REVIEW OF STATISTICAL

CONCEPTS

Numerical Descriptive Measures

R K BANSAL NITJ
 Topics

 Measures of Central Tendency

 Mean, Median, Mode
 Measure of Variation
 Range, Variance and Standard Deviation,
Coefficient of Variation
 Shape
 Symmetric, Skewed, Using Box-and-Whisker Plots

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 Topics
(continued)

 The Empirical Rule and the Bienayme-

Chebyshev Rule
 Pitfalls in Numerical Descriptive Measures and
Ethical Issues

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 Summary Measures
Summary Measures

Central Tendency Variation

Mean Mode
Median Range Coefficient of
Variation
Variance

Standard Deviation
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 Measures of Central Tendency

Central Tendency

Mean Median Mode

n

X i
X  i 1

n
N for a sample/ subgroup
X i
 i 1

N for a population or universe

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 Mean (Arithmetic Mean)

 Mean (Arithmetic Mean) of Data Values

 Sample mean
n Sample Size
X i
X1  X 2   Xn
X i 1

n n
 Population mean
N Population Size
X i
X1  X 2   XN
 i 1

N N
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 Mean (Arithmetic Mean)
(continued)

 The Most Common Measure of Central

Tendency
 Affected by Extreme Values (Outliers)

0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14

Mean = 5 Mean = 6

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 Mean (Arithmetic Mean)
(continued)

 Approximating the Arithmetic Mean

 Used when raw data are not available
c

m
j 1
j fj
X


n
n  sample size
c  number of classes in the frequency distribution
m j  midpoint of the jth class
f j  frequencies of the jth class
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 Median
 Robust Measure of Central Tendency
 Not Affected by Extreme Values
0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14

Median = 5 Median = 5

 In an Ordered Array, the Median is the

‘Middle’ Number
 If n or N is odd, the median is the middle number
 If n or N is even, the median is the average of the
2 middle numbers
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 Median

M = L + (h / f) (N/2 – C)
Where
L is the lower limit of the median class
f is the frequency of the median class
h is the class interval
C is the cumulative frequency of class
preceding the median class

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 Mode
 A Measure of Central Tendency
 Value that Occurs Most Often
 Not Affected by Extreme Values
 There May Not Be a Mode
 There May Be Several Modes
 Used for Either Numerical or Categorical Data

0 1 2 3 4 5 6
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Mode = 9 No Mode
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 Mode
Mode = L + h(f1 – f0) /(2f1 – f0 –f2)
Where
L is the lower limit of the modal class
f1 is the frequency of the modal class
f0 is the frequency of class preceding the
modal class
f2 is the frequency of class proceeding the
modal class
h is the class interval

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 Measures of Variation
Variation

Variance Standard Deviation Coefficient

of Variation
Range Population
Population
Variance Standard
Sample Deviation
Variance Sample
Standard
Deviation
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 Range

 Measure of Variation
 Difference between the Largest and the
Smallest Observations:
Range  X Largest  X Smallest
 Ignores How Data are Distributed (SPREAD)
Range = 12 - 7 = 5 Range = 12 - 7 = 5

7 8 9 10 11 12 7 8 9 10 11 12

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 Variance

 Important Measure of Variation

 Shows Variation about the Mean
 Sample Variance: n

 X X
2
i
S 
2 i 1

n 1
 Population Variance:
N

 X 
2
i
 
2 i 1

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N 15
 Standard Deviation
 Most Important Measure of Variation
 Shows Variation about the Mean
 Has the Same Units as the Original Data
 Sample Standard Deviation: n

 X X
2
i
S i 1

n 1
 Population Standard Deviation: N

 X 
2
i
 i 1

N
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 Standard Deviation
(continued)

 Approximating the Standard Deviation

 Used when the raw data are not available and the
only source of data is a frequency distribution

m  X  fj
c
2
j

j 1
S
n 1
n  sample size
c  number of classes in the frequency distribution
m j  midpoint of the jth class
f j  frequencies of the jth class
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 Comparing Standard Deviations
Data A Mean = 15.5
s = 3.338
11 12 13 14 15 16 17 18 19 20 21

Data B
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = .9258
Data C
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = 4.57

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 Coefficient of Variation
 Measure of Relative Variation
 Always in Percentage (%)
 Shows Variation Relative to the Mean
 Used to Compare Two or More Sets of Data
Measured in Different Units
 S 
CV   100%
X 
 Sensitive to Outliers
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 Comparing Coefficient
of Variation
 Stock A:
 Average price last year = $50
 Standard deviation = $2
 Stock B:
 Average price last year = $100
 Standard deviation = $5
 Coefficient of Variation:
 Stock A: S   $2 
CV    100%    100%  4%
X   $50 
 Stock B:
S   $5 
CV   100%   100%  5%
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X   $100  20
 Shape of a Distribution
 Describe How Data are Distributed
 Measures of Shape
 Skeweness – indicates lack of symmetry of a distb.
 Kurtosis – Indicates peakedness of a distbn

Left-Skewed Symmetric Right-Skewed

Mean < Median < Mode Mean = Median =Mode Mode < Median < Mean

Sk < 0 (-ve) Sk = 0 Sk > 0 (+ve)

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 Skeweness and Kurtosis
 Sk = Σ f. (x-μ)3/σs3 Σ f
x is the cell midpoint of the grouped data
σs is the standard deviation of the sample data
 Kurtosis is represented by K

K = Σ f. (x-μ)4/σs4 Σ f
K = 3 for Normal Distribution
K > 3 for Distribution more peaked than Normal
K < 3 for Distribution less peaked than Normal
 Sk and K tell us about shape of the
distribution
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 The Empirical Rule

 For Most Data Sets, Roughly 68% of the

Observations Fall Within 1 Standard Deviation
Around the Mean
 Roughly 95% of the Observations Fall Within
2 Standard Deviations Around the Mean
 Roughly 99.7% of the Observations Fall
Within 3 Standard Deviations Around the
Mean

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 The Bienayme-Chebyshev Rule
 The Percentage of Observations Contained
Within Distances of k Standard Deviations
Around the Mean Must Be at Least 1  1/ k 2 100%
 Applies regardless of the shape of the data set
 At least 75% of the observations must be contained
within distances of 2 standard deviations around the
mean
 At least 88.89% of the observations must be
contained within distances of 3 standard deviations
around the mean
 At least 93.75% of the observations must be
contained within distances of 4 standard deviations
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around the mean 24
 Camp Meidell Inequality

 The Percentage of Observations Contained

Within Distances of k Standard Deviations
Around the Mean Must Be at Least(1-1/2.25k2)

 Following conditions apply for above to be

applicable
 Applies for uni-modal distribution (data set)
 Also if the mean = mode for the data set

 When K=3 then area within (mean±3σ) >95.1%

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 Scatter Plots of Data with
Various Correlation Coefficients
Y Y Y

X X X
r = -1 r = -.6 r=0
Y Y

X X
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r = .6 r=1 26
 Pitfalls in Numerical Descriptive
Measures and Ethical Issues
 Data Analysis is Objective
 Should report the summary measures that best
meet the assumptions about the data set
 Data Interpretation is Subjective
 Should be done in a fair, neutral and clear manner
 Ethical Issues
 Should document both good and bad results
 Presentation should be fair, objective and neutral
 Should not use inappropriate summary measures
to distort the facts 27
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 Summary

 Described Measures of Central Tendency

 Mean, Median, Mode, Geometric Mean
 Described Measures of Variation
 Range, Variance and Standard Deviation,
Coefficient of Variation
 Illustrated Shape of Distribution
 Symmetric, Skewed

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 Summary
(continued)

 Described the Empirical Rule and the

Bienayme - Chebyshev Rule
 Discussed Correlation Coefficient
 Addressed Pitfalls in Numerical Descriptive
Measures and Ethical Issues

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 Reasons for Drawing a Sample

 Less Time Consuming Than a Census

 Less Costly to Administer Than a Census
 Less Cumbersome and More Practical to
Administer Than a Census of the Targeted
Population

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 Types of Sampling Methods
Samples

Non-Probability Probability Samples

Samples
(Convenience)
Simple
Random Stratified
Judgement Chunk
Cluster
Systematic
Quota
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 Probability Sampling

 Subjects of the Sample are Chosen Based on

Known Probabilities

Probability Samples

Simple
Systematic Stratified Cluster
Random

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 Simple Random Samples

 Every Individual or Item from the Frame Has

an Equal Chance of Being Selected
 Selection May Be With Replacement or
Without Replacement
 One May Use Table of Random Numbers or
Computer Random Number Generators to
Obtain Samples

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 Systematic Samples
 Decide on Sample Size: n
 Divide Frame of N individuals into Groups of k
Individuals: k=N/n
 Randomly Select One Individual from the 1st
Group
 Select Every k-th Individual Thereafter

N = 64
n=8 First Group
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k=8 34
 Stratified Samples
 Population Divided into 2 or More Groups
According to Some Common Characteristic
 Simple Random Sample Selected from Each
Group
 The Two or More Samples are Combined into
One

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 Cluster Samples
 Population Divided into Several “Clusters,”
Each Representative of the Population
 A Random Sampling of Clusters is Taken
 All Items in the Selected Clusters are Studied

Randomly Population
selected 2 divided
clusters into 4
clusters
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 Advantages and Disadvantages
 Simple Random Sample & Systematic Sample
 Simple to use
 May not be a good representation of the
population’s underlying characteristics
 Stratified Sample
 Ensures representation of individuals across the
entire population
 Cluster Sample
 More cost effective
 Less efficient (need larger sample to acquire the
same level of precision)
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