Statistical Methods for Business Decision-Making, Lecture notes of Data Analysis & Statistical Methods

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Statistical Methods for Business Decision-Making

Section 1. Fundamentals

Definitions

Data Set

Population

Observation

Sample

Quantitative Data & Variables

Qualitative Data & Variables

Descriptive Statistics

Inferential Statistics

T A B L E 1. Selected Data from Tampa ID LANDVAL IMPROVAL SALEPRIC NBRHOOD 7 63596 102182 208500 A 276 7167 23082 30000 B 386 8526 47166 69000 C 752 11270 43842 49600 D 801 15645 51749 73800 D 1055 17928 52791 82900 D 1518 9167 30353 39000 E 1527 8584 22557 50000 E 1682 17940 24013 55500 F 2249 17845 21705 67000 G

Definitions (cont.)

Each row pertains to a single residential sale and gives the following information:

1. ID: a numerical identifier of each residence
2. LANDVAL: appraised value of the land ($)
3. IMPROVAL: appraised value of improvements ($)
4. SALEPRIC: sale price of the property ($)
5. NBRHOOD: neighborhood of the residence

Population Definition

 (^) A population is a collection (or set) of data that is the target of your interest and that you want to describe &/or analyze  Possible populations for this example All houses sold in Tampa last year All houses in Tampa last year

Sample Definition

A sample is a subset of data selected from a population.  Suppose I randomly select 200 houses sold in Tampa last year.  The sample in this example is 200 houses sold in Tampa last year (out of the 4027 sold)

Two Types of Data,

Definitions

 Quantitative data are observations measured on a numerical scale.  Qualitative data are nonnumerical data that can only be classified into groups or categories.

Two Types of Data,

Definitions

 TIP. If you’re unsure whether a variable with numerical values is quantitative or not, ask “ Do its numbers tell me how many or how much?”  (^) If “ yes ,” then it is quantitative data.  If “ no ,” then it is qualitative data.

Remember: “ How many or how much?”

Variables Definitions

 Quantitative variables contain numerical data  (^) Qualitative variables contain nonnumerical data

REVIEW Is this a sample or a population? ID LANDVAL IMPROVAL SALEPRIC NBRHOOD 7 63596 102182 208500 1 276 7167 23082 30000 2 386 8526 47166 69000 3 752 11270 43842 49600 4 801 15645 51749 73800 4 Identify quantitative and qualitative variables. variables observations

Inferential Statistics

Definition

The branch of statistics concerned with using sample data to make an inference about a population of data is called inferential statistics****.  (^) An inference in this example is “The median house value in Tampa is approximately $123,450.”

Descriptive or Inferential Statistics?  (^) Aug. 4-5, 2018 YouGov Poll**  (^) “ Do you approve or disapprove of the way Donald Trump is handling his job as president ?”  (^) 40% said “approve”  (^) AND... +/- 3% “margin of error”  (^) YouGov is 95% confident that between 37% and 43% of all Americans are satisfied with the job Pres. Trump is doing ** n = 1000 adults (not registered voters, not likely voters) https://projects.fivethirtyeight.com/trump-approval-ratings/

Exercise

Fundamentals Exercise