
same or
or
approximately
approximately the
the same
same point
point in
in time.
time.
Example
Example:: data
data detailing
detailing the
the number
number of
of building
building
permits
permits issued
issued in
in June
June 2005
2005 in
in each
each of
of the
the counties
counties
of
of Ohio
Ohio
© 2006 Thomson/South-Western 22
Time Series Data
Time
Time series
series data
data are
are collected
collected over
over several
several time
time
periods.
periods.
Example
Example:: data
data detailing
detailing the
the number
number of
of building
building
permits
permits issued
issued in
in Lucas
Lucas County,
County, Ohio
Ohio in
in each
each of
of
the
the last
last 36
36 months
months
© 2006 Thomson/South-Western 23
Data Sources
■ Existing Sources
© 2006 Thomson/South-Western 24
Data Sources
■ Statistical Studies
In
In experimental
experimental studies
studies the
the variables
variables of
of interest
interest
are
are first
first identified.
identified. Then
Then one
one or
or more
more factors
factors are
are
controlled
controlled soso that
that data
data can
can be
be obtained
obtained about
about how
how
the
the factors
factors influence
influence the
the variables.
variables.
In
In observational
observational (nonexperimental)
(nonexperimental) studies
studies no
no
attempt
attempt is
is made
made to to control
control or
or influence
influence the
the
variables
variables of
of interest.
interest.
a survey is a
good
example
© 2006 Thomson/South-Western 25
Data Acquisition Considerations
Time Requirement
• Searching for information can be time consuming.
• Information may no longer be useful by the time it
is available.
Cost of Acquisition
• Organizations often charge for information even
when it is not their primary business activity.
Data Errors
• Using any data that happens to be available or
that were acquired with little care can lead to poor
and misleading information.
© 2006 Thomson/South-Western 26
Descriptive Statistics
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Example: Hudson Auto Repair
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Example: Hudson Auto Repair
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Tabular Summary:
Frequency and Percent Frequency
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Graphical Summary: Histogram
12
10
8
6
4
2
Parts
Cost ($)
50−59 60−69 70−79 80−89 90−99 100-110
© 2006 Thomson/South-Western 31
Numerical Descriptive Statistics
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Statistical Inference
© 2006 Thomson/South-Western 33
Process of Statistical Inference
1. Population
consists of all 2. A sample of 50
tune-ups. Average engine tune-ups
cost of parts is is examined.
unknown.
unknown
© 2006 Thomson/South-Western 34
Statistical Analysis Using Microsoft Excel
Statistical analysis typically involves working with
large amounts of data.
Computer software is typically used to conduct the
analysis.
Frequently the data that is to be analyzed resides in a
spreadsheet.
Modern spreadsheet packages are capable of data
management, analysis, and presentation.
MS Excel is the most widely available spreadsheet
software in business organizations.
© 2006 Thomson/South-Western 35
Statistical Analysis Using Microsoft Excel
■ 3 tasks might be A
Parts
•needed:
Enter Data 1
2
Cost
91
• Enter Functions and Formulas 3
4
71
104
• Apply Tools 5
6
85
62
7 78
8 69
D E
Mean =AVERAGE(A2:A71)
Median =MEDIAN(A2:A71)
Mode =MODE(A2:A71)
Range =MAX(A2:A71)-MIN(A2:A71)
© 2006 Thomson/South-Western 36
Statistical Analysis Using Microsoft Excel
© 2006 Thomson/South-Western 37
Statistical Analysis Using Microsoft Excel
© 2006 Thomson/South-Western 38
Statistical Analysis Using Microsoft Excel
© 2006 Thomson/South-Western 39
End of Chapter 1
© 2006 Thomson/South-Western 40