Unit 1
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Economics is about ... Money
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Biology ... Life
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History ... What, where, and when?
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Philosophy ... Why?
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Accounting ... How much?
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Statistics ... Variation
Data vary. People are different. We can’t see everything, let alone
measure it all. And even what we do measure, we measure
imperfectly. So the data we wind up looking at and basing our
decisions on provide, at best, an imperfect picture of the world.
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Surveys
◦ Business Surveys
◦ School Surveys
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Collecting data
◦ Census ◦ Online – Cookies track where you go and what you
buy
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Describing populations
◦ Voting districts look at ethnicities
◦ Schools for funding
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Almost every day you are exposed to statistics.
For example, consider the following excerpts
from recent newspapers and journals.
◦ “A survey of traffic deaths during this past Memorial Day
weekend shows a 36% decrease in fatalities compared
with last year.”
◦ Men who eat just two servings of tomatoes a week in
raw, sauce or pizza form have a 34% less risk of
developing prostate cancer.”
◦ More than three fourths of all college seniors in the
United States complete at least one internship by
graduation and 55% participate in two or more.”
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These three statements we just read are based on
the collection of data.
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DATA consists of information coming from
observations, counts, measurements, or
responses. The singular for data is datum.
◦ Sometimes data is presented graphically.
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The use of statistics dates back to census
taking in ancient Babylonia, Egypt and later in
the Roman Empire, when data was collected
about matters concerning the state, such as
births and deaths.
The word statistics is derived from the Latin
word status, meaning “state”.
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Data are numbers, but they are not “just
numbers”. Data are numbers with a context. The
number 10.5 for example, carries no information
by itself. But if we hear a friend’s new baby
weighed 10.5 pounds at birth we congratulate
her on the healthy size of her child.
The context engages our background knowledge
and allows us to make judgments. We know that
a baby weighing 10.5 pounds is quite large, and
that a human baby is unlikely to weigh 10.5
ounces or kilograms. The context makes the
number informative.
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Statistics is the science of collecting,
organizing, analyzing and interpreting data in
order to make decisions.
Data beat anecdotes (stories)
◦ An anecdotes is a striking story that sticks in our
minds exactly because it is striking. Anecdotes
humanize an issue, but they can be misleading.
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Let’s look at an example.
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The national cancer institute spent 5 years and $5
million gathering data on this question. The
researcher compared 638 children who had leukemia
with 620 who did not. They went into the homes and
measured the magnetic fields in the children’s
bedrooms, in other rooms and at the front door. They
recorded facts about the power lines near the family
home and also near the mother’s residence when she
was pregnant. Result: no connection between
leukemia and exposure to magnetic fields of the kind
produced by power lines. The editorial that
accompanied the study report in the New England
Journal of Medicine thundered, “It is time to stop
wasting our research resources” on the question.
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What would the effectiveness of a television news
report of a 5 year, $5 million investigation
against a televised interview with an articulate
mother whose child has leukemia and who
happens to live near a power line?
In the public mind, the anecdote wins every time.
Why?
A statistically literate person knows better. Data
are more reliable than anecdotes because they
systematically describe an over all picture rather
than focus on a few incidents.
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You will use two types of data sets when
studying statistics
◦ Populations – the collection of all outcomes,
responses, measurements or counts that are of
interest.
◦ Samples – a subset of a population
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Why are samples used more often than a
population?
◦ Unless a population is small, it is usually impractical
if not impossible to obtain all the population data.
So therefore most studies, information must be
obtained from a sample.
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1.
2.
3.
In a recent survey, 3002 adults in the United
States were asked if they read news on the
Internet at least once a week. Six hundred of
the adults said yes.
Identify the population
Identify the sample
What does the data set consist of?
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Whether a data set is a population or a
sample usually depends on the context of the
real-life situation. For instance, in our
previous example, the population was the set
of responses of all adults in the United States.
Depending on the purpose of the survey, the
population could have been the set of
responses of all adults who live in California
or who have telephones or who read a
particular newspaper
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1.
2.
3.
The U.S. Department of Energy conducts
weekly surveys of approximately 900 gasoline
stations to determine the average price per
gallon of regular gasoline. On December 29,
2011, the average price was $3.48 per gallon.
Identify the population
Identify the sample.
What does the data set consist of?
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Again, whether a data set is a population or a
sample usually depends on the context of the
real-life situation. For instance, in Example 1,
the population was the set of all responses of
all adults in the United States. Depending on
the purpose of the survey, the population
could have been the set of responses of all
adults who live in Texas or who have
telephones or who read a particular
newspaper.
◦ Parameter – a numerical description of a population
characteristic
◦ Statistic – a numerical description of a sample
characteristic
1.
2.
3.
“A recent survey of a sample reported that the
average starting salary for a MBA is less than
$65,000.”
“Startling salaries for the 667 MBA graduates
from the University of Chicago Graduate School
of Business increased 8.5% from the previous
year.”
“In a random check of a sample of retail stores,
the Food and Drug Administration found that
34% of the stores were not storing fish at the
proper temperature.”
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The study of statistics has two major
branches: descriptive statistics and inferential
statistics.
◦ Descriptive statistics is the branch of statistics that
involves the organization, summarization, and
display of data.
◦ Inferential statistics is the branch of statistics that
involves using a sample to draw conclusions about
a population. A basic tool in the study of inferential
statistics is probability.
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Decide which part of the study represents the
descriptive branch of statistics. What
conclusion might be drawn from the study
using inferential statistics?
◦ A large sample of men, aged 48 was studied for 18
years. For unmarried men, approximately 70% were
alive at age 65. For married men, 90% were alive at
65.
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Decide which part of the study represents the
descriptive branch of statistics. What
conclusion might be drawn from the study
using inferential statistics?
◦ In a sample of Wall Street analysts, the percentage
who incorrectly forecasted high-tech earnings in a
recent year was 44%.
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Learning Objectives:
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What is the definition of statistics
Distinguish between a population and sample
Distinguish between a parameter and a statistic
Distinguish between descriptive statistics and
inferential Statistics
Assessment:
◦ Complete Unit 1- Lesson one class work. Due at the
end of class.
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Homework
◦ Find a newspaper or magazine article that describes
a survey and bring to class on Friday.