Statistics for Business and Economics

Chapter 2: Data and Descriptive Statistics

(Reference: Chapter 1, 2)

Faculty of Economic Mathematics, University of Economics and Law

Outline

Data

Descriptive Statistics

Summarizing Data using Tabular and graphical displays

Descriptive Statistics for two variables

Graphical Displays on MS EXCEL and STATA

Data
Data are the facts and figures collected, analyzed, and summarized for presentation
and interpretation.
Components of a data set

▶ Elements are the entities on which data are collected. Each nation listed in Table
1.1 is an element with the nation or element name shown in the first column.
With 60 nations, the data set contains 60 elements.
▶ A variable is a characteristic of interest for the elements. The data set in Table
1.1 includes the following five variables: WTO Status, etc.
▶ The set of measurements obtained for a particular element is called an
observation. Referring to Table 1.1, we see that the first observation (Armenia)
contains the following measurements: Member, 5,400, 2,673,359, BB−, and
Stable.
Scales of Measurement
▶ When the data for a variable consist of labels or names used to identify an
attribute of the element, the scale of measurement is considered a nominal scale.
The scale of measurement for the WTO Status variable is nominal.
▶ The scale of measurement for a variable is considered an ordinal scale if the data
exhibit the properties of nominal data and in addition, the order or rank of the
data is meaningful. For example, the scale of measurement for the Fitch Rating is
ordinal.
▶ The scale of measurement for a variable is an interval scale if the data have all the
properties of ordinal data and interval between values is meaningful (or the
difference of two values is meaninful). Interval data are always numerical. College
admission SAT scores are an example of interval scaled data.
▶ The scale of measurement for a variable is a ratio scale if the data have all the
properties of interval data and the ratio of two values is meaningful. Variables
such as distance, height, weight, and time use the ratio scale of measurement.
Categorical and Quantitative Data

Data can be classified as either categorical or quantitative. Data that can be grouped
by specific categories are referred to as categorical data. Categorical data use either
the nominal or ordinal scale of measurement.
▶ Data that use numeric values to indicate how much or how many are referred to
as quantitative data. Quantitative data are obtained using either the interval or
ratio scale of measurement.
▶ A categorical variable is a variable with categorical data, and a quantitative
variable is a variable with quantitative data.
Cross-sectional and Time series Data
▶ Cross-sectional data are data collected at the same or approximately the same
point in time. The data in Table 1.1 are cross-sectional because they describe the
five variables for the 60 World Trade Organization nations at the same point in
time.
▶ Time series data are data collected over several time periods.
Descriptive Statistics - Example
Descriptive statistics provide summarizing information of the characteristics and
distribution of values in one or more datasets.
Statistical Inference

Population
A population is the set of all the elements of interest in a particular study.

Sample
A sample is a subset of the population.
▶ The process of conducting a survey to collect data for the entire population is
called a census.
▶ The process of conducting a survey to collect data for a sample is called a sample
survey.
▶ statistics uses data from a sample to make estimates and test hypotheses about
the characteristics of a population through a process referred to as statistical
inference.
Exercises: 2 (p. 24)
Relative Frequency

Frequency of the class

Relative frequency of a class =
Total number of observations
Bar Charts and Pie Charts

Exercises: 1-3 (p.38)

Frequency Distribution

A frequency distribution is a tabular summary of data showing the number (frequency)

of observations in each of several non-overlapping categories or classes.
A frequency distribution can be used for both quantitative and categorical data.
However, with quantitative data we must be more careful in defining the
non-overlapping classes to be used in the frequency distribution.
The three steps necessary to define the classes for a frequency distribution with
quantitative data are
1. Determine the number of non-overlapping classes.
2. Determine the width of each class.
3. Determine the class limits.
Frequency Distribution - part 2
▶ Classes are formed by specifying ranges that will be used to group the data. As a
general guideline, we recommend the number of classes using between 5 and 20
classes.
▶ As a general guideline, we recommend that the width be the same for each class.
Largest data value − Smallest data value
Approximate class width =
Number of classes
The approximate class width can be rounded to a more convenient value based on
the preference of the person developing the frequency distribution.
▶ Class limits must be chosen so that each data item belongs to one and only one
class.
▶ The Class midpoint of a class is the value between the lower and upper class
limits. In computing, we use the class midpoint as the present value of the class.
Largest class value − Smallest class value
Class midpoint =
2
Frequency Distribution - example

frequency of the class

Relative frequency of class =
n
Dot plot

A horizontal axis shows the range for the data. Each data value is represented by a dot
placed above the axis. The three dots located above 18 on the horizontal axis indicate
that an audit time of 18 days occurred three times.
Histogram
A histogram is constructed by placing the variable of interest on the horizontal axis
and the frequency, relative frequency, or percent frequency on the vertical axis. The
frequency, relative frequency, or percent frequency of each class is shown by drawing a
rectangle whose base is determined by the class limits on the horizontal axis and whose
height is the corresponding frequency, relative frequency, or percent frequency.

One of the most important uses of a histogram is to provide information about the
shape, or form, of a distribution.
Skewness
Cumulative Distributions

However, rather than showing the frequency of each class, the cumulative frequency
distribution shows the number of data items with values less than or equal to the
upper class limit of each class.
Stem-and-Leaf Display

A stem-and-leaf display is a graphical display used to show simultaneously the rank

order and shape of a distribution of data.

The numbers to the left of the vertical line

(6, 7, 8, 9, 10, 11, 12, 13, and 14) form
the stem, and each digit to the right of the
vertical line is a leaf.
Exercises: 11 - 16 (p.50)
Cross-tabulation
A cross-tabulation is a tabular summary of data for two variables. Although both
variables can be either categorical or quantitative, cross-tabulations in which one
variable is categorical and the other variable is quantitative are just as common.
Cross-tabulation - example
Simpson’s Paradox
You and a friend each do homework at a weekend, and your friend answers a higher
proportion correctly than you on each of two days. Does that mean your friend has
answered a higher proportion correctly than you when the two days are combined? Not
necessarily!

Exercise: 27, 28 (p. 59-60)

Scatter Diagram and Trendline
A scatter diagram is a graphical display of the relationship between two quantitative
variables. And a trendline is a line that provides an approximation of the relationship.
Scatter diagram - Type of relationships
Side-by-side bar chart
Stacked bar charts

Exercises: 36, 37, 38 (p. 68, 69)

Choosing the Type of Graphical Display - 1
Displays Used to Show the Distribution of Data
▶ Bar Chart: the frequency and relative frequency distribution for categorical data.
▶ Pie Chart: the relative frequency and percent frequency for categorical data.
▶ Dot Plot: the distribution for quantitative data over the entire range of the data.
▶ Histogram: the frequency distribution of quantitative data on class intervals.
▶ Stem-and-Leaf display: the rank order and shape of the distribution for
quantitative data.
Displays Used to Make Comparisons of two categorical variables
▶ Side-by-Side bar Chart: used to compare two variables.
▶ Stacked bar Charts: used to compare the relative frequency or percent frequency
Displays Used to Show Relationships
▶ Scatter diagram: used to show the relationship between two quantitative variables.
▶ Trendline: used to approximate the relationship of data in a scatter diagram.
Data Dashboards
A data dashboard is a set of visual displays that organizes and presents information
that is used to monitor the performance of a company or organization in a manner
that is easy to read, understand, and interpret.
Graphical displays on MS EXCEL and STATA
▶ Project 1: Writing a text for the following topics and present at class (with a
sample data).
1. Relative frequency of a class.
2. Bar charts, and pie charts.
3. Scatter diagram, and trendline.
4. Side-by-side bar charts.
▶ Project 2: Writing a text for the following topics and present at class (with a
sample data).
1. Dot plot.
2. Histogram.
3. Stem-and-Leaf display.
4. Stacked bar charts.
Deadline: 09/04/2024. 20 minutes/team. Requirement: text [data, formulas (if
any), commands (in both MS EXCEL and STATA), displays], group meeting minutes,
presentation (including a demonstration on MS EXCEL).
Teamwork for bonus point
▶ Team 1: Supplementary exercises 3 - 6 (p. 24-31), Applications exercises 4 - 10
(p. 38-41)
▶ Team 2: Supplementary exercises 7 - 10 (p. 24-31), Applications exercises 17 - 23
(p. 50-55)
▶ Team 3: Supplementary exercises 11 - 14 (p. 24-31), Applications exercises 24 -
26 (p. 50-55), Applications exercises 29 - 32 (p. 60-64)
▶ Team 4: Supplementary exercises 15 - 18 (p. 24-31), Applications exercises 33 -
35 (p. 60-64), Applications exercises 39 - 43 (p. 69, 70)
▶ Team 5: Supplementary exercises 19 - 22 (p. 24-31), Supplementary exercises 44
- 51 (p. 79 - 84)
▶ Team 6: Supplementary exercises 23 - 25 (p. 24-31), Supplementary exercises 52
- 58 (p. 79 - 84)
▶ Team 1, 2: Case problem 1; Team 3, 4: Case problem 2; Team 5, 6: Case 3 (p.
84-87)
Thank you for your attention!