What is quantitative data analysis?

⚫ Data analysis starts with data

– How do we collect data?
– How do we process the collected data? (*)
– What can we learn from the collected data? (*)
– What do we want to learn from the collected data?

– (*) The main topics.

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.1

Chapter 1. Introduction (concepts)

⚫ Basic concepts
– Population: a collection of all individuals of interest.
– Sample point: an observation.
– Sample: a collection of observations.
– Variability: randomness (fluctuation, etc.)

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.2

What is quantitative data analysis?
⚫ Exercise 1.17 Times (in minutes) to fall asleep for
Smokers and nonsmokers.
(Collected samples, sample points)

– Smokers: 69.3, 56.0, 22.1, 47.6, 53.2, 48.1,

52.7, 34.4, 60.2, 43.8, 23.2, 13.8
– Nonsmokers: 28.6, 25.1, 26.4, 34.9, 29.8, 28.4, 38.5, 30.2
30.5, 31.8, 41.6, 21.1, 36.0, 37.9, 13.9

Objective: Find which group of people take longer time to fall asleep.
How ? Any idea?

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.3

What is quantitative data analysis?
⚫ Simple methods
– Smokers: 69.3, 56.0, 22.1, 47.6, 53.2, 48.1,
52.7, 34.4, 60.2, 43.8, 23.2, 13.8
– Nonsmokers: 28.6, 25.1, 26.4, 34.9, 29.8, 28.4, 38.5, 30.2
30.5, 31.8, 41.6, 21.1, 36.0, 37.9, 13.9

1. The longest time to fall asleep: 69.3m is from the group of

smokers.
2. The shortest time to fall asleep: 13.8m is also from the
group of smokers.
3. Is it possible to draw a conclusion?

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.4

What is quantitative data analysis?
⚫ Graphics approaches
– Simple and effective ways to conduct statistical analysis
– Horizontal axis: i; Vertical axis: time in minutes.
80
70 Smokers
Nonsmokers
60
50
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.5

What is quantitative data analysis?
Smokers: 69.3, 56.0, 22.1, 47.6, 53.2, 48.1,
⚫ Stem-and-leaf plot for smokers
52.7, 34.4, 60.2, 43.8, 23.2, 13.8

Relative
Stem leafs Frequency frequency Histogram

3.5
1 3.8 1 0.083333 3
2.5

Frequency
2 2.13.2 2 0.166667 2
Frequency
1.5
3 4.4 1 0.83333 1
0.5
0
4 3.87.68.1 3 0.25
5 2.73.26.0 3 0.25 Bin

6 0.29.3 2 0.166667

➢ Empirical distributions

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.6

What is quantitative data analysis?
Smokers Nonsmokers

Histogram Histogram

3.5 8
3 7 Frequency
Frequency
6

Frequency
2.5
Frequency

5
2
4
1.5
3
1 2
0.5 1
0 0
10 20 30 40 More

Bin
Bin

Is it possible to draw a conclusion?

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.7

What is quantitative data analysis?

• Basic analytical methods: Summary of data

– The sample size: n
– The sample mean: x1 + x2 +  + xn
x=
n

( xi − x ) 2
n
– The sample variance: s =2

i =1 (n − 1)

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.8

What is quantitative data analysis?
⚫ The sample size
– Smoker: 12
– Nonsmoker: 15 ⚫ Is it possible
to draw a
⚫ The sample means (location) conclusion?
– On average, which group falls asleep faster?
– Smoker: 43.7
– Nonsmoker: 30.32 < 43.7
⚫ How do you
⚫ The sample variances (variability) justify your
– Which group is more (less) consistent? conclusion?
– Smoker: 286.5
– Nonsmoker: 50.81 < 286.5

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.9

What is quantitative data analysis?

⚫ Advanced analytic methods

– Find and test the difference between the means of the times to
fall asleep.
– Find and test the difference between the variances of the times to
fall asleep.
– Find and test the probability distributions of the times to fall
asleep for both smokers and nonsmokers.
– Find and test the probability distribution of the difference
between the times to fall asleep of smokers and nonsmokers.

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.10

What is quantitative data analysis?

⚫ Analysis tools (fundamental)

– Probability: to quantify the strength or “confidence” in conclusions
or to gauge the strength of statistical inference.
❖ Example: P-value
❖ ANOVA: Analysis of variance

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.11

What is quantitative data analysis?

⚫ More questions to be asked and answered:

– For a smoker and a nonsmoker, what is the probability that the
smoker is to fall asleep faster than the nonsmoker?
– For a smoker and a nonsmoker, what is the probability that the
smoker is to fall asleep slower than the nonsmoker?
– What is the probability that a smoker takes ten more minutes to
fall asleep than a nonsmoker?
– What is the probability that a nonsmoker takes ten more minutes
to fall asleep than a smoker?

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.12

What is quantitative data analysis?

⚫ Statistical approaches
– Descriptive statistics: to gain summary of data in sample (mean, median, deviation,
graphics, etc.)
– Inferential statistics: estimation on system (model) parameters (rather than
summary of data) and test of hypothesis (i.e., draw conclusions based on estimates.)
⚫ Data collection
– Random sampling: Randomly generate samples (simple random sampling, stratified
random sampling, etc.)
– Experimental design: Design of all information-gathering exercises where variation
is present, whether under the full control of the experimenter or not.

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.13

What is quantitative data analysis?

⚫ Specific measures
– Measure of location:
• Sample mean
• Sample median
– Measure of variability
• Sample variance
• Sample standard deviation
– Distribution
• Frequency histogram
• Probability distribution

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.14

Descriptive, Predictive, Prescriptive
Descriptive Analytics, which use data aggregation and data
mining to provide insight into the past and answer: “What has
happened?”

Predictive Analytics, which use statistical models and

forecasting techniques to understand the future and answer:
“What could happen?”

Prescriptive Analytics, which use optimization and simulation

algorithms to advise on possible outcomes and answer: “What
should we do?”

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 15

What do we learn from this course?

⚫ Review basic probability theory

⚫ Basic statistics
❖ Basic theory: random sample, estimates, hypothesis tests, etc.
❖ Excel implementation
❖ Excel functions in statistics
⚫ Advanced statistics
❖ Regression analysis
❖ Experiments and design
❖ Excel data analysis package

Note: A laptop with MS Office (Analysis toolpak) is required.

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.16

After this course,

1. We should be able to understand the basic theory

intuitively.
2. We should have the ability to formulate problems properly
for data analysis;
3. We should be able to choose the proper methods for data
analysis;
4. We should be able to use proper tools (e.g., Excel) to get
numerical results;
5. We should be able to interpret numerical results correctly
and understand the results intuitively.

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.17

 Any question?

Fall, 2022 MSCI 609 Quantitative Data Analysis Chapter 1 1.18