Instructional Module: Republic of The Philippines Nueva Vizcaya State University Bayombong, Nueva Vizcaya

Republic of the Philippines
NUEVA VIZCAYA STATE UNIVERSITY

Bayombong, Nueva Vizcaya
INSTRUCTIONAL MODULE
IM No.:IM- BE 14- 1STSEM-2021-2022
College: BUSINESS EDUCATION

Campus: BAYOMBONG ___
DEGREE PROGRAM BSBA COURSE NO. BE 14

SPECIALIZATION COURSE TITLE ECONOMIC STATISTICS
YEAR LEVEL 4 TIME FRAME 9 WK 2-4 IM 1

NO. NO.
I. UNIT TITLE/CHAPTER TITLE

Chapter 1: Introduction to Statistics for Economists
II. LESSON TITLE
Lesson 1: Introduction, basic concepts and data description

Lesson 2: Types of Statistics
Lesson 3: Types of Variables
Lesson 4: Levels of Measurement
Lesson 5: Data Description
III. LESSON OVERVIEW
Economic questions are at the heart of our daily lives. Many of us, for example, wonder if we are
materially better off than our parents or if our children will make economic gains beyond our own. We
also have concerns about current economic conditions, such as the likelihood of a recession and whether
economic actors are efficiently and responsibly utilizing resources when engaged in economic activities.
And as public policies are enacted, we question if they are achieving the desired effects or if they are
generating unintended consequences. Society turns to economists for answers to such questions.
Economists, in turn, rely on economic theory combined with statistical methods to arrive at their answers.
You are no doubt familiar with many theoretical frameworks developed by economists for understanding
economic relationships, as they are the focus of most undergraduate education in economics. However,
to obtain concrete answers to society’s questions, economists typically marry theory with empirical
evidence obtained from the collection and statistical analysis of data. (Lewis, 2012). For a student of
statistics, the answer lies in becoming an informed and discerning user of numerical information
(Hanneman, Kposowa, & Riddle, 2013).
IV. DESIRED LEARNING OUTCOMES
After reading this chapter, student will be able to:

1. Define the different statistical terms and concepts;
2. Explain the distinction between sample statistics and population parameters; and
3. Analyze the variables and apply the notion of levels of measurement and data description.
V. LESSON CONTENT
Chapter 1
Introduction to Statistics for Economists

What is Statistics?
A first step in learning statistics is to appreciate the human capacity to summarize information
through visual inspection and numerical indicators. Graphs and other charts can be used to summarize
lots of information that would require many pages if each piece of information were written down without
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IM No.:IM- BE 14- 1STSEM-2021-2022
graphs. Through visual inspection, the statistician can begin to look for patterns or trends in data to
explore the possibility of uncovering relationships. In addition to visual inspection, the statistician uses
simple arithmetic to compute single numbers (indexes or numerical indicators) that summarize data and
buttress results derived from visual gleaning. Having described the data in summary form, the next major
goal of the statistician is to draw inferences or arrive at conclusions using simple mathematical
calculations (Hanneman, Kposowa, & Riddle, 2013).
Statistics is the science (i.e. scientific method) of collecting, organizing, presenting & analyzing
data with the intention of being able to make effective (or “sound”) decisions. In Economics, Statistics
plays a role among agents in being rational (Cabiles N. , 2013):
Example (Cabiles N. , 2013):
1. Which college degree should one choose?
2. Should a firm producing beauty products introduce a new drug designed to lighten the skin?
3. Will it be favorable for the government to raise the Value-Added-Tax and reduce income tax?
What do economists mean when they talk about empirical evidence? In general, it is information
that is quantified and analyzed in a systematic fashion for the purposes of understanding economic
relationships and outcomes. For example, statistical descriptions of a country’s income distribution can
help us answer the first pair of questions posed above, while statistical hypothesis testing might be used
to evaluate the effects of a public policy. How, then, do economists know what empirical evidence to use
for which questions? The answer is twofold and demonstrates the vital connection between economic
theory and statistical methods. Once a question is posed, economists then identify appropriate theoretical
frameworks that articulate the relationships between the key economic variables based on the theory’s
assumptions about economic behavior and institutions. Such theoretical frameworks not only provide
economists with an orderly way of thinking about economic activities, but also guide our choices of
effective empirical evidence for the questions at hand. Suppose, for example, we wanted to assess if
today’s middle-aged adults are materially better off than their parents. We would begin by first defining
what it means to be “materially better off” and then we would identify a quantifiable variable, such as
household income, to measure it. After collecting data for household income, we would fully describe the
statistical characteristics of the income variable, which might include constructing a frequency distribution,
calculating the “average” and spread of the series, and perhaps its change, in real terms, over time. From
these descriptive measures, we could then test if average household income, its distribution, or its growth
rate are statistically different between the two generations. If such differences do obtain, we could then
use economic theory along with the statistical method known as regression analysis to measure what
factors might contribute to the variation in household income between the two groups. Generating the
appropriate empirical evidence to understand economic activity requires us to learn a variety of statistical
methods (Lewis, 2012).
Two (2) Types of Statistics
1. Descriptive Statistics - the methods of organizing, summarizing and presenting data in an

informative manner. For example: Unemployment rate in the Philippines dropped from 10% in the late
1990s to 7% in 2010 (Cabiles N. , 2013). It describes the characteristics of an economic variable for
which we have a large number of observations (Lewis, 2012). Methods concerned with collecting,
describing, and analyzing a set of data without drawing conclusions (or inferences) about a large group
(Araneta, 2020). These are tools that are used to summarize and index various things about the variation
in the distribution of the scores of cases on one (or more) variable(s). This is one of our main tasks: to
summarize large amounts of information in such a way that we can quickly, accurately, and honestly
communicate about the main patterns that are present in the data (Hanneman, Kposowa, & Riddle,
2013).
2. Inferential Statistics- the methods used to estimate a property of a population on the basis of a
sample. For example: In the Philippines, the movement from being Unemployed to Employed (i.e. the rate
of job finding) averages to about 6 months (Cabiles N. , 2013). The term statistical inference refers to
statistical methods that describe a population, which we do not observe, using measures from a sample,
which we do observe. This means we will calculate statistics based on a sample and then infer from them
the values of the population’s parameters. It draws conclusions about economic variables in the context
of incomplete information (Lewis, 2012). Methods by which one uses sample information to make
inferences or generalizations about a population (Araneta, 2020).
IM No.:IM- BE 14- 1STSEM-2021-2022
Basic Concepts
Population - refers to the entire set of individuals or objects of interest or the measurements
obtained from all individuals or objects of interest (Cabiles N. , 2013)
Sample- a portion or part of the population of interest (Cabiles N. , 2013). A subset of the population
Population Sample
Whole Cake Slice
Wheat Harvest Sack of Wheat
Youth Students
Source: (Cabiles N. , 2013)
A researcher wishing to study risk factors for divorce in the United States will most likely not have time,
money, and resources to study the entire population of couples who married at some point and divorced
at a later time. In research, what frequently happens is that a researcher obtains a representative sample
of couples that he or she studies (Hanneman, Kposowa, & Riddle, 2013).
Parameter vs. Statistic
Parameter is a measured characteristic of a population while Statistic is a measured characteristic

of a sample (Araneta, 2020).
Observation is a realized value of the variable (Araneta, 2020).
Data is a collection of all observations (Araneta, 2020).
Experimental/Sampling unit - individual or object on which a variable is measured (Araneta, 2020).
Variables - Statisticians collect information or data on characteristics or attributes of units of

analysis. The characteristics are referred to as variables. A variable is a characteristics or attribute that
can take on different values (or vary) across cases. It changes from person to person, from country to
country, from city to city, or from country to country (Hanneman, Kposowa, & Riddle, 2013). Variable can
assume different values or labels for different persons or objects under consideration. A characteristic
observed or measured on every unit of the population. For example, blood type, age, sex etc. (Araneta,
2020).
Example (Araneta, 2020):

Task: To determine the average birth weight of babies born to 18-year-old mothers in Municipality A
Population: Set of 18-year-old mothers in Municipality A
Sample: Subset of 18-year-old mothers drawn from the entire set of 18-year-old mothers in
Municipality A
Variable: Birth weight of a baby
Value: ≥ 0
Parameter: Population (true) average birth weight of all babies born to 18-year-old mothers in
Municipality A
Statistic: Average birth weight of babies born to 18-year-old mothers in the sample.
Types of Variables
1. Qualitative Variable/Attribute - a non-numeric or categorical characteristic of a population (or

sample). For example: Gender, Religious Affiliation, Marital Status (Cabiles N. , 2013). A variable that
distinguishes kind but not amount is often referred to a “qualitative” or “categorical”. Nominal and ordinal
variable are qualitative (Hanneman, Kposowa, & Riddle, 2013).
2. Quantitative Variable - a numerical characteristic of a population (or sample). It tells how many
or how much of a certain aspect is present. For example: Age, Number of Children, Income. It can either
of discrete or continuous (Cabiles N. , 2013). A variable that distinguishes the amount of difference
IM No.:IM- BE 14- 1STSEM-2021-2022
between cases is sometimes called “quantitative”. Interval and ratio variables are quantitative (Hanneman,
Kposowa, & Riddle, 2013).
Quantitative Variable: Discrete vs Continuous Variable
1. Discrete Variable - can only assume a certain value (i.e. there are “gaps” between the values).
It typically results from counting. For example: No. of Vehicles Passing through Katipunan Avenue during
morning rush hour, Number of bedrooms in a condominium unit, Number of dependents per mid-age
employee (Cabiles N. , 2013). A variable is considered a discrete variable if its unit of measurement cannot
be broken down or subdivided into finer or smaller units. For example, the variable “children ever born per
woman” is discrete. Its unit of measurement is human beings or persons, and these exist only as whole
numbers (integers). Children ever born could take on values ranging from 0 (no children), 1 child, 2
children, or 3 children to the highest possible number of children born, but this variable will never take on
values such as 0.1 children or 2.5 children. Other examples of discrete variables are household size,
number of living children, number of married couples, number of cars per garage, and so on (Hanneman,
2. Continuous Variable - can assume any value within a specific range. This may not be easily
derived through simple counting. For example: Amount of Water Pressure from a faucet turned at full
opening, Flight time between Manila to Cebu, QPI (Cabiles N. , 2013). Continuous variables are those
whose numerical values can be broken down or sub-divided into finer units almost indefinitely. Age
qualifies as an example of continuous variable in that it could be broken down into years, months, days,
and beyond. Other examples are weight, height, time, income, educational attainment, and so on. Many
other continuous variables are formed by taking ratios or rates (Hanneman, Kposowa, & Riddle, 2013).
Levels of Measurement
The way in which we attach scores to attributes when we measure phenomena is very important.
The level of measurement of a variable describes the kind and amount of information it contains; it also
affects what kinds of operations we can perform on the variable, and the types of statistics that are
appropriate. There are four main levels or types of measurement: nominal, ordinal, interval, and ratio. The
level or type of measurement to use on a variable is determined by noting the presence or absence of four
characteristics: distinctiveness, ordering in magnitude, equal intervals, and an absolute or natural zero
1.Nominal –Level Data - “quantifying” of a qualitative data. The assignment or nomination of a

certain value to an attribute. For set of attributes with assigned values (i.e. labels), the labels have no
particular or natural order. For example: Marital Status: Single = 1, Married = 2, Separated/Divorced =3,
Widowed = 4. Each status is assigned a certain value but Single < Widowed just because of the numbers
assigned, nor is Separated/Divorced > Married for the same reason. The purpose of Nominal-Level Data
is to be able to facilitate a count on the qualitative data (for analytical purposes) (Cabiles N. , 2013).
Nominal variables have only the characteristics of distinctiveness. It measures identity or category
(Hanneman, Kposowa, & Riddle, 2013).The weakest level of measurement, numbers or symbols are used
simply for categorizing subjects into different groups. The categories are not arranged according to
magnitude. (Araneta, 2020).
2. Ordinal-Level Data - “quantifying” of a qualitative data, with ranking involved. The assignment or
nomination of a certain value to an attribute with value being relative to other attributes (and, in effect,
other values). Due to the relativity of values, ordinal-level data can be ranked or follow a natural hierarchy
or order. For example: Customer Survey: Extremely Satisfied = 4, Satisfied = 3, Somewhat Satisfied = 2,
Dissatisfied = 1. Each Satisfaction level is assigned a certain value with Extremely Satisfied > Satisfied >
Somewhat Satisfied >Dissatisfied. It allows a measure on the qualitative preferences (via “points system”)
(Cabiles N. , 2013). Ordinal variables indicate not only distinctiveness, but also ordering in magnitude. In
such case, larger numbers represent more of the concept or phenomenon being measured than smaller
numbers (Hanneman, Kposowa, & Riddle, 2013). It contains the properties of the nominal level. The
numbers assigned to categories of any variable may be ranked or ordered in some low to high manner. It
has no fixed unit of measurement representing a set size throughout the scale (Araneta, 2020).
IM No.:IM- BE 14- 1STSEM-2021-2022
3. Interval-Level Data - refers to data possessing Ordinal-Level Data (i.e. can be ranked), but at
the same time, the differences between variables are of a constant size. For example: Water Temperature:
20⁰ - Tepid, 30⁰ - Lukewarm, 40⁰ - Hot; Tepid < Warm < Hot (Ranking); Water Temperature differences in
intervals of 10 ⁰ (Constant Difference). Interval-Level Data may not give a significant meaning to 0 value.
(i.e. 0⁰ does not say that the water has no temperature or heat.) (Cabiles N. , 2013). Interval variables
have the characteristics of distinctiveness, ordering in magnitude, and in addition, equal intervals
(Hanneman, Kposowa, & Riddle, 2013). It has the properties of the nominal and ordinal levels. The
distances between any two numbers on the scale are of known sizes. It must have a common and constant
unit of measurement (Araneta, 2020).
4. Ratio-Level Data - common mode of reporting quantitative data. It refers to data possessing
Interval-Level Data (i.e. can be ranked, with constant differences), but at the same time, the value 0 already
takes a certain meaning. The ratio between two values are also meaningful. For example: Income: Person
A – 25,000, Person B – 30,000; Person A’s Income < Person B’s Income (Ranking); Income difference is
5,000 (Constant difference); Person B earns 20% more than Person A (Meaningful Ratio) (Cabiles N. ,
2013). Ratio variables have all the qualities previously stated (distinctiveness, ordering in magnitude, and
equal intervals) (Hanneman, Kposowa, & Riddle, 2013). It contains all the properties of the interval level.
The ratios are meaningful (Araneta, 2020).
Table 1.1 summarizes how levels of measurement distinguish types of variables (Hanneman,
Table 1.1 Levels of Measurement and Their Characteristics

Characteristics Nominal Ordinal Interval Ratio
Distinctiveness Present Present Present Present
Ordering in magnitude Absent Present Present Present
Equal intervals Absent Absent Present Present
Absolute zero Absent Absent Absent Present
Source: (Hanneman, Kposowa, & Riddle, 2013)
Data Description
The organization of data to show the general pattern of the data. It reveals the concentration of the
values of the data and the existence of extreme or unusual values in the data (Cabiles N. , 2013).
Frequency Table - grouping of qualitative data into mutually exclusive classes showing the number
of observations in each class. Mutual exclusivity: the occurrence of one prevents the occurrence of the
other (e.g. gender – one cannot be both male or female). Class frequency: the number of observations in
each class (Cabiles N. , 2013).
Constructing a Frequency Table: Sample Case
Using the following Data on Car Sales, construct a Frequency Table for the Number of Cars Sold
by Type of Gasoline Used (Cabiles N. , 2013):

IM No.:IM- BE 14- 1STSEM-2021-2022
Solution:
• 2 mutually exclusive classes
• Type of Gasoline used: G = 0 for Unleaded; G = 1 for Diesel
• From the data:
G = 0 →6 observations Class Frequency
G = 1 → 4 observations
• Frequency Table Number of Cars Sold by Type of Gasoline Used:
Type of Gasoline Used No. of Cars Sold

Unleaded (G = 0) 6
Diesel (G = 1) 4
Relative Class Frequency - shows the relationship between class total and the total number of
observations. The ratio/fraction of the number of observations in each class to the total number of
observations (Cabiles N. , 2013).
𝐶𝑙𝑎𝑠𝑠 𝐹𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦
𝑅𝑒𝑙𝑎𝑡𝑖𝑣𝑒 𝐶𝑙𝑎𝑠𝑠 𝐹𝑟𝑒𝑞𝑢𝑒𝑐𝑦 =
𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑂𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠
From the data:
G = 0 →6 observations
G = 1 → 4 observations
Total Number of Observations: 10
Type of Gasoline Used No. of Cars Sold Relative Frequency

Unleaded (G = 0) 6 0.6
Diesel (G = 1) 4 0.4
Total 10 1 10 1
Graphical Presentation of Data - allows a fast comparison of class frequencies (Cabiles N. , 2013). Pictures
(visualizations) of our data, though, are often even more effective ways of conveying the same information.
Two kinds of statistical graphics (graphs) are commonly used to report on nominal variables: the bar chart
and the pie chart. These are not easy to draw by hand, but spreadsheets and statistical software packages
make them very easy to prepare (Hanneman, Kposowa, & Riddle, 2013).
Bar Chart - graph reporting the classes on the X-axis and the class frequencies on the Y-axis. The class
frequencies are proportional to the height of the bars (Cabiles N. , 2013). It is widely used. You’ve seen
them in newspapers and magazines, as well as in scientific reports. Bar charts are very easy to interpret,
and provide information on both the frequencies and the relative frequencies of a nominal variable
(Hanneman, Kposowa, & Riddle, 2013)
Pie Chart - chart showing the proportion or percent of each class frequency to the total number of
observations. It is used for relative class frequencies and shows which class has a larger share of
occurrences (relative to the others) (Cabiles N. , 2013). The pie chart is better than the bar chart for
showing the sizes of the groups as parts of the whole sample. It is not as good at showing the actual
frequencies (though they can be reported in the labels). Like all other statistical charts and tables, a pie
chart should have a title and explanatory notes, if needed. The slices of the pie can be arranged in any
order, without affecting our impression of which are the biggest and smallest groups (Hanneman,
Frequency Distribution - a grouping of data into mutually exclusive classes showing the number of
observations in each class. It is used for quantitative data.
Recall the following Frequency Table:
IM No.:IM- BE 14- 1STSEM-2021-2022
The Bar Chart allows one to conclude quickly
that more cars using Unleaded Gasoline have
been sold than those that use Diesel Gasoline
(Cabiles N. , 2013).
Type of No. of Cars

Gasoline Used Sold
Unleaded (G = 6
0)
Diesel (G = 1) 4
VI. LEARNING ACTIVITIES
Ruby Hotels asked their patrons upon checking out to rate their overall stay as: Excellent, Good,
Satisfactory & Poor. With 20 respondents, they have the following data (Cabiles N. , 2013):
Let Cell = 1 if Respondent selects Class and 0, otherwise.
Raw Data (for processing) Construct a Frequency Table
Rating Frequency Relative

Frequency
(in %)
Excellent
Good
Satisfactory
Poor
Total
VII. ASSIGNMENT
Given the above Frequency Table, create the Pie Chart using the Relative Frequencies.
VIII. EVALUATION (Note: Not to be included in the student’s copy of the IM)
IX. REFERENCES
Araneta. (2020). 3 Webinars of Guide to Writing a Health Research Proposal Modules: Statisticsl Analysis.
Department of Science and Technology VI and Western Visayas Health Research and
Development Consortium. Iloilo: Department of Science and Technology VI and Western Visayas
Health Research and Development Consortium.
Cabiles, N. (2013). Statistics for Economists. Ateneo de Manila University, Quezon City.
Hanneman, R. A., Kposowa, A. J., & Riddle, M. D. (2013). Basic Statistics for Social Research. California,
US: Jossey-Bass A Wiley Imprint.
Lewis, M. (2012). Applied Statistics for Economists. New York, USA: Routledge Taylor & Francis Group.
Mathai, A. M., & Haubold, H. J. (2018). Probability and Statistics: A Course for Physicist and Engineers.
Germany: De Gruyter.

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Republic of the Philippines

NUEVA VIZCAYA STATE UNIVERSITY

College: BUSINESS EDUCATION

DEGREE PROGRAM BSBA COURSE NO. BE 14

YEAR LEVEL 4 TIME FRAME 9 WK 2-4 IM 1

I. UNIT TITLE/CHAPTER TITLE

II. LESSON TITLE

Lesson 1: Introduction, basic concepts and data description

III. LESSON OVERVIEW

IV. DESIRED LEARNING OUTCOMES

After reading this chapter, student will be able to:

Introduction to Statistics for Economists

Two (2) Types of Statistics

1. Descriptive Statistics - the methods of organizing, summarizing and presenting data in an

Parameter vs. Statistic

Parameter is a measured characteristic of a population while Statistic is a measured characteristic

Observation is a realized value of the variable (Araneta, 2020).

Data is a collection of all observations (Araneta, 2020).

Experimental/Sampling unit - individual or object on which a variable is measured (Araneta, 2020).

Variables - Statisticians collect information or data on characteristics or attributes of units of

Example (Araneta, 2020):

1. Qualitative Variable/Attribute - a non-numeric or categorical characteristic of a population (or

Quantitative Variable: Discrete vs Continuous Variable

1.Nominal –Level Data - “quantifying” of a qualitative data. The assignment or nomination of a

Table 1.1 Levels of Measurement and Their Characteristics

Constructing a Frequency Table: Sample Case

Source: (Cabiles N. , 2013)

Type of Gasoline Used No. of Cars Sold

Type of Gasoline Used No. of Cars Sold Relative Frequency

Recall the following Frequency Table:

Type of No. of Cars

VI. LEARNING ACTIVITIES

Rating Frequency Relative

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