Chapter 01
What is statistics?
Dr. Halil İbrahim CEBECİ
Statistics Lecture Notes
What is statistics?
Simple Explanation:
 Statistics is a way to get information from data
Statistics
is
the
study
of
the
collection,
organization,
analysis,
interpretation,
and
presentation of data
What do statisticians do?
 Statisticians contribute to scientific enquiry by
applying their knowledge to the design of surveys
and experiments; the collection, processing, and
analysis of data; and the interpretation of the
results
Statistics Lecture Notes – Chapter 01
What is statistics?
Statistics
Data
Data:
Facts, especially
numerical facts,
collected together for
reference or
information.
55,68,39,43
Information
Information:
Knowledge
communicated
concerning some
particular fact.
Class average,
Most frequent mark,
Marks distribution, etc.
Statistics is a tool for creating new understanding from a
set of numbers.
Statistics Lecture Notes – Chapter 01
What is statistics?
Why?
 Because numeric
everywhere
and
non-numeric
 In marketing, accounting, finance,
politics, sciences, and elsewhere,
statistics
data
are
economics,
there are
 We need to be able to understand statistics
when we encounter them
 We need to not be tricked by misleading
statistics
 We need to use statistics to help us make
decisions under future uncertainty
Statistics Lecture Notes – Chapter 01
What is statistics?
Where?
 Research analysts for Merrill Lynch evaluate many
facets of a particular stock before making a “buy”
or “sell” recommendation.
 The marketing department at Colgate-Palmolive
Co., a manufacturer of soap products, has the
responsibility
of
making
recommendations
regarding the potential profitability of a newly
developed group of face soaps having fruit smells.
 The United States government is concerned with
the present condition of our economy and with
predicting future economic trends.
 Managers must make decisions about the quality of
their product or service.
Statistics Lecture Notes – Chapter 01
Key statistical concepts
Descriptive statistics
Collecting (eg.Survey, Experiment and Observation),
presenting(eg. Bar Charts and Graphs), and describing
data (eg. Mean)
Inferential statistics
Drawing conclusions and/or making decisions
concerning a population based only on sample data
Statistics Lecture Notes – Chapter 01
Key statistical concepts
Population
 a population is the group of all items of interest to a
statistics practitioner.
 frequently very large; sometimes infinite.
E.g. All 5 million Florida voters, per Example 12.5
Sample
 A sample is a set of data drawn from the population.
 Potentially very large, but less than the population.
E.g. a sample of 765 voters exit polled on election day.
Statistics Lecture Notes – Chapter 01
Key statistical concepts
Population
Sample
Subset
Parameter
(A descriptive measure
of a population)
Statistics Lecture Notes – Chapter 01
Statistic
(A descriptive measure
of a sample)
Descriptive Statistics

According
to
Consumer
Reports,
General
Electric
washing
machine
owners
reported 9 problems per 100
machines during 2001. The
statistic
9
describes
the
number of problems out of
every 100 machines.
Statistics Lecture Notes – Chapter 01
Descriptive Statistics
are methods of organizing, summarizing, and
presenting data in a convenient and informative way.
These methods include:

Graphical Techniques and,

Numerical Techniques
The actual method used depends on what information
we would like to extract. Are we interested in…

measure(s) of central location? and/or

measure(s) of variability (dispersion)?
Statistics Lecture Notes – Chapter 01
Statistical Inference


Descriptive Statistics describe the data set that’s
being analyzed, but doesn’t allow us to draw any
conclusions or make any interferences about the
data. Hence we need another branch of statistics:
inferential statistics.
Inferential statistics is also a set of methods, but it
is used to draw conclusions or inferences about
characteristics of populations based on data from
a sample.

Statistics Lecture Notes – Chapter 01
Statistical Inference

Statistical inference is the process of making an
estimate, prediction, or decision about a population
based on a sample.
What can we infer about a Population’s Parameters
based on a Sample’s Statistics?
Statistics Lecture Notes – Chapter 01
Statistical Inference
Rationale:
 Large populations make investigating each
member impractical and expensive.
 Easier and cheaper to take a sample and make
estimates about the population from the sample.
However:
 Such conclusions and estimates are not always
going to be correct. For this reason, we build into
the statistical inference “measures of reliability”,
namely confidence level and significance level.
Statistics Lecture Notes – Chapter 01
Examples
Ex1.1 - According to USAToday (15 October 1987),
the average size of an American household had fallen
from 3.14 persons in 1970 to 2.66 persons in 1987.
a. The 1987 figure of 2.66 is claimed to be the
value of a population parameter. What are the
population and the parameter?
b. What procedure must be taken to be 100%
certain that the value of the population
parameter is exactly 2.66?
c. What procedure was likely used to arrive at the
1987 figure of 2.66? Use the terms sample,
sample statistic, and inference in your answer.
Statistics Lecture Notes – Chapter 01
Examples
A1.1a - One can imagine determining the number of
persons living in each and every household in the
United States. The set of all these (millions of)
numbers is the population of interest. The average of
this population of numbers is the parameter of
interest, which is claimed to be 2.66.
A1.1b - You would have to collect all the numbers in
the population (called taking a census) and then
compute the average of all the numbers.
Statistics Lecture Notes – Chapter 01
Examples
A1.1c - It is likely that only a relatively small subset
of all American households was selected and the
number of persons living in each of these households
obtained. The set of numbers obtained for the
selected group of households is a sample drawn from
the population. The average of the sample values,
called the sample statistic, was then computed to be
2.66. The statement that 2.66 is the average size of
all American households is an inference about the
population parameter; it may or may not be correct.
Statistics Lecture Notes – Chapter 01
Exercises
Q1.1 - Thousands of customers have accounts at a
large department store. An accountant claims that
the average unpaid balance for these accounts is
$75, a figure obtained by computing the average of
the unpaid balances for 50 of the accounts.
a. Identify the population and its parameter.
b. What is the sample?
c. Is the figure of $75 a parameter or a statistic?
Statistics Lecture Notes – Chapter 01
Exercises
Q1.2 - A psychologist has interviewed 250 school
children throughout New York State and found that
80% of them spend at least 25 hours a week
watching television.
a. Identify the population parameter and the sample
statistic of interest here
b. Comment on the following inference, which is
based on the results of the psychologist’s
interviews: 80 percent of American school children
spend at least 25 hours a week watching
television.
Statistics Lecture Notes – Chapter 01
References
 Keller, Gerald; Statistics
Economics, 9e, 2012
for
Management
and
 Groebner, D.F.; Shannon, P.W., Fry, P.C, Smith,
K.D;
Business Statistics: A decision Making
Approach, 7e, 2007
 McClave, J.T, Benson, P.G, Sincich, T.; Statistics for
Business and Economics, 11e, 2011
Statistics Lecture Notes – Chapter 01