Overview of Statistics What is Statistics? What is Statistics? Why Study Statistics? Why Study Statistics? Uses of Statistics Uses of Statistics Statistical Challenges Statistical Challenges Writing and Presenting Reports Writing and Presenting Reports Statistical Pitfalls Statistical Pitfalls Statistics: An Evolving Field Statistics: An Evolving Field Chapter 11

What is Statistics? Statistics is the science of collecting, organizing, analyzing, interpreting, and presenting data.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 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.A statistician is an expert with at least a master’s degree in mathematics or statistics or a trained professional in a related field. McGraw-Hill/Irwin© 2007 The McGraw-Hill Companies, Inc. All rights reserved.

Why Study Statistics?  Communication  Computer Skills Understanding the language of statistics facilitates communication and improves problem solving.Understanding the language of statistics facilitates communication and improves problem solving. The use of spreadsheets for data analysis and word processors or presentation software for reports improves upon your existing 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  Technical Literacy Statistics help summarize large amounts of data and reveal underlying relationships.Statistics help summarize large amounts of data and reveal underlying relationships. Career opportunities are in growth industries propelled by advanced technology. The use of statistical software increases your 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  Quality Improvement Statistical literacy can enhance your career mobility.Statistical literacy can enhance your career mobility. Statistics helps firms oversee their suppliers, monitor their internal operations and identify problems.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.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.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 Making Inferences from Samples Visual Displays Numerical Summaries Estimating Parameters Testing Hypotheses

Uses of Statistics  Auditing  Marketing Sample from over 12,000 invoices to estimate the proportion of incorrectly paid invoices.Sample from over 12,000 invoices to estimate the proportion of incorrectly paid invoices. Identify likely repeat customers for Amazon.com and suggests co-marketing opportunities based on a database of 5 million Internet purchases.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  Purchasing Evaluate 100 incoming patients using a 42-item physical and mental assessment questionnaire.Evaluate 100 incoming patients using a 42-item physical and mental assessment questionnaire. Determine the defect rate of a shipment and whether that rate has changed significantly over time.Determine the defect rate of a shipment and whether that rate has changed significantly over time.

Uses of Statistics  Medicine  Forecasting Determine whether a new drug is really better than the placebo or if the difference is due to chance.Determine whether a new drug is really better than the placebo or if the difference is due to chance. Manage inventory by forecasting consumer demand.Manage inventory by forecasting consumer demand.

Statistical Challenges Is technically current (e.g., software-wise).Is technically current (e.g., software-wise). Communicates well.Communicates well. Is proactive.Is proactive. Has a broad outlook.Has a broad outlook. Is flexible.Is flexible. Focuses on the main problem.Focuses on the main problem.  The Ideal Statistician

Statistical Challenges Meets deadlines.Meets deadlines. Knows his/her limitations and is willing to ask for help.Knows his/her limitations and is willing to ask for help. Can deal with imperfect information.Can deal with imperfect information. Has professional integrity.Has professional integrity.  The Ideal Statistician

Statistical Challenges  Working with Imperfect Data  Dealing with Practical Constraints State any assumptions and limitations and use generally accepted statistical tests to detect unusual data points or to deal with missing data.State any assumptions and limitations and use generally accepted statistical tests to detect unusual data points or to deal with missing data. You will face constraints on the type and quantity of data you can collect.You will face constraints on the type and quantity of data you can collect.

Statistical Challenges  Upholding Ethical Standards  Using Consultants Know and follow accepted procedures, maintain data integrity, carry out accurate calculations, report procedures, protect confidentiality, cite sources and financial support.Know and follow accepted procedures, maintain data integrity, carry out accurate calculations, report procedures, protect confidentiality, cite sources and financial support. Hire consultants at the beginning of the project, when your team lacks certain skills or when an unbiased or informed view is needed.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 For long-range job success Most common weaknesses Report-writing Managerial accounting 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.Outline the report before you begin. Complete the report in sections.Complete the report in sections. Ask trusted peers to review the report and make any necessary revisions.Ask trusted peers to review the report and make any necessary revisions. Be prepared to make multiple revisions.Be prepared to make multiple revisions.

Writing and Presenting Reports  Writing Style Answer research question succinctly.Answer research question succinctly. List most important results first.List most important results first. Include section headings and avoid lengthy paragraphs.Include section headings and avoid lengthy paragraphs. Provide clear data sources.Provide clear data sources. Use appendices for technical information.Use appendices for technical information. Be stylistically consistent.Be stylistically consistent.

Writing and Presenting Reports  Avoid Jargon  Spelling and Grammar Present technical concepts so that others can understand them.Present technical concepts so that others can understand them. Don’t rely on software to catch all spelling and grammar errors.Don’t rely on software to catch all spelling and grammar errors.

Writing and Presenting Reports  Make it Attractive Descriptive title.Descriptive title. DateDate Author(s)Author(s) Page number.Page number. Wide margins.Wide margins. Typeface and point size.Typeface and point size. Bullets and subheadings.Bullets and subheadings. Bold face, italics, color.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 neededBody 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 suggestionsConclusions (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 SourcesBibliography and Sources Appendices (if needed for lengthy or technical material)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.Embed in the narrative near the paragraph in which they are interpreted. Number and title each table above the table, each graph below the graphNumber 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.Select a few key points to convey. Use simple charts and diagrams.Use simple charts and diagrams. Emphasize using color and fonts creatively.Emphasize using color and fonts creatively. Have backup slides or transparencies.Have backup slides or transparencies. Rehearse timing.Rehearse timing. Refer audience to written report for details.Refer audience to written report for details. Imagine yourself in the audience.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.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!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.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  Pitfall 2: Making Conclusions from Nonrandom Samples Be careful about making generalizations from small samples (e.g., a group of 10 patients).Be careful about making generalizations from small samples (e.g., a group of 10 patients). Be careful about making generalizations from retrospective studies of special groups (e.g., heart attack patients).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  Pitfall 4: Using Poor Survey Methods Be careful about drawing strong inferences from events that are not surprising when looking at the entire population (e.g., winning the lottery).Be careful about drawing strong inferences from events that are not surprising when looking at the entire population (e.g., winning the lottery). Be careful about using poor sampling methods or vaguely worded questions (e.g., anonymous survey or quiz).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  Pitfall 6: Making Generalizations about Individuals from Observations about Groups Be careful about drawing conclusions when no cause-and-effect link exists (e.g., most shark attacks occur between 12p.m. and 2p.m.).Be careful about drawing conclusions when no cause-and-effect link exists (e.g., most shark attacks occur between 12p.m. and 2p.m.). Avoid reading too much into statistical generalizations (e.g., men are taller than women).Avoid reading too much into statistical generalizations (e.g., men are taller than women).

Statistical Pitfalls  Pitfall 7: Unconscious Bias  Pitfall 8: Attaching Practical Importance to Every Statistically Significant Study Result Be careful about unconsciously or subtly allowing bias to color handling of data (e.g., heart disease in men vs. women).Be careful about unconsciously or subtly allowing bias to color handling of data (e.g., heart disease in men vs. women). 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).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 20 th century.Statistics is a relatively young field, having been developed mostly during the 20 th century. Its mathematical frontiers continue to expand with the aid of computers.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 moreMajor 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