Chapter

1
Overview of Statistics
What is Statistics? Why Study Statistics? Uses of Statistics Statistical Challenges Writing and Presenting Reports Statistical Pitfalls Statistics: An Evolving Field

What is Statistics?
Statistics is the science of collecting, organizing, analyzing, interpreting, and presenting data. A statistic is a single measure (number) used to summarize a sample data set. For example, the average height of students in this class.

A statistician is an expert with at least a masters degree in mathematics or statistics or a trained professional in a related field.
McGraw-Hill/Irwin 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Study Statistics?

Communication
Understanding the language of statistics facilitates communication and improves problem solving.

Computer Skills
The use of spreadsheets for data analysis and word processors or presentation software for reports improves upon your existing skills.

Why Study Statistics?

Information Management
Statistics help summarize large amounts of data and reveal underlying relationships.

Technical Literacy
Career opportunities are in growth industries propelled by advanced technology. The use of statistical software increases your technical literacy.

Why Study Statistics?

Career Advancement
Statistical literacy can enhance your career mobility.

Quality Improvement
Statistics helps firms oversee their suppliers, monitor their internal operations and identify problems.

Uses of Statistics
Two primary uses for statistics:
Descriptive statistics the collection, organization, presentation and summary of data. Inferential statistics generalizing from a sample to a population, estimating unknown parameters, drawing conclusions, making decisions.

Uses of Statistics
Overview of Statistics

Statistics
Describing Data
Visual Displays Numerical Summaries
Making Inferences from Samples

Estimating Parameters

Testing Hypotheses

Uses of Statistics
Auditing
Sample from over 12,000 invoices to estimate the proportion of incorrectly paid invoices.

Marketing
Identify likely repeat customers for Amazon.com and suggests co-marketing opportunities based on a database of 5 million Internet purchases.

Uses of Statistics
Health Care
Evaluate 100 incoming patients using a 42-item physical and mental assessment questionnaire.

Purchasing
Determine the defect rate of a shipment and whether that rate has changed significantly over time.

Uses of Statistics
Medicine
Determine whether a new drug is really better than the placebo or if the difference is due to chance.

Forecasting
Manage inventory by forecasting consumer demand.

Statistical Challenges
The Ideal Statistician
Is technically current (e.g., software-wise).
Communicates well. Is proactive. Has a broad outlook. Is flexible.

Focuses on the main problem.

Statistical Challenges
The Ideal Statistician
Meets deadlines.

Knows his/her limitations and is willing to ask for help.

Can deal with imperfect information. Has professional integrity.

Statistical Challenges
Working with Imperfect Data
State any assumptions and limitations and use generally accepted statistical tests to detect unusual data points or to deal with missing data.

Dealing with Practical Constraints

You will face constraints on the type and quantity of data you can collect.

Statistical Challenges
Upholding Ethical Standards
Know and follow accepted procedures, maintain data integrity, carry out accurate calculations, report procedures, protect confidentiality, cite sources and financial support.

Using Consultants
Hire consultants at the beginning of the project, when your team lacks certain skills or when an unbiased or informed view is needed.

Statistical Challenges
Skills Needed for Success in Business
For initial job success Report-writing For long-range job success Managerial accounting Most common weaknesses Communication skills Writing skills Immaturity Unrealistic expectations

Accounting principles Managerial economics Mathematics Statistics Managerial finance Report writing Oral communication

Writing and Presenting Reports

Rules for Power Writing
Outline the report before you begin.
Complete the report in sections. Ask trusted peers to review the report and make any necessary revisions.

Be prepared to make multiple revisions.

Writing and Presenting Reports

Writing Style
Answer research question succinctly. List most important results first. Include section headings and avoid lengthy paragraphs. Provide clear data sources. Use appendices for technical information. Be stylistically consistent.

Writing and Presenting Reports

Avoid Jargon
Present technical concepts so that others can understand them.

Spelling and Grammar

Dont rely on software to catch all spelling and grammar errors.

Writing and Presenting Reports

Make it Attractive
Descriptive title. Date Author(s) Page number. Wide margins. Typeface and point size. Bullets and subheadings. Bold face, italics, color.

Writing and Presenting Reports

Organizing a Technical Report
Typical business report style includes: Executive Summary (1 page maximum) - Briefly describe task and goals, data and data sources, methods that were used, main findings and any limitations. Introduction (1 to 3 paragraphs) - Statement of the problem - Data sources and definitions - Methods utilized

Writing and Presenting Reports

Organizing a Technical Report
Typical business report style includes: Body of the Report (as long as necessary) - Discussion, explanations, interpretations - Tables and graphs, as needed Conclusions (1 to 3 paragraphs) - Statement of findings (in order of importance) - Limitations (if necessary) - Future research suggestions

Writing and Presenting Reports

Organizing a Technical Report
Typical business report style includes: Bibliography and Sources Appendices (if needed for lengthy or technical material)

Writing and Presenting Reports

Tables and Graphs
Embed in the narrative near the paragraph in which they are interpreted.

Number and title each table above the table, each graph below the graph

Writing and Presenting Reports

Rules for Presenting Oral Reports
Select a few key points to convey. Use simple charts and diagrams. Emphasize using color and fonts creatively. Have backup slides or transparencies. Rehearse timing. Refer audience to written report for details. Imagine yourself in the audience.

Writing and Presenting Reports

Pictures Help Make the Point

Writing and Presenting Reports

The Three Ps
Pace yourself when presenting. Take your time, introduce yourself, your data and your project. Make the first minute count. Plan what your are going to present. Organize your ideas with an outline. Keep it simple! Practice before presenting to get the timing right. Consider videotaping yourself or practicing in front of peers.

Statistical Pitfalls
Pitfall 1: Making Conclusions about a Large Population from a Small Sample
Be careful about making generalizations from small samples (e.g., a group of 10 patients).

Pitfall 2: Making Conclusions from Nonrandom Samples

Be careful about making generalizations from retrospective studies of special groups (e.g., heart attack patients).

Statistical Pitfalls
Pitfall 3: Attaching Importance to Rare Observations from Large Samples
Be careful about drawing strong inferences from events that are not surprising when looking at the entire population (e.g., winning the lottery).

Pitfall 4: Using Poor Survey Methods

Be careful about using poor sampling methods or vaguely worded questions (e.g., anonymous survey or quiz).

Statistical Pitfalls
Pitfall 5: Assuming a Causal Link Based on Observations
Be careful about drawing conclusions when no cause-and-effect link exists (e.g., most shark attacks occur between 12p.m. and 2p.m.).

Pitfall 6: Making Generalizations about Individuals from Observations about Groups

Avoid reading too much into statistical generalizations (e.g., men are taller than women).

Statistical Pitfalls
Pitfall 7: Unconscious Bias
Be careful about unconsciously or subtly allowing bias to color handling of data (e.g., heart disease in men vs. women).

Pitfall 8: Attaching Practical Importance to Every Statistically Significant Study Result

Statistically significant effects may lack practical importance (e.g., Austrian military recruits born in the spring average 0.6 cm taller than those born in the fall).

Statistics: An Evolving Field

Statistics is a relatively young field, having been developed mostly during the 20th century. Its mathematical frontiers continue to expand with the aid of computers. Major recent developments include - Exploratory data analysis (EDA) - Computer-intensive statistics - Design of experiments - Robust product design - Advanced Bayesian methods - and more

Applied Statistics in Business and Economics

End of Chapter 1