Chapter-1

Introduction and Descriptive

Statistics
Dr. Srilakshminarayana.G

Learning Objectives
After studying this chapter, we should be able to:

Difference between cross-sectional data and time-series data

Distinguish between qualitative data and quantitative data.
Describe nominal, ordinal, interval, and ratio scales of measurements.
Different types of charts that describe data sets.
Explain measures of central tendency, dispersion and how to compute
them.
Use Excel to create charts and compute various measures.

What is Statistics?
Statistics is a science that helps us make better decisions
in business and economics as well as in other fields.
Statistics teaches us how to summarize, analyze, and
draw meaningful inferences from data that then lead to
improve decisions.
These decisions that we make help us improve the
running, for example, a department, a company, the
entire economy, etc.

Using Statistics (Two Categories)

Descriptive Statistics
Collect
Organize
Summarize
Display
Analyze

Inferential Statistics
Predict and forecast
values of population
parameters
Test hypotheses about
values of population
parameters
Make decisions

Cross-Sectional data and Time-Series data

Cross-Sectional data: Data collected at a given point of time or during a

time interval.
Examples:
1. Information gathered about the quality of a product from a group of
respondents involved in a market research.
2. Ratings given by the employees about the facilities provided in the
organization.
3. Closing stock price of 25 stocks collected on 25.06.2014.
4. Information gathered from market regarding the satisfaction levels of the
customers.

Time series data: Data collected at different time points regarding a characteristic
under study. Data change as the time changes.
Examples
1. Daily, monthly, yearly sales of a product.
2. Gross revenue of an organization taken for the last 10 years.
3. Budget allotment for a sector.
4. Prices of a stock that change with change in time.
5. Petrol prices of a nation that change with time.
6. Production of units that change monthly.

Types of Variables - Two Types

Qualitative - Categorical or Nominal:
Examples areColor
Gender
Nationality

Quantitative - Measurable or Countable:

Examples areTemperatures
Salaries
Number of points scored on a 100 point exam

Example 1
Realtors who help sell condominiums in the Boston area provide
prospective buyers with the information given in Table 11.
Which of the variables in the table are quantitative and which
are qualitative?

Example-2
The election commissioner wants to know the details of the parties and
their spread over different constituencies. The following table has been
given to him. Identify the quantitative variables and qualitative variables
S.No

Party
Name

Number of
candidates

Zone

Number of
Voters

Amount
Spent

Party-A

14

A, E, D

1,25,000

2,75,000

Party-B

20

B, D, E

1,27,000

2,25,000

Party-C

21

A, B, C

2,15,000

2,75,000

Party-D

20

D, E, F

2,00,000

2,40,000

Party-E

18

A, B, D

1,75,000

2,15,000

Party-F

15

D, E, F

1,25,000

2,20,000

Party-G

16

F, G, E

1,30,000

2,10,000

Scales of Measurement
Nominal Scale - groups or classes
Gender, color, professional classification, etc.
Ordinal Scale - order matters
Ranks (top ten videos, products, etc.)
Interval Scale - difference or distance matters has arbitrary zero value.
Temperatures (0F, 0C), marks, time,
Ratio Scale - Ratio matters has a natural zero value.
Salaries, Sales, costs, market share, number of purchasers, distance
travelled, etc.

Nominal Scale
In the nominal scale of measurement, numbers are used simply as labels for
groups or classes.
If our data set consists of blue, green, and red items, we may designate blue as 1,
green as 2, and red as 3. In this case, the numbers 1, 2, and 3 stand only for the
category to which a data point belongs. Nominal stands for name of
category.
The nominal scale of measurement is used for qualitative rather than
quantitative data: blue, green, red; male, female; professional classification;
geographic classification; and so on.

Ordinal Scale
In the ordinal scale of measurement, data elements may be ordered
according to their relative size or quality.
Four products ranked by a consumer may be ranked as 1, 2, 3, and 4,
where 4 is the best and 1 is the worst. In this scale of measurement we do
not know how much better one product is than others, only that it is
better.

Interval Scale
In the interval scale of measurement the value of zero is assigned arbitrarily and
therefore we cannot take ratios of two measurements. But we can take ratios of
intervals. A good example is how we measure time of day, which is in an interval
scale. We cannot say 10:00 A.M. is twice as long as 5:00 A.M. But we can say that
the interval between 0:00 A.M. (midnight) and 10:00 A.M., which is a duration of
10 hours, is twice as long as the interval between 0:00 A.M. and 5:00 A.M., which
is a duration of 5 hours. This is because 0:00 A.M. does not mean absence of any
time. Another example is temperature. When we say 0F, we do not mean zero heat.
A temperature of 100F is not twice as hot as 50F.

Ratio Scale
If two measurements are in ratio scale, then we can take ratios of those
measurements. The zero in this scale is an absolute zero. Money, for
example, is measured in a ratio scale. A sum of $100 is twice as large as
$50. A sum of $0 means absence of any money and is thus an absolute
zero. We have already seen that measurement of duration (but not time of
day) is in a ratio scale. In general, the interval between two interval scale
measurements will be in ratio scale. Other examples of the ratio scale are
measurements of weight, volume, area, or length.

Example 1
The HR manager of an organization wishes to identify employees
satisfaction level with respect to the working conditions of the
organization. The following questionnaire was formulated to get the
details from the employees. The questionnaire was divided into two
sections. The first section includes demographic characteristics of
the respondents. The other section focus on their satisfaction levels
with respect to different parameters.

Questionnaire for the study on employee satisfaction:

Kindly fill the questionnaire by giving a tick on the appropriate box for the questions.

1. Age
< 20
20-30
30-40
40-50
> 50

2. Experience
<1 yr
1-2
2-4
4-8
8-15
>15

3. Gender
male
female

4. Marital status
married
unmarried

5. Position
6. Department

Working conditions and hygiene issues

1. Satisfaction with the surrounding environment and general layout of
office
Extremely
satisfied

very
satisfied

moderately
satisfied

slightly
satisfied

not at all
satisfied

2. Satisfaction with the geographically situated workplace

Extremely
satisfied

very
satisfied

moderately
satisfied

slightly
satisfied

not at all
satisfied

3. Satisfaction of parking facility

Extremely
satisfied

moderately
very satisfied satisfied

slightly
satisfied

not at all
satisfied

slightly
satisfied

not at all
satisfied

4. Satisfaction of canteen facility

Extremely
satisfied

moderately
very satisfied satisfied

Example-2
A survey by an electric company contains questions on the following:
1. Age of household head.
2. Gender of household head.
3. Number of people in household.
4. Use of electric heating (yes or no).
5. Number of large appliances used daily.
6. Average number of hours heating is on.
7. Average number of heating days.
8. Household income.
9. Average monthly electric bill.
10. Ranking of this electric company as compared with two previous electricity suppliers.

Example-3
An individual federal tax return form asks, among other things, for the
following information: income (in dollars and cents), number of
dependents, whether filing singly or jointly with a spouse, whether or
not deductions are itemized, amount paid in local taxes. Describe the
scale of measurement of each variable, and state whether the variable is
qualitative or quantitative.

Example-4
Describe each of the following variables as qualitative (categorical) or
quantitative