What does Statistics Mean?

• Descriptive statistics
– Number of people
– Trends in employment
– Data
• Inferential statistics
– Make an inference about a population from a
sample
Population Parameter Versus
Sample Statistics
 Population Parameter
• Variables in a population
• Measured characteristics of a population
• Greek lower-case letters as notation
 Sample Statistics
• Variables in a sample
• Measures computed from data
• English letters for notation
 Making Data Usable
• Frequency distributions
• Proportions
• Central tendency
– Mean
– Median
– Mode
• Measures of dispersion
 Frequency Distribution of
Deposits

Frequency (number of
people making deposits
Amount in each range)

less than $3,000 499

$3,000 - $4,999 530
$5,000 - $9,999 562
$10,000 - $14,999 718
$15,000 or more 811
3,120
 Percentage Distribution of
Amounts of Deposits

Amount Percent
less than $3,000 16
$3,000 - $4,999 17
$5,000 - $9,999 18
$10,000 - $14,999 23
$15,000 or more 26
100
 Probability Distribution of
Amounts of Deposits

Amount Probability
less than $3,000 .16
$3,000 - $4,999 .17
$5,000 - $9,999 .18
$10,000 - $14,999 .23
$15,000 or more .26
1.00
 Measures of Central Tendency
• Mean - arithmetic average
– µ, Population; X , sample
• Median - midpoint of the distribution
• Mode - the value that occurs most often
Population Mean

 Xi
 
N
Sample Mean

 Xi
X
n
Sales for Products A and B,
Both Average 200
Product A Product B
196 150
198 160
199 176
199 181
200 192
200 200
200 201
201 202
201 213
201 224
202 240
202 261
 Measures of Dispersion
or Spread
• Range
• Mean absolute deviation
• Variance
• Standard deviation
 The Range
as a Measure of Spread
• The range is the distance between the smallest
and the largest value in the set.
• Range = largest value – smallest value
Mean Squared Deviation

(Xi  X)
2

n
 The Variance

Population
 2

Sample
2
S
 Variance

 X  X ) 2
S 
2

n 1
 Variance
• The variance is given in squared units
• The standard deviation is the square root of
variance:
Sample Standard Deviation

S 

 Xi X2
n1
 Class Data Histogram
less than $3,000 499
$3,000 - $4,999 530
$5,000 - $9,999 562
$10,000 - $14,999 718
$15,000 or more 811
3,120
900
800
700
600
500
400
300
200
100
0
 Mean

 f . Xm
X
n
 Standard Deviation

2
 f .X
  2
f .X /n
m  
m
S    
n1
 Other Measures
n
HM 
• Harmonic Mean 1/ x

xxx x
GM  n 1. 2. 3..........
. n
• Geometric Mean

2
x
• Quadratic Mean QM 
n
 The Normal Distribution
• Normal curve
• Bell shaped
• Almost all of its values are within plus or
minus 3 standard deviations
• I.Q. is an example
• Skewness: Pearson’s index of skewness (-1to+1)
3 x  median 
 
PI 
s
Normal Distribution

 x  
2

2 2
Standardized Normal Distribution

• Symetrical about its mean

• Mean identifies highest point
• Infinite number of cases - a continuous
distribution
• Area under curve has a probability density = 1.0
• Mean of zero, standard deviation of 1
The Standardized Normal is the
Distribution of Z

–z +z
 Linear Transformation of Any Normal
Variable Into a Standardized Normal Variable

s s

m m X

Sometimes the Sometimes the

scale is stretched scale is shrunk

x
z


-2 -1 0 1 2
Also called Z scores
 Parameter Estimates
• Point estimates
• Confidence interval estimates
• Population distribution

• Sample distribution

• Sampling distribution
Distribution Mean Standard


Deviation
Population 
Sample S
X

Sampling X SX
 Central Limit Theorem

 S
S x
 S 
n x
n
Standard Error of the Mean Estimating the Standard Error
of the Mean

X  
 S
X    Zcl
n
Random Sampling Error and
Sample Size are Related
 Sample Size
• Variance (standard
deviation)
• Magnitude of error
• Confidence level
Sample Size Formula

 zs 
n 
E
Sample Size Formula - Example

Suppose a survey researcher, studying

expenditures on juices, wishes to have a
95 percent confident level (Z) and a
range of error (E) of less than $2.00. The
estimate of the standard deviation is
$29.00.
Sample Size Formula - Example

1  
2 2
 zs .96 29
.00 
n     
 E  2 .00 
2
56.84
   28
.
42 2
808
 2.00
 Finite Population Correction Factor

N n
N 1

Multiply the sample size calculated by

this factor
 Proportions
Standard Error of the proportion. Sp

Normal Approximation to Binomial Distribution

If np≥5, nq≤5 where q=1-p

  np
  npq
Confidence Interval for a
Proportion
x    z
x  np  z npq
x np npq
  z 2
n n n
pq
pˆ  p  z
n
 Sample Size for a Proportion
Z pq 2

n
Where: E 2
n = Number of items in samples

Z2 = The square of the confidence interval

in standard error units.

p = Estimated proportion of success

q = (1-p) or estimated the proportion of failures

E2 = The square of the maximum allowance for error

between the true proportion and sample proportion
 Calculating Sample Size
at the 95% Confidence Level

p = .6 (1. 96 )2(. 6)(. 4 )

n=
q = .4 ( . 035 )2
(3. 8416)(. 24)
=
001225
. 922
=
. 001225
= 753
So Simple !!!