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STA301 - Statistics Probability - Lecture No 1

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WHAT IS STATISTICS?

That science which enables us to draw conclusions about various phenomena on the basis of real data collected on sample-basis.

  • A tool for data-based research
  • Also known as Quantitative Analysis
  • A lot of application in a wide variety of disciplines Agriculture, Anthropology, Astronomy, Biology, Economic, Engineering, Environment, Geology, Genetics, Medicine, Physics, Psychology, Sociology, Zoology …. Virtually every single subject from Anthropology to Zoology …. A to Z!
  • Any scientific enquiry in which you would like to base your conclusions and decisions on real-life data, you need to employ statistical techniques!
  • Now a day, in the developed countries of the world, there is an active movement for of Statistical Literacy. THE NATURE OF THIS DISCIPLINE

The nature of statistics

MEANINGS OF ‘STATISTICS’

The word “Statistics” which comes from the Latin words status, meaning a political state, originally meant information useful to the state, for example, information about the sizes of population sand armed forces. But this word has now acquired different meanings.

  • In the first place, the word statistics refers to “numerical facts systematically arranged”. In this sense, the word statistics is always used in plural. We have, for instance, statistics of prices, statistics of road accidents, statistics of crimes, statistics of births, statistics of educational institutions, etc. In all these examples, the word statistics denotes a set of numerical data in the respective fields. This is the meaning the man in the street gives to the word Statistics and most people usually use the  word data instead.
  • In the second place, the word statistics is defined as a discipline that includes procedures and techniques used to collect process and analyze numerical data to make inferences and to research decisions in the face of uncertainty. It should of course be borne in mind that uncertainty does not imply ignorance but it refers to the incompleteness and the instability of data available. In this sense, the word statistics is used in the singular. As it embodies more of less all stages of the general process of learning, sometimes called scientific method, statistics is characterized as a science. Thus the word statistics used in the plural refers to a set of numerical information and in the singular, denotes the science of basing decision on numerical data. It should be noted that statistics as a subject is mathematical in character.
  • Thirdly, the word statistics are numerical quantities calculated from sample observations; a single quantity that has been so collected is called a statistic. The mean of a sample for instance is a statistic. The word statistics is plural when used in this sense.

CHARACTERISTICS OF THE SCIENCE OF STATISTICS

  • Statistics is a discipline in its own right. It would therefore be desirable to know the characteristic features of statistics in order to appreciate and understand its general nature. Some of its important characteristics are given below:
  • Statistics deals with the behaviour of aggregates or large groups of data. It has nothing to do with what is happening to a particular individual or object of the aggregate.
  • Statistics deals with aggregates of observations of the same kind rather than isolated figures.
  • Statistics deals with variability that obscures underlying patterns. No two objects in this universe are exactly alike. If they were, there would have been no statistical problem.
  • Statistics deals with uncertainties as every process of getting observations whether controlled or uncontrolled, involves deficiencies or chance variation. That is why we have to talk in terms of probability.
  • Statistics deals with those characteristics or aspects of things which can be described numerically either by counts or by measurements.
  • Statistics deals with those aggregates which are subject to a number of random causes, e.g. the heights of persons are subject to a number of causes such as race, ancestry, age, diet, habits, climate and so forth.
  • Statistical laws are valid on the average or in the long run. There is n guarantee that a certain law will hold in all cases. Statistical inference is therefore made in the face of uncertainty.
  • Statistical results might be misleading the incorrect if sufficient care in collecting, processing and interpreting the data is not exercised or if the statistical data are handled by a person who is not well versed in the subject mater of statistics.

THE WAY IN WHICH STATISTICS WORKS

As it is such an important area of knowledge, it is definitely useful to have a fairly good idea about the way in which it works, and this is exactly the purpose of this introductory course.
The following points indicate some of the main functions of this science:

  • Statistics assists in summarizing the larger set of data in a form that is easily understandable.
  • Statistics assists in the efficient design of laboratory and field experiments as well as surveys.
  • Statistics assists in a sound and effective planning in any field of inquiry.
  • Statistics assists in drawing general conclusions and in making predictions of how much of a thing will happen under given conditions.

IMPORTANCE OF STATISTICS IN VARIOUS FIELDS

As stated earlier, Statistics is a discipline that has finds application in the most diverse fields of activity. It is perhaps a subject that should be used by everybody. Statistical techniques being powerful tools for analyzing numerical data are used in almost every branch of learning. In all areas, statistical techniques are being increasingly used, and are developing very rapidly.

  • A modern administrator whether in public or private sector leans on statistical data to provide a factual basis for decision.
  • A politician uses statistics advantageously to lend support and credence to his arguments while elucidating the problems he handles.
  • A businessman, an industrial and a research worker all employ statistical methods in their work. Banks, Insurance companies and Government all have their statistics departments.
  • A social scientist uses statistical methods in various areas of social-economic life a nation. It is sometimes said that "a social scientist without an adequate understanding of statistics, is often like the blind man groping in a dark room for a black cat that is not there".

THE MEANING OF DATA

The word "data" appears in many contexts and frequently is used in ordinary conversation. Although the word carries something of an aura of scientific mystique, its meaning is quite simple and mundane. It is Latin for "those that are given" (the singular form is "datum"). Data may therefore be thought of as the results of observation.

EXAMPLES OF DATA

  • Data are collected in many aspects of everyday life.
  • Statements given to a police officer or physician or psychologist during an interview are data.
  • So are the correct and incorrect answers given by a student on a final examination.
  • Almost any athletic event produces data.
  • The time required by a runner to complete a marathon,
  • The number of errors committed by a baseball team in nine innings of play.
  • And, of course, data are obtained in the course of scientific inquiry:
  • The positions of artifacts and fossils in an archaeological site,
  • The number of interactions between two members of an animal colony during a period of observation,
  • The spectral composition of light emitted by a star.

OBSERVATIONS AND VARIABLES

In statistics, an observation often means any sort of numerical recording of information, whether it is a physical measurement such as height or weight; a classification such as heads or tails, or an answer to a question such as yes or no.

VARIABLES

A characteristic that varies with an individual or an object is called a variable. For example, age is a variable as it varies from person to person. A variable can assume a number of values. The given set of all possible values from which the variable takes on a value is called its Domain. If for a given problem, the domain of a variable contains only one value, then the variable is referred to as a constant.

QUANTITATIVE AND QUALITATIVE VARIABLES

Variables may be classified into quantitative and qualitative according to the form of the characteristic of interest. A variable is called a quantitative variable when a characteristic can be expressed numerically such as age, weight, income or number of children. On the other hand, if the characteristic is non-numerical such as education, sex, eyecolour, quality, intelligence, poverty, satisfaction, etc. the variable is referred to as a qualitative variable. A qualitative characteristic is also called an attribute. An individual or an object with such a characteristic can be counted or enumerated after having been assigned to one of the several mutually exclusive classes or categories.

DISCRETE AND CONTINUOUS VARIABLES

A quantitative variable may be classified as discrete or continuous. A discrete variable is one that can take only a discrete set of integers or whole numbers, which is the values, are taken by jumps or breaks. A discrete variable represents count data such as the number of persons in a family, the number of rooms in a house, the number of deaths in an accident, the income of an individual, etc.

A variable is called a continuous variable if it can take on any value-fractional or integral––within a given interval, i.e. its domain is an interval with all possible values without gaps. A continuous variable represents measurement data such as the age of a person, the height of a plant, the weight of a commodity, the temperature at a place, etc.

A variable whether countable or measurable, is generally denoted by some symbol such as X or Y and Xi or Xj represents the ith or jth value of the variable. The subscript i or j is replaced by a number such as 1,2,3, … when referred to a particular value.

MEASUREMENT SCALES

By measurement, we usually mean the assigning of number to observations or objects and scaling is a process of measuring. The four scales of measurements are briefly mentioned below:

NOMINAL SCALE

The classification or grouping of the observations into mutually exclusive qualitative categories or classes is said to constitute a nominal scale. For example, students are classified as male and female. Number 1 and 2 may also be used to identify these two categories. Similarly, rainfall may be classified as heavy moderate and light. We may use number 1, 2 and 3 to denote the three classes of rainfall. The numbers when they are used only to identify the categories of the given scale carry no numerical significance and there is no particular order for the grouping.

ORDINAL OR RANKING SCALE

It includes the characteristic of a nominal scale and in addition has the property of ordering or ranking of measurements. For example, the performance of students (or players) is rated as excellent, good fair or poor, etc. Number 1, 2, 3, 4 etc. are also used to indicate ranks. The only relation that holds between any pair of categories is that of "greater than" (or more preferred).

INTERVAL SCALE

A measurement scale possessing a constant interval size (distance) but not a true zero point, is called an interval scale. Temperature measured on either the Celsius or the Fahrenheit scale is an outstanding example of interval scale because the same difference exists between 20o C (68o F) and 30o C (86o F) as between 5o C (41o F) and 15o C (59o F). It cannot be said that a temperature of 40 degrees is twice as hot as a temperature of 20 degree, i.e. the ratio 40/20 has no meaning. The arithmetic operation of addition, subtraction, etc. is meaningful.

RATIO SCALE

It is a special kind of an interval scale where the sale of measurement has a true zero point as its origin. The ratio scale is used to measure weight, volume, distance, money, etc. The, key to differentiating interval and ratio scale is that the zero point is meaningful for ratio scale.

ERRORS OF MEASUREMENT

Experience has shown that a continuous variable can never be measured with perfect fineness because of certain habits and practices, methods of measurements, instruments used, etc. the measurements are thus always recorded correct to the nearest units and hence are of limited accuracy. The actual or true values are, however, assumed to exist. For example, if a student's weight is recorded as 60 kg (correct to the nearest kilogram), his true weight in fact lies between 59.5 kg and 60.5 kg, whereas a weight recorded as 60.00 kg means the true weight is known to lie between 59.995 and 60.005 kg. Thus there is a difference, however small it may be between the measured value and the true value. This sort of departure from the true value is technically known as the error of measurement. In other words, if the observed value and the true value of a variable are denoted by x and x + ε respectively, then the difference (x + ε) – x, i.e. ε is the error. This error involves the unit of measurement of x and is therefore called an absolute error. An absolute error divided by the true value is called the relative error. Thus the relative error =  ε / x + ε , which when multiplied by 100, is percentage error. These errors are independent of the units of measurement of x. It ought to be noted that an error has both magnitude and direction and that the word error in statistics does not mean mistake which is a chance inaccuracy.

BIASED AND RANDOM ERRORS

An error is said to be biased when the observed value is consistently and constantly higher or lower than the true value. Biased errors arise from the personal limitations of the observer, the imperfection in the instruments used or some other conditions which control the measurements. These errors are not revealed by repeating the measurements. They are cumulative in nature, that is, the greater the number of measurements, the greater would be the magnitude of error. They are thus more troublesome. These errors are also called cumulative or systematic errors.

An error, on the other hand, is said to be unbiased when the deviations, i.e. the excesses and defects, from the true value tend to occur equally often. Unbiased errors and revealed when measurements are repeated and they tend to cancel out in the long run. These errors are therefore compensating and are also known as random errors or accidental errors.

MGT301 - Principles of Marketing - Lecture Handout 16

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Lesson overview and learning objectives:

In last Lesson we discussed the Consumer Buying behavior. Today We will discuss business buyer behaviour, types of buying situations, participants in the business buying process, and major influences on business buyers so our today’s topic is:

Read more: MGT301 - Principles of Marketing - Lecture Handout 16