Overview of Statistics
What is Statistics?
Why Study Statistics?
Uses of Statistics
Statistical Challenges
Writing and Presenting Reports
Statistical Pitfalls
Statistics: An Evolving Field
Chapter
1
What is Statistics?
• Statistics is the science of collecting, organizing,
analyzing, interpreting, and presenting data.
• A statistic is a single measure (number) used to
summarize a sample data set. For example, the
average height of students in this class.
• A statistician is an expert with at least a master’s
degree in mathematics or statistics or a trained
professional in a related field.
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Why Study Statistics?
 Communication
• Understanding the language of statistics facilitates
communication and improves problem solving.
 Computer Skills
• The use of spreadsheets for data analysis and word
processors or presentation software for reports
improves upon your existing skills.
Why Study Statistics?
 Information Management
• Statistics help summarize large amounts of data
and reveal underlying relationships.
 Technical Literacy
• Career opportunities are in growth industries
propelled by advanced technology. The use of
statistical software increases your technical
literacy.
Why Study Statistics?
 Career Advancement
• Statistical literacy can enhance your career mobility.
 Quality Improvement
• Statistics helps firms oversee their suppliers,
monitor their internal operations and identify
problems.
Uses of Statistics
 Two primary uses for statistics:
• Descriptive statistics – the collection, organization,
presentation and summary of data.
• Inferential statistics – generalizing from a sample
to a population, estimating unknown parameters,
drawing conclusions, making decisions.
Uses of Statistics
 Overview of Statistics
Statistics
Describing
Data
Visual
Displays
Numerical
Summaries
Making Inferences
from Samples
Estimating
Parameters
Testing
Hypotheses
Uses of Statistics
 Auditing
• Sample from over 12,000 invoices to estimate the
proportion of incorrectly paid invoices.
 Marketing
• Identify likely repeat customers for Amazon.com
and suggests co-marketing opportunities based
on a database of 5 million Internet purchases.
Uses of Statistics
 Health Care
• Evaluate 100 incoming patients using a 42-item
physical and mental assessment questionnaire.
 Purchasing
• Determine the defect rate of a shipment and
whether that rate has changed significantly over
time.
Uses of Statistics
 Medicine
• Determine whether a new drug is really better
than the placebo or if the difference is due to
chance.
 Forecasting
• Manage inventory by forecasting consumer
demand.
Statistical Challenges
 The Ideal Statistician
• Is technically current (e.g., software-wise).
• Communicates well.
• Is proactive.
• Has a broad outlook.
• Is flexible.
• Focuses on the main problem.
Statistical Challenges
 The Ideal Statistician
• Meets deadlines.
• Knows his/her limitations and is willing to ask for help.
• Can deal with imperfect information.
• Has professional integrity.
Statistical Challenges
 Working with Imperfect Data
• State any assumptions and limitations and use
generally accepted statistical tests to detect
unusual data points or to deal with missing data.
 Dealing with Practical Constraints
• You will face constraints on the type and quantity
of data you can collect.
Statistical Challenges
 Upholding Ethical Standards
• Know and follow accepted procedures, maintain
data integrity, carry out accurate calculations,
report procedures, protect confidentiality, cite
sources and financial support.
 Using Consultants
• Hire consultants at the beginning of the project,
when your team lacks certain skills or when an
unbiased or informed view is needed.
Statistical Challenges
 Skills Needed for Success in Business
For initial
job success
Report-writing
For long-range
job success
Managerial accounting
Most common
weaknesses
Communication skills
Accounting principles Managerial economics
Writing skills
Mathematics
Managerial finance
Immaturity
Statistics
Report writing
Unrealistic expectations
Oral communication
Writing and Presenting Reports
 Rules for Power Writing
• Outline the report before you begin.
• Complete the report in sections.
• Ask trusted peers to review the report and make
any necessary revisions.
• Be prepared to make multiple revisions.
Writing and Presenting Reports
 Writing Style
• Answer research question succinctly.
• List most important results first.
• Include section headings and avoid lengthy
paragraphs.
• Provide clear data sources.
• Use appendices for technical information.
• Be stylistically consistent.
Writing and Presenting Reports
 Avoid Jargon
• Present technical concepts so that others can
understand them.
 Spelling and Grammar
• Don’t rely on software to catch all spelling and
grammar errors.
Writing and Presenting Reports
 Make it Attractive
•
•
•
•
•
•
•
•
Descriptive title.
Date
Author(s)
Page number.
Wide margins.
Typeface and point size.
Bullets and subheadings.
Bold face, italics, color.
Writing and Presenting Reports
 Organizing a Technical Report
Typical business report style includes:
• Executive Summary (1 page maximum)
- Briefly describe task and goals, data and
data sources, methods that were used,
main findings and any limitations.
• Introduction (1 to 3 paragraphs)
- Statement of the problem
- Data sources and definitions
- Methods utilized
Writing and Presenting Reports
 Organizing a Technical Report
Typical business report style includes:
• Body of the Report (as long as necessary)
- Discussion, explanations, interpretations
- Tables and graphs, as needed
• Conclusions (1 to 3 paragraphs)
- Statement of findings (in order of importance)
- Limitations (if necessary)
- Future research suggestions
Writing and Presenting Reports
 Organizing a Technical Report
Typical business report style includes:
• Bibliography and Sources
• Appendices (if needed for lengthy or technical
material)
Writing and Presenting Reports
 Tables and Graphs
• Embed in the narrative
near the paragraph in
which they are interpreted.
• Number and title each table
above the table, each graph
below the graph
Writing and Presenting Reports
 Rules for Presenting Oral Reports
• Select a few key points to convey.
• Use simple charts and diagrams.
• Emphasize using color and fonts creatively.
• Have backup slides or transparencies.
• Rehearse timing.
• Refer audience to written report for details.
• Imagine yourself in the audience.
Writing and Presenting Reports
 Pictures Help Make the Point
Writing and Presenting Reports
 The Three Ps
• Pace yourself when presenting. Take your time,
introduce yourself, your data and your project.
Make the first minute count.
• Plan what your are going to present. Organize
your ideas with an outline. Keep it simple!
• Practice before presenting to get the timing right.
Consider videotaping yourself or practicing in front
of peers.
Statistical Pitfalls
 Pitfall 1: Making Conclusions about a Large
Population from a Small Sample
• Be careful about making generalizations from
small samples (e.g., a group of 10 patients).
 Pitfall 2: Making Conclusions from
Nonrandom Samples
• Be careful about making generalizations from
retrospective studies of special groups (e.g.,
heart attack patients).
Statistical Pitfalls
 Pitfall 3: Attaching Importance to Rare
Observations from Large Samples
• Be careful about drawing strong inferences from
events that are not surprising when looking at the
entire population (e.g., winning the lottery).
 Pitfall 4: Using Poor Survey Methods
• Be careful about using poor sampling methods or
vaguely worded questions (e.g., anonymous
survey or quiz).
Statistical Pitfalls
 Pitfall 5: Assuming a Causal Link Based on
Observations
• Be careful about drawing conclusions when no
cause-and-effect link exists (e.g., most shark
attacks occur between 12p.m. and 2p.m.).
 Pitfall 6: Making Generalizations about
Individuals from Observations about Groups
• Avoid reading too much into statistical
generalizations (e.g., men are taller than
women).
Statistical Pitfalls
 Pitfall 7: Unconscious Bias
• Be careful about unconsciously or subtly allowing
bias to color handling of data (e.g., heart disease
in men vs. women).
 Pitfall 8: Attaching Practical Importance to
Every Statistically Significant Study Result
• Statistically significant effects may lack practical
importance (e.g., Austrian military recruits born in
the spring average 0.6 cm taller than those born
in the fall).
Statistics: An Evolving Field
• Statistics is a relatively young field, having been
developed mostly during the 20th century.
• Its mathematical frontiers continue to expand with the
aid of computers.
• Major recent developments include
- Exploratory data analysis (EDA)
- Computer-intensive statistics
- Design of experiments
- Robust product design
- Advanced Bayesian methods
- and more
Applied Statistics in
Business and Economics
End of Chapter 1