Chapter 1

The Nature of Probability and

Statistics
 Introduction
Statistics is the science of conducting
studies to collect, organise, summarise,
analyse, and draw conclusions from
data.
 Some Examples
IRELAND FACTS
• Population: 4 million
• Capital: Dublin
• Major languages:English, Irish
• Major religion: Christianity
• Life expectancy: 74 years (men), 80 years
(women) (UN)
(BBC Website)
 Use of Statistics in Business
* Quality control: Statistical quality-control
procedures assure high product quality and
enhance productivity.
*Product planning: Statistical methods are used
to analyse economic factors and business trends
and to prepare detailed budgets, inventory
control systems, and realistic sales quotas.
*Forecasting: Statistics are used to predict
sales, productivity, and employment trends.
 Descriptive and Inferential Statistics
*Descriptive statistics consists of the collection,
organisation, summarisation, and presentation
of data.
*Inferential statistics consists of generalising
from samples to populations, performing
estimations, hypothesis testing, determining
relationships among variables, and making
predictions.
 Basic Vocabulary
* Probability is the chance of an event
occurring.
*A population consists of all subjects that are
being studied.
* A sample is a group of subjects selected from
a population.
 Populations and Samples
You use inferential statistics to form conclusions
about a large group – a population – by collecting a
portion of it – a sample. The analyst decides what
the population is. Typically, the population is so
large that it would be nearly impossible to obtain
information about every item in it. In stead, we
obtain information about selected members and
attempt to draw a conclusion about all members.
In other words, we attempt to infer something
about the population using information about only
some of the members of this population.
 Example
If we are interested in measuring the salaries of
high-school teachers in Cyprus;
-List of salaries of every high-school teacher in
Cyprus is the example of POPULATION data set.
- List of salaries by selecting 20 high-school
teachers from a across the country is the
example of SAMPLE data set.
 Variables and Data
* In order to gain knowledge about seemingly
haphazard events, statisticians collect
information for variables that describe the
events.

* A variable is a characteristic or attribute that

can assume different values.
* Data are the values that variables can assume.
 Variables and Data (cont’d.)

* A data set is a collection of data values.

* Each value in the data set is called a data
value or a datum.
* Random variables have values that are
determined by chance.
 Variables and Types of Data
* Qualitative variables can be placed into
distinct categories according to some
characteristic or attribute. Example: Colours of
cars, Gender, Religious preference, Ethnic
group, Nationality
* Quantitative variables are numerical in
nature and can be ordered or ranked. Example:
Number of pages in the statistics textbook,
Capacity of students in a Classroom, Weights of
fish caught today by fisher men
 Variables and Types of Data (cont’d.)
Quantitative variables can be further classified
into two groups.
•Discrete variables assume values that can be
counted.

* Continuous variables can assume all values

between any two specific values.
 Levels of Measurement
1-Nominal:classifies data into mutually
exclusive (nonoverlapping), exhausting
categories in which no order or ranking can be
imposed on the data.

2-Ordinal: classifies data into categories that

can be ranked; however, precise differences
between the ranks do not exist.
 Levels of Measurement (cont’d)

3- Interval:ranks data, and precise differences

between units of measure do exist; however,
there is no meaningful zero.

4- Ratio: possesses all the characteristics of

interval measurement, and there exists a true
zero.
Data Collection and Sampling
Techniques

*Telephone surveys

*Mailed questionnaire surveys

*Personal interviews
 Sampling Methods
•Random samples are selected using chance
methods or random methods.

•Researchers obtain systematic samples by

numbering each subject of the populations and
then selecting every kth number.
 Sampling Methods
Investigating the whole population is often impossible
due to expense, time, or size of population etc. Using
samples saves time and money and, in some cases,
enables the researcher to get more detailed
information about a particular subject. Samples
cannot be selected in haphazard ways because the
information obtained might be biased.
To obtain samples that are unbiased - i.e. give each
subject in the population an equally likely chance of
being selected - statisticians use four basic methods of
sampling: random, systematic, stratified, and cluster
sampling.
 Sampling Methods (Cont’d)
*Researchers select stratified samples by
dividing the population into groups according to
some characteristic that is important to the
study, then sampling from each group.

*Researchers select cluster samples by using

intact groups called clusters.
 Observational and Experimental
Studies
In an observational study, the researcher
merely observes what is happening or what has
happened in the past and tries to draw
conclusions based on these observations.

In an experimental study, the researcher

manipulates one of the variables and tries to
determine how the manipulation influences
other variables.
 Computers and Calculators

In the past, statistical calculations were done

with pencil and paper. However, with the
advent of calculators, numerical
computations became easier.

Excel, MINITAB, SPSS

 Conclusion
The applications of statistics are many
and varied. People encounter them in
everyday life, such as in reading
newspapers or magazines, listening to
the radio, or watching television.
 Summary
􀂄 The two major areas of statistics are descriptive and
inferential.
􀂄 When the populations to be studied are large,
statisticians use subgroups called samples.
􀂄 The four basic methods for obtaining samples are:
random, systematic, stratified, and cluster.
􀂄 Data can be classified as qualitative or quantitative.
􀂄 The four basic types of measurement are nominal,
ordinal, interval, and ratio.
􀂄 The two basic types of statistical studies are
observational and experimental.