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QUANTITATIVE TECHNIQUES IN BUSINESS QTB

INFERENTIAL STATISTICS


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INFERENTIAL STATISTICS
1. Lesson Objectives
After studying this session you would be able to
1. Understand and infer results from data in order to answer the associational and
differential research questions using different parametric and non parametric tests.
2. Understand, implement and interpret the chi-square, phi and cramers V
3. understand, implement and interpret the correlation statistics
4. understand, implement and interpret the regression statistics
5. understand, implement and interpret the T-test statistics
Lesson Outline
1. Non parametric test.
1. Chi square /Fisher exact
2. Phi and cramers v
3. Kendall tau-b
4. Eta
2. Parametric test
1. Correlation
1. Pearson correlation
2. Spearman correlation
2. Regression
1. Simple regression
2. Multiple regression
3. T-Test
1. One-sample T-test
2. Independent sample T-test
3. Paired sample T-test

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INFERENTIAL STATISTICS

Inferential statistics are used to make inferences (conclusions) about a population from a
sample based on the statistical relationships or differences between two or more variables using
statistical tests with the assumption that sampling is random in order to generalize or make
predictions about the future.

Why we use inferential Statistics:-
Inferential statistics are used
1. To test some hypothesis either to check relationship between variables (two/more) or to
compare two groups to measure the differences among them.
2. To generalize the results about a population from a sample
3. To make predictions about the future.
4. To make conclusions
You don't need to understand the underlying calculus, but you do need to know which inferential
statistic is appropriate to use and how to interpret it.
Some basic concepts about inferential statistics
1. Statistical significance (The p value)
Statistical significance test is the test of a null hypothesis H
o
which is a hypothesis that we attempt to
reject or nullify. i.e.
H
o
=There is no relationship /Difference between variable 1 and variable 2
When we apply any inferential statistic, it gives us significance value (called p value). If the p value is
less than 5% then the test result is said to be significant at the 5% level. The term significant means
that the test signifies or points to the conclusion that there is evidence against the truth of the null
hypothesis. The comparison of p with 5% is a standard method often used by researchers, but it is
better to report and interpret the actual values of p.
Interpretation
If the p value is greater than 0.05 than it means that H
o
is accepted and H
1
is rejected. It relates that
there is no relationship/difference between the variables/groups.
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If the p value is less than or equal to 0.05 than it means that H
o
is rejected and H
1
is accepted. It
relates that there is relationship/difference between the variables/groups. A higher p value means
that the relationship is lesser significant and a smaller p value means that the relationship is highly
significant.
2. Confidence Interval
Confidence interval is a range of values constructed for a variable of interest so that this
range has a specified probability of including the true value of the variable. The specified
probability is called the confidence level, and the end points of the confidence interval are
called the confidence limits.

It is one of the alternatives to null hypothesis significance testing (NHST). These intervals
provide more information then NHST and may provide more practical information. For
example, suppose one knew that an increase in reading scores of five points, obtained on a
particular instrument, would lead to a functional increase in reading performance.
Two different methods of instruction were compared. The result showed that students who used
this new method scored significantly higher statistically than those who used the other method.
According to NHST, we would reject the null hypothesis of no difference between methods and
conclude that the new method is better. If we apply confidence intervals to this same study, we can
determine an interval that contains the population mean difference 95% of the time. If the lower
bound of that interval is greater than five points, we can conclude that using this method of
instruction would lead to a practical or functional increase in reading levels. If, however, the
confidence interval ranged from say 1 to 11, the result would be statistically significant, but the
mean difference in the population could be as little as 1 point, or as big as 11 points. Given these
results, we could not be confident that there would be a practical increase in reading using the new
method.
3. The effect size (weak, moderate or strong)
Effect size is the strength of the relationship between the independent variable and the dependent
variable, and/or the magnitude of the difference between levels of the independent variable with
respect to the dependent variable.
A statistically significant outcome does not give information about the strength or size of the
outcome. Therefore, it is important to know, the size of the effect. Statisticians have proposed many
effect size measures that fall mainly into two types of families, the r family and the d family.
Interpreting Effect Sizes
Effect sizes always have an absolute value between -1.0 and +1.0. According to Cohen (1988) we can
interpret the effect size (r/d) as follows

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0 No effect No relationship
>0 0.33 Small effect Weak relationship
>0.33 0.70 Medium/typical effect Moderate
relationship
>0.70 <1 Large effect Strong relationship
1 Maximum effect Perfect relationship
Steps in interpreting inferential statistics
1. Relate why a test is applied
2. Discuss for which variable the test is applied
3. Elaborate whether the null hypothesis is rejected or accepted w.r.t. p value
As discussed above if the significance (p) value is less than 0.05 then H
O
is rejected and H
1
is
accepted, conversely if the significance value is greater than 0.05 then H
O
is accepted and H
1
is
rejected
4. State what is the direction of the effect
5. For associational research question indicate whether the association or relationship is
positive or negative
6. For differential research question state which group performed better?
7. Conclude the results
Types of tests used in Inferential Statistics
Inferential statistics include a wide variety of tests to infer the results. This variety of tests can be
classified in two broader categories that are
1. Non parametric tests
2. Parametric tests
Following is the detailed discussion related to both types of tests.
1. Non parametric test
Non parametric tests are the statistical tests that are used
1. When the level of measurement is nominal or ordinal. E.g. chi-square test or Kendalls tau-b.
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2. When assumptions about normal distribution in the population is not met e.g. spearman
correlation
Non parametric tests involve
1. Chi-Square test
2. Kend
3. alls tau-b
4. Eta
5. Spearman correlation (will be discussed in correlation section)
Lets see these tests in detail.
Chi-Squared Test
Chi-Squared test is the most commonly used non-parametric test to check the association
between two nominal variables in order to accept or reject the null hypothesis.
Hypothesis for Chi-Square Test
H
o
= there is no association between gender and geometry in h.s.
H
1
= There is association between gender and geometry in h.s.
It is used to check
1. The association between two nominal variables
2. Compare two or more groups if they are categorical in nature
Assumptions and Conditions for the Chi-Squared test
1. The data of the variables must be independent. Each subject is assessed only once.
2. Both the variables are nominal.
3. All the expected counts are greater than 1 for chi-square.
4. At least 80% of the expected frequencies should be greater than or equal to 5.
Checking the assumptions for the Chi-Squared test
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The assumptions for Chi-squared test are checked through cross tabulation of the
categorical variables. It can be drawn by
1. Click the analyze menu
2. Select the descriptive statistics option
3. Select crosstabs option in the sub menu
4. Put geometry in h.s. in rows section and gender in columns section
5. Check chi-squared, phi and Cramers v from statistics tab
6. Check observed, expected and total from cells tab
7. Click continue then ok to get the following crosstabs in output window

geometry in h.s. * gender Crosstabulation

gender
Total

male female
geometry in h.s. not taken Count 10 29 39
Expected Count 17.7 21.3 39.0
% of Total 13.3% 38.7% 52.0%
Taken Count 24 12 36
Expected Count 16.3 19.7 36.0
% of Total 32.0% 16.0% 48.0%
Total Count 34 41 75
Expected Count 34.0 41.0 75.0
% of Total 45.3% 54.7% 100.0%

1. Check if all the values of expected counts are greater than one (excluding total column and
the total row)
2. Check if the 80% values of expected counts are greater than 5. You can calculate the
percentage using following formula



Number of cells with expected counts greater than 5 100
Total number of cells
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3. If the assumptions are fulfilled then use significance value of Pearson chi-square as
highlighted below
4. If the assumptions for chi-square are not fulfilled then select the significance value of
Fishers exact test
5. To check the strength of the relationship (effect size) use the value of Phi for 2x2 crosstab
and value of Cramers V for 3x3 crosstab. Remember that both Phi and Cramers v have
similar values for 2x3 and 3x2 crosstabs
Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent
geometry in h.s. * gender
75 100.0% 0 .0% 75 100.0%

Chi-Square Tests


Value df
Asymp. Sig. (2-
sided)
Exact Sig. (2-
sided)
Exact Sig. (1-
sided)
Pearson Chi-Square 12.714
a
1 .000

Continuity Correction
b
11.112 1 .001

Likelihood Ratio 13.086 1 .000

Fisher's Exact Test

.000 .000
Linear-by-Linear Association 12.544 1 .000

N of Valid Cases
b
75

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 16.32.
b. Computed only for a 2x2 table

Symmetric Measures

Value Approx. Sig.
Nominal by Nominal Phi -.412 .000
Cramer's V .412 .000
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Interpretation:

To check the association between gender and geometry in h.s. chi-square test is conducted. The
case processing summary table indicates that there is no participant with missing value. The
assumptions are checked through crosstabs. The Crosstabulation table includes the Counts and
Expected Counts, and their relative percentages within gender. The result shows that there are
24 males who had taken geometry which is 71% of total 34 male students. On the other hand,
12 of 41 females took geometry; that is only 29% of the females. It looks like a higher
percentage of males took geometry than female students. The Ch-Square Test table tell us
whether we can be confident that this apparent difference is not due to chance.

Note: it is noted very carefully that, we use the Pearson Chi-Square or (for small samples) the
Fishers exact test to interpret the results of the test.
Note, in the Cross Tabulation table, that the Expected Count of the number of male students
who didnt take geometry is 17.7 and the observed or actual Count is 10. Thus, there are 7.7
fewer males who didnt take geometry than would be expected by chance, given the Totals
shown in the Table. There are also the same discrepancies between observed and expected
counts in the other three cells of the table. A question answered by the chi-square test is
whether these discrepancies between observed and expected counts are bigger than one might
expect by chance.

The Chi-Square Tests table is used to determine if there is a statistically significant relationship
between two dichotomous or nominal variables. It tells you whether the relationship is
statistically significant but does not indicate the strength of the relationship, like phi or a
correlation does. In output, we use the Pearson Chi-Square or (for small samples) the Fishers
exact test to interpret the results of the test. They are statistically significant (p < .001), which
indicates that we can be quite certain that males and females are different on whether they
take geometry.

Phi is -.412, and like the chi-square, it is statistically significant. Phi is also a measure of effect
size for an associational statistic and, in this case, effect size is moderate according to Cohen
(1988)

KENDALLS TAU-B
If the variables are ordered (i.e. ordinal), you have several other choices. We will use Kendalls
tau-b in this problem.

Example:
What is the relationship or association between fathers education and mothers education?

1. Analyze Descriptive Statistics Crosstabs.
N of Valid Cases 75

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2. Click on Reset to clear the previous entries.
3. Put mothers education revised in the Rows box and fathers education revised in the
columns box.
4. Click on Cells and ask that the Observed and Expected cell counts and Total percentages
be printed in the table. Click on Continue and then Statistics.
5. Request the following Statistics: Kendalls tau-b coefficient under ordinal, and Phi and
Cramers V under nominal (for comparison purposes). Do not check Chi-Square.
6. Click on Continue
7. Click on OK.

Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent
mother education
revised * father
education revised
73 97.3% 2 2.7% 75 100.0%









mother education revised * father education revised Crosstabulation

father education revised
Total

1 2 3
mother education
revised
1 Count 43 8 2 53
Expected Count 35.6 13.1 4.4 53.0
% of Total 58.9% 11.0% 2.7% 72.6%
2 Count 6 10 2 18
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Expected Count 12.1 4.4 1.5 18.0
% of Total 8.2% 13.7% 2.7% 24.7%
3 Count 0 0 2 2
Expected Count 1.3 .5 .2 2.0
% of Total .0% .0% 2.7% 2.7%
Total Count 49 18 6 73
Expected Count 49.0 18.0 6.0 73.0
% of Total 67.1% 24.7% 8.2% 100.0%



Symmetric Measures

Value
Asymp.
Std. Error
a

Approx.
T
b

Approx.
Sig.
Ordinal by Ordinal Kendall's tau-b
.494 .108 3.846 .000
N of Valid Cases 73

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.

Interpretation:
To investigate the relationship between fathers education and mothers education, Kendalls
tau-b was used. The analysis indicated a significant positive association between fathers
education and mothers education, tau =.494, p<.001. This means that more highly educated
fathers were married to more highly educated mothers and less educated fathers were married
to less educated mothers. This tau is considered to be a large effect size (Cohen, 1988).
ETA
If one variable is nominal and the other is scale then ETA is the appropriate test used to check
the relationship between the two variables. Eta is calculated for both variables. First you should
decide the dependent variable and consider the Eta value of that variable.
Example: What is the association between gender and number of math courses taken? How
strong is it?
8. Analyze Descriptive Statistics Crosstabs.
9. Click on Reset to clear the previous entries.
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10. Put math courses taken in the Rows box and gender in the columns box.
11. Click the Statistics and select Eta.
12. Click Continue
13. Click OK to get following results
Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent
math courses taken *
gender
75 100.0% 0 .0% 75 100.0%
math courses taken * gender Crosstabulation


Gender
Total

Male female
math courses
taken
0 Count 4 12 16
Expected Count 7.3 8.7 16.0
1 Count 3 13 16
Expected Count 7.3 8.7 16.0
2 Count 9 6 15
Expected Count 6.8 8.2 15.0
3 Count 6 2 8
Expected Count 3.6 4.4 8.0
4 Count 7 5 12
Expected Count 5.4 6.6 12.0
5 Count 5 3 8
Expected Count 3.6 4.4 8.0
Total Count 34 41 75
Expected Count 34.0 41.0 75.0
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Directional Measures

Value
Nominal by
Interval
Eta math courses taken
Dependent
.328
gender Dependent .419

Interpretation
Eta was used to investigate the strength of the association between gender and number of
math courses taken (eta=.33). This is a weak to medium effect size (Cohen, 1988). Males were
more likely to take several or all the math courses than females.

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Class Activity Session 6
Pleuse show ull work und expluln your unswers.

1. Popcorn sules ln movle theuters breuk down us 40% pluln popcorn und 60% buttered
popcorn. Whlle 65% of the pluln popcorn ls purchused by udults, 80% of the
buttered popcorn ls purchused by chlldren. If u chlld purchuses popcorn, whut ls the
probublllty thut lt ls buttered popcorn?

(guldellnes: develop u |olnt-probublllty tuble. Note thut the problem ls usklng thut you
compute u condltlonul probublllty)

2. A process follows the blnomlul dlstrlbutlon wlth n = 7 und p = .4. Flnd
u. P(x = 3)
b. P(x > 5)
c. P(x e 2)

1. 6cores on un endurunce test for curdluc putlents ure normully dlstrlbuted wlth meun =
200 und stundurd devlutlon = 30.
u. Whut ls the probublllty u putlent wlll score ubove 206?
b. Whut percentuge of putlents score below 155?
c. Whut score does u putlent ut the 25th percentlle recelve?

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2. A culculus lnstructor uses computer ulded lnstructlon und ullows students to tuke the
mldterm exum us muny tlmes us needed untll u pusslng grude ls obtulned. Followlng
ls u record of the number of students ln u cluss of 20 who took the test euch number
of tlmes.

6tudents Number of tests

7 1
6 2
4 3
2 4
1 5

u. use the relutlve frequency upprouch to construct u probublllty dlstrlbutlon
b. show thut lt sutlsfles the requlred condltlon for belng u probublllty dlstrlbutlon.
c. Flnd the expected vulue of the number of tests tuken.

5. For the puyoff tuble below, the declslon muker wlll use P(s
1
) = .15, P(s
2
) = .5, und P(s
3
) = .35.

s
1
s
2
s
3

d
1
-5000 1000 10,000
d
2
-15,000 -2000 40,000

u. Whut ulternutlve would be chosen uccordlng to expected vulue?

b. For u lottery huvlng u puyoff of 40,000 wlth probublllty p und -15,000 wlth probublllty
(1-p), the declslon muker expressed the followlng lndlfference probubllltles.

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Puyoff Probublllty
10,000 .85
1000 .60
-2000 .53
-5000 .50

Let U(40,000) = 10 und U(-15,000) = 0 und flnd the utlllty vulue for euch puyoff.

c. Whut ulternutlve would be chosen uccordlng to expected utlllty?



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CORRELATION & REGRESSION
Inferential Statistics








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Correlation
Correlation is a statistical process that determines the mutual (reciprocal) relationship between two (or
more) variables which are thought to be mutually related in a way that systematic changes in the value
of one variable are accompanied by systematic changes in the other and vice versa.
It is used to determine
1. The existence of mutual relationship that is defined by the significance (p) value.
2. The direction of relationship that is defined by the sign (+,-) of the test value
3. The strength of relationship that is defined by the test value
Correlation Coefficient (r)
The correlation coefficient measures the strength of linear relationship between two or more
numerical variables. The value of correlation coefficient can vary from -1.0 (a perfect negative
correlation or association) through 0.0 (no correlation) to +1.0 (a perfect positive correlation).
Note that +1 and -1 are equally high or strong, but they lead to different interpretations. A high
positive correlation between anxiety and grades would mean that students with higher anxiety
tended to have higher grades, those with lower anxiety had lower grades, and those in between
had grades that were neither especially high nor especially low. A high negative correlation
would mean that students with high anxiety tended to have low grades; also high grades would
be associated with low anxiety. With a zero correlation there are no consistent associations. A
student with high anxiety might have low, high or medium grades.
There are two types of correlation
1. Pearson Correlation
2. Spearman Correlation
1. Pearson Correlation
The Pearson Correlation is used when you have two variables that are normal/scale An
assumption of the Pearson correlation is that the variables are related in a linear (straight
line) way so we will examine the scatter plots to see if that assumption is reasonable.
Second, the Pearson Correlation, and the Spearman correlation will be computed. and the
Spearman is used when one or both is ordinal.

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1. Assumptions and conditions for Pearson
1. The two variables have a linear relationship.
2. Scores on one variable are normally distributed for each value of the other variable and
vice versa.
3. Outliers (i.e. extreme scores) can have a big effect on the correlation.

1. Checking the assumptions for Pearson Correlation
The assumptions for correlation test are checked through normal curve (normality
assumption) and the scatter plot (linearity assumption)
Normality assumption
1. Click on the analyze menu
2. Select the descriptive statistics option
3. Select frequency option in the sub menu
4. Put math achievement and Satmath in variables box
5. Check skewness in statistics tab and histogram in charts tab
6. Click continue and then ok
7. You will get skewness values showing that the variables are
approximately normally distributed further check the
normality of data through normal curve in histograms using
chart editor



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Statistics

math achievement test scholastic aptitude test - math
N Valid 75 75
Missing 0 0
Skewness .044 .128
Std. Error of Skewness .277 .277

Linearity assumption
8. Click on the graph menu
9. Select legacy dialogue, interactive and then scatter plot
10. Put math achievement in y-axis and satmath in x-axis
11. Click ok to get scatter plot in output window
12. Double click on the scatter plot to get into chart editor
13. Click on the add fit line at total button in tool bar to
get linear line and R square linear = 0.62 close window
14. Repeat the previous step for quadratic line and get R
square = 0.621
15. click apply and close the window
16. Calculate the difference between the two R square (0.621 0.62 = 0.001)
17. If the difference is less than 0.05 (the p value) then the relation is linear (0.001>0.05)
hence apply Pearson correlation
How to apply Pearson Correlation
1. Select analyze then correlate and then bivariate
2. Put math achievement and Satmath in variable box
3. Ensure that Pearson, two tailed, and flag relationships are
checked
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4. Click ok to get follow results in output window
Correlations

math
achievement test
scholastic
aptitude test -
math
math achievement test Pearson Correlation 1 .788
**

Sig. (2-tailed)

.000
N 75 75
scholastic aptitude test
math
Pearson Correlation .788
**
1
Sig. (2-tailed) .000

N 75 75
**. Correlation is significant at the 0.01 level (2-tailed).


Interpretation
To investigate if there was a statistically significant association between Scholastic aptitude test
and math achievement, a correlation was computed. Both the variables were approximately
normal there is linear relationship between them hence fulfilling the assumptions for Pearson's
correlation. Thus, the Pearsons r is calculated, r= 0.79, p < .001 relating that there is highly
significant relationship between the variables. The positive sign of the Pearson's test value
shows that there is positive relationship, which means that students who have high scores in
math achievement test do have high scores in scholastic aptitude test and vice versa. Using
Cohens (1988) guidelines the effect size is large relating that there is strong relationship
between math achievement and scholastic aptitude test.



Spearman Correlation:
If the assumptions for Pearson correlation are not fulfilled then consider the Spearman
correlation with the assumption that the Relationship between two variables is monotonically
non-linear
Example: what is the association between mothers education and math achievement?
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1. Analyze Correlate Bivariate.
2. Move math achievement and mothers education to the variables box
3. Next ensure that the spearman and Pearson boxes are checked.
4. Make sure that the two-tailed (under test of significance), flag significant correlations
and two-tailed are checked
5. Now click on options and check means and standard deviations and click on exclude
cases list wise.
6. Click on continue and click on Ok

Correlations
a


mother's
education
math
achieveme
nt test
Spearman's
rho
mother's
education
Correlation
Coefficient
1.000 3.15
**

Sig. (2-tailed) . .006
math
achievement test
Correlation
Coefficient
.315
**
1.000
Sig. (2-tailed) .006 .

Interpretation
To investigate if there was a statistically significant association between mothers education and math
achievement, a correlation was computed. Mothers education was skewed (skewness=1.13), which
violated the assumption of normality. Thus, the spearman rho statistic was calculated, r, (73) = .32, p =
.006. The direction of the correlation was positive, which means that students who have highly educated
mothers tend to have higher math achievement test scores and vice versa. Using Cohens (1988)
guidelines the effect size is medium for studies in his area. The r
2
indicates that approximately 10% of
the variance in math achievement test score can be predicted from mothers education.

REGRESSION ANALYSIS
Regression analysis is used to measure the relationship between two or more variables. One
variable is called dependent (response, or outcome) variable and the other is called
Independent (explanatory or predictor) variables.
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It is used to check that due to one unit change in the independent variable(s) how much change
occurs in dependent variable.


Regression Equation
It is the equation representing the relation between selected values of one variable (x:the independent
variable) and observed values of the other (y: the dependent variable); it permits the prediction of the
most probable values of y. The standard form of this equation for two variables and for more than two
variables respectively is as follows
Y = a + bx Y = a + bx
1
+ cx
2
+ dx
3
+ ex
4
Y = dependent variable
a = Constant
b, c, d, e, = slope coefficients
x
1
, x
2
, x
3
, x
4
= Independent variables
Types of Regression
There are two types of regression analysis that are
7. Simple Regression
8. Multiple regression
9. Simple Regression
Simple regression is used to check the contribution of independent variable(s) in the dependent
variable if the independent variable is one.
10. Assumptions and conditions of simple regression
1. Dependent variable should be scale
2. The relationship of variables should be linear
3. Data should be independent
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Example: Can we predict math achievement from grades in high school
Commands
1. Analyze Regression Linear
2. Highlight math achievement. Click the arrow to move it into the dependent box
3. Highlight grades in high school and click on the arrow to move it into the independent
(s) box.
4. Click on Ok
Variables Entered/Removed
b

Model
Variables
Entered
Variables
Removed Method
1 grades in h.s.
a
. Enter
a. All requested variables entered.

Model Summary
Model R R Square
Adjusted R
Square
Std. Error of
the Estimate
1 .504
a
.254 .244 5.80018
a. Predictors: (Constant), grades in h.s.

ANOVA
b

Model
Sum of
Squares Df Mean Square F Sig.
1 Regression 836.606 1 836.606 24.868 .000
a

Residual 2455.875 73 33.642

Total 3292.481 74

a. Predictors: (Constant), grades in h.s.

b. Dependent Variable: math achievement test

Coefficients
a

Model
Unstandardized
Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) .397 2.530

.157 .876
grades in h.s. 2.142 .430 .504 4.987 .000
a. Dependent Variable: math achievement test

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Regression equation is Y = 0.40 + 2.14X
Interpretation
Simple regression was conducted to investigate how well grades in high school predict math
achievement scores. The results were statistically significant F (1, 73) = 24.87, p<.001. The
indentified equation to understand this relationship was math achievement = .40 + 2.14*
(grades in high school). The adjusted R
2
value was .244. This indicates that 24% of the variance
in math achievement was explained by the grades in high school. According to Cohen (1988),
this is a large effect.
Multiple Regression
Multiple regressions is used to check the contribution of independent variable(s) in the
dependent variable if the independent variables are more than one.

5. Assumptions and conditions of Multiple regression
1. Dependent variables should be scale.
Example: How well can you predict math achievement from a combination of four variables:
grades in high school, fathers education, mother education and gender
Commands

6. Analyze Regression Linear
7. Highlight math achievement. Click the arrow to move it into the dependent box
8. Highlight grades in high school, fathers education, mother education and gender and click
on the arrow to move them into the independent (s) box.
9. Under method, be sure that enter is selected.
10. Click on continue and then ok to get the following results in output window


Descriptive Statistics

Mean
Std.
Deviation N
math achievement
test
12.6621 6.49659 73
grades in h.s. 5.70 1.552 73
father's education 4.73 2.830 73
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mother's education 4.14 2.263 73
Gender .55 .501 73


Model Summary
Model R R Square
Adjusted R
Square
Std. Error
of the
Estimate
1 .616
a
.379 .343 5.26585
ANOVA
b

Model
Sum of
Squares df
Mean
Square F Sig.
1 Regression 1153.222 4 288.305 10.397 .000
a

Residual 1885.583 68 27.729

Total 3038.804 72

Coefficients
Model
Unstandardized
Coefficients
Standardized
Coefficients
T Sig. B Std. Error Beta
1 (Constant) 1.047 2.526

.415 .680
grades in h.s. 1.946 .427 .465 4.560 .000
father's education .191 .313 .083 .610 .544
mother's education .406 .375 .141 1.084 .282
Gender -3.759 1.321 -.290 -2.846 .006
a. Dependent Variable: math achievement test


Regression Equation:
Y = 1.047 + 1.95X
1
+ 0.19X
2
+ 0.41X
3
3.76 X
4

Interpretation
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

Simultaneously multiple regression was conducted to investigate the best predictors of math
achievement test scores. The means, standard deviation, and inter correlations can be found in
table. The combination of variables to predict math achievement from grades in high school,
fathers education, mothers education and gender was statistically significant, F = 10.40, p
<0.05. The beta coefficients are presented in last table. Note that high grades and male gender
significantly predict math achievement when all four variables are included. The adjusted R
2
value was 0.343. This indicates that 34 % of the variance in math achievement was explained by
the model according to Cohen (1988), this is a large effect.

QUANTITATIVE TECHNIQUES IN BUSINESS QTB

Class Activity Session 7
Correlation
Some studies are interested in whether two variables are related to each other.
Is there a relationship between birth order and IQ scores?
Is there a relationship between socioeconomic status (SES) and health?
The CORRELATION COEFFICIENT is a statistic that shows the strength of the relationship
between the two variables. The correlation coefficient falls between -1.00 and +1.00. The
statistic shows both the STRENGTH of the relationship between the variables, and the
DIRECTION of the relationship. The numerical value indicates the strength of the
relationship. The sign in front of the numerical value indicates the direction of the
relationship. Let us consider each of these in more detail.
THE NUMBERICAL VALUE:
Correlation coefficient values that are close to zero (e.g., -.13, +.08) suggest that there is no
relationship between the two variables. The closer the correlation is to one (e.g., -.97, +.83) the
stronger the relationship between the two variables. Thus, we might expect that there would
be no relationship between the height of college students and their SAT scores, and we would
be correct. The correlation coefficient is very close to zero. However, we might expect a
correlation between adult height and weight to be stronger, and again we would be correct.

THE SIGN:
The sign of the correlation coefficient tells us whether these two variable are directly related or
inversely related.
Do the two variables increase and decrease in the same direction?
The more time a student spends studying the better their grade, the less time spent studying
the lower the grade. Notice how both study time and grade vary in the same direction. As
studying increases grades increase, and when studying decreases grades decline. Grade and
study time would be POSITIVELY correlated. The term POSITIVE does not necessarily mean its a
good thing (when is getting a poor grade a "good" thing!). It simply means that there is a direct
relationship, the variables are varying (changing) in the same direction.

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Do the two variables vary in opposing directions?
As the number of children in a family increase the lower the IQ scores of the children. Thus,
family size and children's IQ scores vary in the opposite direction. As family size increases the
IQ scores decline, as the family size decreases IQ scores increase. IQ and family size are
NEGATIVELY correlated (inversely related).

Try the following exercise to see if you understand the concept of correlation.
It is best if you have read both this section and the research method section on correlational
studies before completing the exercise.
EXERCISE

Inferential Statistics
Inferential Statistics allow researchers to draw conclusions (inferences) from the data. There
are several types of inferential statistics. The choice of statistic depends on the nature of the
study. Covering the different procedures used is beyond the scope of this course. However,
understanding why they are used is important.

A researcher asks two groups of children to complete a personality test. The researcher then
wants to know whether the males scored differently than the females on certain measures of
personality. We will create a fictitious personality trait "Z." Here are the scores for the girls
and the boys:


Girls Boys
23 37 The mean score for the "Z" trait in boys
was higher than the mean score for "Z"
in the girls. But notice how within the
two groups there was considerable
fluctuation. By "chance" alone we might
have obtained these different
values. Thus, in order to conclude that
"Z" shows a gender difference, we need
40 56
37 18
41 41
41 42
33 38
28 50
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

25 22 to rule out that these differences were
just a fluke. This is where inferential
statistics come in to play.
24 33
13 47
28 25
44 46
Mean=31.42 Mean=37.92
SD=9.03 SD=11.14
An important concept in inferential statistics is STATISTICAL SIGNIFICANCE. When an inferential
statistic reveals a statistically significant result the differences between the groups were
unlikely due to chance. Thus, we can rule out chance with a certain degree of
confidence. When the results of the inferential statistic are not statistically significant, chance
could still be a reason why we obtained the observations that we did.












QUANTITATIVE TECHNIQUES IN BUSINESS QTB



T-TEST STATISTIC
Inferential Statistics

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T-TEST Statistics
The t test is used to compare to groups to answer the differential research questions. Its values
determines the difference by comparing means
Hypothesis for T-test
H
O
: there is no Difference between variable 1 and variable 2
H
1
: There is difference between variable 1 and variable 2
Types of T-test
There are three types of T-test
1. One sample t-test
2. Independent sample t-test
3. Paired sample t-test

1. ONE SAMPLE T-TEST
One sample t-test is used to determine if there is difference between population mean
(Test value) and the sample mean (X)
Assumptions and conditions of 1 sample t-test
1. The dependent variable should be normally distributed within the population
2. The data are independent.(scores of one participant are not depend on scores of the
other :participant are independent of one another )
Example: is the mean SAT-Math score in the modified HSB data set significantly different
from the presumed population mean of 500?
Commands
1. Analyze Compare means One sample t-test
2. Move scholastic aptitude test-math to the test variables box.
3. Type 500 in the test value box
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4. Click on Ok


One-Sample Statistics

N Mean Std. Deviation
Std. Error
Mean
scholastic aptitude test
math
75 490.53 94.553 10.918

One-Sample Test

Test Value = 500

t Df
Sig. (2-
tailed)
Mean
Difference
95% Confidence Interval of
the Difference

Lower Upper
scholastic aptitude test math -.867 74 .389 -9.467 -31.22 12.29

Interpretation:
To investigate the difference between population and the sample, one-sample t-test is
conducted. The One-Sample Statistics table provides basic descriptive statistics for the variable
under consideration. The Mean AT-Math for the students in the sample will be compared to the
hypothesize population mean, displayed as the Test Value in the One-Sample Test table. On
the bottom line of this table are the t value, df, and the two-tailed sig. (p) value, which are
circled. Note that p=.389 so we can say that the sample mean (490.53) is not significantly
different from the population mean of 500. The table also provides the difference (-9.47)
between the sample and population mean and the 95% Confidence Interval. The difference
between the sample and the population mean is likely to be between +12.29 and -31.22 points.
Notice that this range includes the value of zero, so it is possible that there is no difference.
Thus, the difference is not statistically significant.
1. INDEPENDENT SAMPLE T-TEST
Independent sample T-test is used to compare two independent groups (Male and
Female)with respect to there effect on same dependent variable.
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Assumptions and conditions of Independent T-test
1. Variance of the dependent variable for two categories of the independent variable
should be equal to each other
2. Dependent variable should be scale
3. Data on dependent variable should be independent.
Example: Do male and female students differ significantly in regard to their average math
achievement scores
Commands
1. Analyze Compare means independent sample t-test
2. Move math achievement scores to the test variables box.
3. Move gender to the grouping variable box
4. Click on define groups
5. Type 0 for males in the group 1 box and 1 for females in the group 2 box
6. Click on continue
7. Click on Ok

Interpretation
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The first table, Group Statistics, shows descriptive statistics for the two groups (males and
females) separately. Note that the means within each of the three pairs look somewhat
different. This might be due to chance, so we will check the t test in the next table.
The second table, Independent Sample Test, provides two statistical tests. The left two
columns of numbers are the Levenes test for the assumption that the variances of the two
groups are equal. This is not the t test; it only assesses an assumption! If this F test is not
significant (as in the case of math achievement and grades in high school), the assumption is
not violated, and one uses the Equal variances assumed line for the t test and related statistics.
However, if Levenes F is statistically significant (Sig. <.05), as is true for visualization, then
variances are significantly different and the assumption of equal variances is violated. In that
case, the Equal variances not assumed line used; and SSPS adjusts t, df, and Sig. The
appropriate lines are circled.
Thus, for visualization, the appropriate t=2.39, degree of freedom (df) = 57.15, p=.020. This t is
statistically significant so, based on examining the means, we can say that boys have higher
visualization scores than girls. We used visualization to provide an example where the
assumption of equal variances was violated (Levenes test was significant). Note that for grades
in high school, the t is not statistically significant (p=.369) so we conclude that there is no
evidence of a systematic difference between boys and girls on grades. On the other hand, math
achievement is statistically significant because p<.05; males have higher means.
The 95% Confidence Interval of the Difference is shown in the two right-hand column of the
output. The confidence interval tells us if we repeated the study 100 times, 95 of the times the
true (population) difference would fall within the confidence interval, which for math
achievement is between 1.05 points and 6.97 points. Note that if the Upper and Lower bounds
have the same sign (either + and + or and -), we know that the difference is statistically
significant because this means that the null finding of zero difference lies outside of the
confident interval. On the other hand, if zero lies between the upper or lower limits, there
could be no difference, as is the case of grades in h.s. The lower limit of the confidence interval
on math achievement tells us that the difference between males and females could be as small
as 1.05 points out 25, which are the maximum possible scores.
Effects size measures for t tests are not provided in the printout but can be estimated relatively
easily. For math achievement, the difference between the means (4.01) would be divided by
about 6.4, an estimate of the pooled (weighted average) standard deviation. Thus, d would be
approximately .60, which is, according to Cohen (1988), a medium to large sized effect.
Because you need means and standard deviations to compute the effect size, you should
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

include a table with means and standard deviations in your results section for a full
interpretation of t tests.
8. PAIRED SAMPLE T-TEST
Paired sample T-test is used to compare two paired groups (e.g. Mothers and fathers) with
respect to there effect on same dependent variable.
Assumptions and conditions of Paired sample T-test
9. The independent variable is dichotomous and its levels (or groups) are paired, or
matched, in some way (husband-wife, pre-post etc)
10. The dependent variable is normally distributed in the two conditions
Example: Do students fathers or mothers have more education?
Commands
11. Analyze Compare means paired sample t-test
12. Click on both of the variables, fathers education and mothers education, and move
them simultaneously to the paired variables box
13. Click on Ok
Paired Samples Statistics

Mean N
Std.
Deviation
Std. Error
Mean
Pair 1 father's education 4.73 73 2.830 .331
mother's
education
4.14 73 2.263 .265
Paired Samples Correlations

N Correlation Sig.
Pair 1 father's education &
mother's education
73 .681 .000

Interpretation
The first table shows the descriptive statistics used to compare mothers and fathers education
levels. The second table Paired Samples Correlations, provides correlations between the two
paired scores. The correlation (r=.68) between mothers and fathers education indicates that
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

highly educate men tend to marry highly educated women and vice versa. It doesnt tell you
whether men or women have more education. That is what t in the third table tells you.
The last table shows the Paired Samples t Test. The Sig. for the comparison of the average
education level of the students mothers and fathers was p=.019. Thus, the difference in
educational level is statistically significant, and we can tell from the means in the first table that
fathers have more education; however, the effect size is small (d=.28), which is computed by
dividing the mean of the paired differences (.59) by the standard deviation (2.1) of the paired
differences. Also, we can tell from the confidence interval that the difference in the means
could be as small as .10 of a point or as large as 1.08 points on the 2 to 10 scale.
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

Class Activity Session 8
Inferential Statistics
Inferential Statistics allow researchers to draw conclusions (inferences) from the data. There
are several types of inferential statistics. The choice of statistic depends on the nature of the
study. Covering the different procedures used is beyond the scope of this course. However,
understanding why they are used is important.

A researcher asks two groups of children to complete a personality test. The researcher then
wants to know whether the males scored differently than the females on certain measures of
personality. We will create a fictitious personality trait "Z." Here are the scores for the girls
and the boys:


Girls Boys

23 37 The mean score for the "Z" trait in boys
was higher than the mean score for "Z"
in the girls. But notice how within the
two groups there was considerable
fluctuation. By "chance" alone we might
have obtained these different
values. Thus, in order to conclude that
"Z" shows a gender difference, we need
to rule out that these differences were
just a fluke. This is where inferential
statistics come in to play.
40 56
37 18
41 41
41 42
33 38
28 50
25 22
24 33
13 47
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

28 25
44 46
Mean=31.42 Mean=37.92
SD=9.03 SD=11.14
An important concept in inferential statistics is STATISTICAL SIGNIFICANCE. When an inferential
statistic reveals a statistically significant result the differences between the groups were
unlikely due to chance. Thus, we can rule out chance with a certain degree of
confidence. When the results of the inferential statistic are not statistically significant, chance
could still be a reason why we obtained the observations that we did.
In the example above we would use an inferential statistic called a T-TEST. The t-test is used
when we are comparing TWO groups. In this instance the t-test does not yield a statistically
significant difference. In other words, the differences between the scores for the boys and the
scores for the girls are not large enough for us to rule out chance as a possible explanation. We
would have to conclude then that there is no gender difference for our hypothetical "Z" trait.

Inferential statistics do not tell you whether your study is accurate or whether your findings are
important. Statistics cannot make up for an ill-conceived study or theory. They simply assess
whether we can rule out the first "extraneous" variable of all research, CHANCE.


QUANTITATIVE TECHNIQUES IN BUSINESS QTB


Final-Term Project Discussion
&
Lab Practice Session



QUANTITATIVE TECHNIQUES IN BUSINESS QTB

Lab Practice Session
The students will be given two hours session in Lab revision of what they have learnt in Post-mid
session.
1. The objectives of this session are to provide students an opportunity to
2. Revise the whole course that they have learnt throughout the post mid session
3. Have hands on practice on dealing with quantitative data using SPSS
4. Share their problems that they confront during revision and get the solution
5. Clarify if they have any ambiguity regarding understanding or application of any concept
regarding QTB
Final Project Discussion
The students will be given one hours session to discuss about the final draft of their final projects.
The objectives of this session are to provide students an opportunity to
1. Share their problems that they confront during revision and get the solution
2. Clarify if they have any ambiguity regarding understanding or application of any concept
regarding QTB
3. Get productive feedback on what they have done regarding their projects
The Drafts will be checked on the following criteria
The drafts will be checked if the following components are covered
1. Whether the survey is appropriately designed to collect the primary data
2. Whether the following components are appropriately discussed in the report
1. An introduction explaining the background and objectives of your work.
2. The Justification of the topic selection
3. A description of the data definitions of the variables, conclusions about data quality,
and so on.
4. A justification of the methods you have chosen to analyze the data.
5. Analysis and results descriptive as well as inferential with results
6. Conclusion a discussion and interpretation of your results and a summary of what you
have achieved.
QUANTITATIVE TECHNIQUES IN BUSINESS QTB

7. Length: 1500 to 2000 words



PRESENTATION
on
Final Term Project

QUANTITATIVE TECHNIQUES IN BUSINESS QTB

Presentation
Students will be evaluated on the basis of following criteria.
1. Timing of presentation.
2. Clarity of concepts.
3. Structure of the presentation.
4. Quality of overheads, handouts etc.
5. Application of theory to practice.
6. Ability to answer questions effectively


















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