Slides Prepared by

JOHN S. LOUCKS
St. Edwards University

2003 South-Western/Thomson LearningTM

Slide 1
 Chapter 3
Descriptive Statistics:
Numerical Methods, Part A
Measures of Location
Measures of Variability

x
2003 South-Western/Thomson LearningTM
Slide 2
 Measures of Location

Mean
Median
Mode
Percentiles
Quartiles

2003 South-Western/Thomson LearningTM

Slide 3
 Example: Apartment Rents

Given below is a sample of monthly rent values ($)

for one-bedroom apartments. The data is a sample of 70
apartments in a particular city. The data are presented
in ascending order.
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
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Slide 4
 Mean

The mean of a data set is the average of all the data

values.
If the data are from a sample, the mean is denoted by
x.
xi
x
n
If the data are from a population, the mean is
denoted by m (mu).

xi

N

2003 South-Western/Thomson LearningTM

Slide 5
 Example: Apartment Rents

Mean
xi 34, 356
x 490.80
n 70
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 6
 Median

The median is the measure of location most often

reported for annual income and property value data.
A few extremely large incomes or property values
can inflate the mean.

2003 South-Western/Thomson LearningTM

Slide 7
 Median

The median of a data set is the value in the middle

when the data items are arranged in ascending order.
For an odd number of observations, the median is the
middle value.
For an even number of observations, the median is
the average of the two middle values.

2003 South-Western/Thomson LearningTM

Slide 8
 Example: Apartment Rents

Median
Median = 50th percentile
i = (p/100)n = (50/100)70 = 35.5
Averaging the 35th and 36th data values:
Median = (475 + 475)/2 = 475
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
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Slide 9
 Mode

The mode of a data set is the value that occurs with

greatest frequency.
The greatest frequency can occur at two or more
different values.
If the data have exactly two modes, the data are
bimodal.
If the data have more than two modes, the data are
multimodal.

2003 South-Western/Thomson LearningTM

Slide 10
 Example: Apartment Rents

Mode
450 occurred most frequently (7 times)
Mode = 450
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 11
 Using Excel to Compute
the Mean, Median, and Mode
Formula Worksheet

A B C D E
Apart- Monthly
1 ment Rent ($)
2 1 525 Mean =AVERAGE(B2:B71)
3 2 440 Median =MEDIAN(B2:B71)
4 3 450 Mode =MODE(B2:B71)
5 4 615
6 5 480
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 12
 Using Excel to Compute
the Mean, Median, and Mode
Value Worksheet

A B C D E
Apart- Monthly
1 ment Rent ($)
2 1 525 Mean 490.80
3 2 440 Median 475.00
4 3 450 Mode 450.00
5 4 615
6 5 480
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 13
 Percentiles

A percentile provides information about how the

data are spread over the interval from the smallest
value to the largest value.
Admission test scores for colleges and universities
are frequently reported in terms of percentiles.

2003 South-Western/Thomson LearningTM

Slide 14
 Percentiles

The pth percentile of a data set is a value such that at

least p percent of the items take on this value or less
and at least (100 - p) percent of the items take on this
value or more.
Arrange the data in ascending order.
Compute index i, the position of the pth percentile.
i = (p/100)n
If i is not an integer, round up. The pth percentile is
the value in the ith position.
If i is an integer, the pth percentile is the average of
the values in positions i and i+1.

2003 South-Western/Thomson LearningTM

Slide 15
 Example: Apartment Rents

90th Percentile
i = (p/100)n = (90/100)70 = 63
Averaging the 63rd and 64th data values:
90th Percentile = (580 + 590)/2 = 585
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 16
 Quartiles

Quartiles are specific percentiles

First Quartile = 25th Percentile
Second Quartile = 50th Percentile = Median
Third Quartile = 75th Percentile

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Slide 17
 Example: Apartment Rents

Third Quartile
Third quartile = 75th percentile
i = (p/100)n = (75/100)70 = 52.5 = 53
Third quartile = 525
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 18
 Using Excel to Compute
Percentiles and Quartiles
Unsorted Monthly Rent ($)

A B C D E F
Apart- Monthly
1 ment Rent ($)
2 1 525
3 2 440
4 3 450
5 4 615
6 5 480
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 19
 Using Excel to Compute
Percentiles and Quartiles
Sorting Data
Step 1 Select any cell containing data in column B
Step 2 Select the Data pull-down menu
Step 3 Choose the Sort option
Step 4 When the Sort dialog box appears:
In the Sort by box, make sure that
Monthly Rent ($) appears and that
Ascending is selected
In the My list has box, make sure that
Header row is selected
Click OK

2003 South-Western/Thomson LearningTM

Slide 20
 Using Excel to Compute
Percentiles and Quartiles
Sorted Monthly Rent ($)

A B C D E F
Apart- Monthly
1 ment Rent ($)
2 1 425
3 2 430
4 3 430
5 4 435
6 5 435
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 21
 Using Excel to Compute
Percentiles and Quartiles
Formula Worksheet for 90th Percentiles Index

A B C D E F
Apart- Monthly Number of
1 ment Rent ($) Observations Percentile Index i
2 1 425 70 90 =(E2/100)*D2
3 2 430
4 3 430
5 4 435
6 5 435
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 22
 Using Excel to Compute
Percentiles and Quartiles
Value Worksheet for 90th Percentiles Index

A B C D E F
Apart- Monthly Number of
1 ment Rent ($) Observations Percentile Index i
2 1 425 70 90 63.00
3 2 430
4 3 430
5 4 435
6 5 435
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 23
 Using Excel to Compute
Percentiles and Quartiles
Value Worksheet for 3rd Quartiles Index

A B C D E F
Apart- Monthly Number of
1 ment Rent ($) Observations Percentile Index i
2 1 425 70 75 52.50
3 2 430
4 3 430
5 4 435
6 5 435
Note: Rows 7-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 24
 Measures of Variability

It is often desirable to consider measures of

variability (dispersion), as well as measures of
location.
For example, in choosing supplier A or supplier B we
might consider not only the average delivery time for
each, but also the variability in delivery time for each.

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Slide 25
 Measures of Variability

Range
Interquartile Range
Variance
Standard Deviation
Coefficient of Variation

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Slide 26
 Range

The range of a data set is the difference between the

largest and smallest data values.
It is the simplest measure of variability.
It is very sensitive to the smallest and largest data
values.

2003 South-Western/Thomson LearningTM

Slide 27
 Example: Apartment Rents

Range
Range = largest value - smallest value
Range = 615 - 425 = 190
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

2003 South-Western/Thomson LearningTM

Slide 28
 Interquartile Range

The interquartile range of a data set is the difference

between the third quartile and the first quartile.
It is the range for the middle 50% of the data.
It overcomes the sensitivity to extreme data values.

2003 South-Western/Thomson LearningTM

Slide 29
 Example: Apartment Rents

Interquartile Range
3rd Quartile (Q3) = 525
1st Quartile (Q1) = 445
Interquartile Range = Q3 - Q1 = 525 - 445 = 80
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 30
 Variance

The variance is a measure of variability that utilizes

all the data.
It is based on the difference between the value of
each observation (xi) and the mean (x for a sample,
for a population).

2003 South-Western/Thomson LearningTM

Slide 31
 Variance

The variance is the average of the squared differences

between each data value and the mean.
If the data set is a sample, the variance is denoted by
s2.
i
( x x ) 2
s2
n 1
If the data set is a population, the variance is denoted
by 2.
( x ) 2
2 i
N

2003 South-Western/Thomson LearningTM

Slide 32
 Standard Deviation

The standard deviation of a data set is the positive

square root of the variance.
It is measured in the same units as the data, making
it more easily comparable, than the variance, to the
mean.
If the data set is a sample, the standard deviation is
denoted s.
s s2
If the data set is a population, the standard deviation
is denoted (sigma).
2

2003 South-Western/Thomson LearningTM

Slide 33
 Coefficient of Variation

The coefficient of variation indicates how large the

standard deviation is in relation to the mean.
If the data set is a sample, the coefficient of variation
is computed as follows:
s
(100)
x
If the data set is a population, the coefficient of
variation is computed as follows:

(100)

2003 South-Western/Thomson LearningTM

Slide 34
 Example: Apartment Rents

Variance

s 2 ( xi x ) 2
2 , 996.16
n 1
Standard Deviation

s s2 2996. 47 54. 74
Coefficient of Variation
s 54. 74
100 100 11.15
x 490.80

2003 South-Western/Thomson LearningTM

Slide 35
 Using Excel to Compute the Sample Variance,
Standard Deviation, and Coefficient of Variation
Formula Worksheet

A B C D E
Apart- Monthly
1 ment Rent ($)
2 1 525 Mean =AVERAGE(B2:B71)
3 2 440 Median =MEDIAN(B2:B71)
4 3 450 Mode =MODE(B2:B71)
5 4 615 Variance =VAR(B2:B71)
6 5 480 Std. Dev. =STDEV(B2:B71)
7 6 510 C.V. =E6/E2*100
Note: Rows 8-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 36
 Using Excel to Compute the Sample Variance,
Standard Deviation, and Coefficient of Variation
Value Worksheet

A B C D E
Apart- Monthly
1 ment Rent ($)
2 1 525 Mean 490.80
3 2 440 Median 475.00
4 3 450 Mode 450.00
5 4 615 Variance 2996.16
6 5 480 Std. Dev. 54.74
7 6 510 C.V. 11.15
Note: Rows 8-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 37
 Using Excels
Descriptive Statistics Tool

Step 1 Select the Tools pull-down menu

Step 2 Choose the Data Analysis option
Step 3 Choose Descriptive Statistics from the list of
Analysis Tools
continued

2003 South-Western/Thomson LearningTM

Slide 38
 Using Excels
Descriptive Statistics Tool

Step 4 When the Descriptive Statistics dialog box

appears:
Enter B1:B71 in the Input Range box
Select Grouped By Columns
Select Labels in First Row
Select Output Range
Enter D1 in the Output Range box
Select Summary Statistics
Click OK

2003 South-Western/Thomson LearningTM

Slide 39
 Using Excels
Descriptive Statistics Tool
Value Worksheet (Partial)
A B C D E
Apart- Monthly
1 ment Rent ($) Monthly Rent ($)
2 1 525
3 2 440 Mean 490.8
4 3 450 Standard Error 6.542348114
5 4 615 Median 475
6 5 480 Mode 450
7 6 510 Standard Deviation 54.73721146
8 7 575 Sample Variance 2996.162319
Note: Rows 9-71 are not shown.
2003 South-Western/Thomson LearningTM
Slide 40
 Using Excels
Descriptive Statistics Tool
Value Worksheet (Partial)
A B C D E
9 8 430 Kurtosis -0.334093298
10 9 440 Skewness 0.924330473
11 10 450 Range 190
12 11 470 Minimum 425
13 12 485 Maximum 615
14 13 515 Sum 34356
15 14 575 Count 70
16 15 430
Note: Rows 1-8 and 17-71 are not shown.

2003 South-Western/Thomson LearningTM

Slide 41
 Descriptive Statistics:
Numerical Methods, Part B

Measures of Relative Location and Detecting

Outliers
Exploratory Data Analysis
Measures of Association Between Two Variables
The Weighted Mean and
Working with Grouped Data

x
2003 South-Western/Thomson LearningTM
Slide 42
 Measures of Relative Location
and Detecting Outliers
z-Scores
Chebyshevs Theorem
Empirical Rule
Detecting Outliers

2003 South-Western/Thomson LearningTM

Slide 43
 z-Scores

The z-score is often called the standardized value.

It denotes the number of standard deviations a data
value xi is from the mean.
xi x
zi
s
A data value less than the sample mean will have a
z-score less than zero.
A data value greater than the sample mean will have
a z-score greater than zero.
A data value equal to the sample mean will have a
z-score of zero.

2003 South-Western/Thomson LearningTM

Slide 44
 Example: Apartment Rents

z-Score of Smallest Value (425)

xi x 425 490.80
z 1. 20
s 54. 74
Standardized Values for Apartment Rents
-1.20 -1.11 -1.11 -1.02 -1.02 -1.02 -1.02 -1.02 -0.93 -0.93
-0.93 -0.93 -0.93 -0.84 -0.84 -0.84 -0.84 -0.84 -0.75 -0.75
-0.75 -0.75 -0.75 -0.75 -0.75 -0.56 -0.56 -0.56 -0.47 -0.47
-0.47 -0.38 -0.38 -0.34 -0.29 -0.29 -0.29 -0.20 -0.20 -0.20
-0.20 -0.11 -0.01 -0.01 -0.01 0.17 0.17 0.17 0.17 0.35
0.35 0.44 0.62 0.62 0.62 0.81 1.06 1.08 1.45 1.45
1.54 1.54 1.63 1.81 1.99 1.99 1.99 1.99 2.27 2.27
2003 South-Western/Thomson LearningTM
Slide 45
 Chebyshevs Theorem

At least (1 - 1/k2) of the items in any data set will be

within k standard deviations of the mean, where k is
any value greater than 1.
At least 75% of the items must be within
k = 2 standard deviations of the mean.
At least 89% of the items must be within
k = 3 standard deviations of the mean.
At least 94% of the items must be within
k = 4 standard deviations of the mean.

2003 South-Western/Thomson LearningTM

Slide 46
 Example: Apartment Rents

Chebyshevs Theorem

Let k = 1.5 with x = 490.80 and s = 54.74

At least (1 - 1/(1.5)2) = 1 - 0.44 = 0.56 or 56%
of the rent values must be between
x - k(s) = 490.80 - 1.5(54.74) = 409
and
x + k(s) = 490.80 + 1.5(54.74) = 573

2003 South-Western/Thomson LearningTM

Slide 47
 Example: Apartment Rents

Chebyshevs Theorem (continued)

Actually, 86% of the rent values
are between 409 and 573.
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

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Slide 48
 Empirical Rule

For data having a bell-shaped distribution:

Approximately 68% of the data values will be

within one standard deviation of the mean.

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Slide 49
 Empirical Rule

For data having a bell-shaped distribution:

Approximately 95% of the data values will be

within two standard deviations of the mean.

2003 South-Western/Thomson LearningTM

Slide 50
 Empirical Rule

For data having a bell-shaped distribution:

Almost all (99.7%) of the items will be

within three standard deviations of the mean.

2003 South-Western/Thomson LearningTM

Slide 51
 Example: Apartment Rents

Empirical Rule
Interval % in Interval
Within +/- 1s 436.06 to 545.54 48/70 = 69%
Within +/- 2s 381.32 to 600.28 68/70 = 97%
Within +/- 3s 326.58 to 655.02 70/70 = 100%
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615
2003 South-Western/Thomson LearningTM
Slide 52
 Detecting Outliers

An outlier is an unusually small or unusually large

value in a data set.
A data value with a z-score less than -3 or greater
than +3 might be considered an outlier.
It might be an incorrectly recorded data value.
It might be a data value that was incorrectly included
in the data set.
It might be a correctly recorded data value that
belongs in the data set !

2003 South-Western/Thomson LearningTM

Slide 53
 Example: Apartment Rents

Detecting Outliers
The most extreme z-scores are -1.20 and 2.27.
Using |z| > 3 as the criterion for an outlier,
there are no outliers in this data set.
Standardized Values for Apartment Rents
-1.20 -1.11 -1.11 -1.02 -1.02 -1.02 -1.02 -1.02 -0.93 -0.93
-0.93 -0.93 -0.93 -0.84 -0.84 -0.84 -0.84 -0.84 -0.75 -0.75
-0.75 -0.75 -0.75 -0.75 -0.75 -0.56 -0.56 -0.56 -0.47 -0.47
-0.47 -0.38 -0.38 -0.34 -0.29 -0.29 -0.29 -0.20 -0.20 -0.20
-0.20 -0.11 -0.01 -0.01 -0.01 0.17 0.17 0.17 0.17 0.35
0.35 0.44 0.62 0.62 0.62 0.81 1.06 1.08 1.45 1.45
1.54 1.54 1.63 1.81 1.99 1.99 1.99 1.99 2.27 2.27
2003 South-Western/Thomson LearningTM
Slide 54
 Exploratory Data Analysis

Five-Number Summary
Box Plot

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Slide 55
 Five-Number Summary

Smallest Value
First Quartile
Median
Third Quartile
Largest Value

2003 South-Western/Thomson LearningTM

Slide 56
 Example: Apartment Rents

Five-Number Summary
Lowest Value = 425 First Quartile = 450
Median = 475
Third Quartile = 525 Largest Value = 615
425 430 430 435 435 435 435 435 440 440
440 440 440 445 445 445 445 445 450 450
450 450 450 450 450 460 460 460 465 465
465 470 470 472 475 475 475 480 480 480
480 485 490 490 490 500 500 500 500 510
510 515 525 525 525 535 549 550 570 570
575 575 580 590 600 600 600 600 615 615

2003 South-Western/Thomson LearningTM

Slide 57
 Box Plot

A box is drawn with its ends located at the first and

third quartiles.
A vertical line is drawn in the box at the location of
the median.
Limits are located (not drawn) using the interquartile
range (IQR).
The lower limit is located 1.5(IQR) below Q1.
The upper limit is located 1.5(IQR) above Q3.
Data outside these limits are considered outliers.
continued

2003 South-Western/Thomson LearningTM

Slide 58
 Box Plot (Continued)

Whiskers (dashed lines) are drawn from the ends of

the box to the smallest and largest data values inside
the limits.
The locations of each outlier is shown with the
symbol * .

2003 South-Western/Thomson LearningTM

Slide 59
 Example: Apartment Rents

Box Plot

Lower Limit: Q1 - 1.5(IQR) = 450 - 1.5(75) = 337.5

Upper Limit: Q3 + 1.5(IQR) = 525 + 1.5(75) = 637.5
There are no outliers.

37 40 42 45 47 50 52 550 575 600 625

5 0 5 0 5 0 5

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Slide 60
 Measures of Association
between Two Variables
Covariance
Correlation Coefficient

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Slide 61
 Covariance

The covariance is a measure of the linear association

between two variables.
Positive values indicate a positive relationship.
Negative values indicate a negative relationship.

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Slide 62
 Covariance

If the data sets are samples, the covariance is denoted

by sxy.
( xi x )( yi y )
sxy
n 1
If the data sets are populations, the covariance is
denoted by xy .

( xi x )( yi y )
xy
N

2003 South-Western/Thomson LearningTM

Slide 63
 Correlation Coefficient

The coefficient can take on values between -1 and +1.

Values near -1 indicate a strong negative linear
relationship.
Values near +1 indicate a strong positive linear
relationship.
If the data sets are samples, the coefficient is rxy.
sxy
rxy
sx s y
xy
If the data sets are populations, the coefficient is .
xy
xy
x y
2003 South-Western/Thomson LearningTM
Slide 64
 Using Excel to Compute the
Covariance and Correlation Coefficient
Formula Worksheet

A B C D E
Average 18-Hole
1 Drive Score
2 277.6 69 Pop. Covariance =COVAR(A2:A7,B2:B7)
3 259.5 71 Samp. Correlation =CORREL(A2:A7,B2:B7)
4 269.1 70
5 267.0 70
6 255.6 71
7 272.9 69
8

2003 South-Western/Thomson LearningTM

Slide 65
 Using Excel to Compute the
Covariance and Correlation Coefficient
Value Worksheet

A B C D E
Average 18-Hole
1 Drive Score
2 277.6 69 Pop. Covariance -5.9
3 259.5 71 Samp. Correlation -0.9631
4 269.1 70
5 267.0 70
6 255.6 71
7 272.9 69
8

2003 South-Western/Thomson LearningTM

Slide 66
 The Weighted Mean and
Working with Grouped Data
Weighted Mean
Mean for Grouped Data
Variance for Grouped Data
Standard Deviation for Grouped Data

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Slide 67
 Weighted Mean

When the mean is computed by giving each data

value a weight that reflects its importance, it is
referred to as a weighted mean.
In the computation of a grade point average (GPA),
the weights are the number of credit hours earned for
each grade.
When data values vary in importance, the analyst
must choose the weight that best reflects the
importance of each value.

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Slide 68
 Weighted Mean

x = wi xi
wi

where:
xi = value of observation i
wi = weight for observation i

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Slide 69
 Grouped Data

The weighted mean computation can be used to

obtain approximations of the mean, variance, and
standard deviation for the grouped data.
To compute the weighted mean, we treat the
midpoint of each class as though it were the mean of
all items in the class.
We compute a weighted mean of the class midpoints
using the class frequencies as weights.
Similarly, in computing the variance and standard
deviation, the class frequencies are used as weights.

2003 South-Western/Thomson LearningTM

Slide 70
 Mean for Grouped Data

Sample Data

x
fM
i i

f i

Population Data

fM
i i

N
where:
fi = frequency of class i
Mi = midpoint of class i

2003 South-Western/Thomson LearningTM

Slide 71
 Example: Apartment Rents

Given below is the previous sample of monthly rents

for one-bedroom apartments presented here as grouped
data in the form of a frequency distribution.
Rent ($) Frequency
420-439 8
440-459 17
460-479 12
480-499 8
500-519 7
520-539 4
540-559 2
560-579 4
580-599 2
600-619 6
2003 South-Western/Thomson LearningTM
Slide 72
 Example: Apartment Rents

Mean for Grouped Data

Rent ($) fi Mi f iMi
420-439 8 429.5 3436.0 34, 525
x 493. 21
440-459 17 449.5 7641.5 70
460-479 12 469.5 5634.0 This approximation
480-499 8 489.5 3916.0
differs by $2.41 from
500-519 7 509.5 3566.5
520-539 4 529.5 2118.0 the actual sample
540-559 2 549.5 1099.0 mean of $490.80.
560-579 4 569.5 2278.0
580-599 2 589.5 1179.0
600-619 6 609.5 3657.0
Total 70 34525.0

2003 South-Western/Thomson LearningTM

Slide 73
 Variance for Grouped Data

Sample Data
f ( M x ) 2
s2 i i
n 1
Population Data

f ( M ) 2
2 i i
N

2003 South-Western/Thomson LearningTM

Slide 74
 Example: Apartment Rents

Variance for Grouped Data

s2 3, 017.89

Standard Deviation for Grouped Data

s 3, 017.89 54. 94
This approximation differs by only $.20
from the actual standard deviation of $54.74.

2003 South-Western/Thomson LearningTM

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 End of Chapter 3

2003 South-Western/Thomson LearningTM

Slide 76