Chapter 1

1. INTRODUCTION
Definition and classifications of Statistics
Definition: We can define statistics in two ways.
Those are
[Link] sense or lay man definition
 It is an aggregate or collection of numerical facts.
Single or unrelated items are not considered as statistics.

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 [Link] sense (formal definition)
Statistics is defined as the science of collecting,
organizing, presenting, analyzing and interpreting
numerical data for the purpose of assisting in
making a more effective decision

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 Classifications:
Depending on how data can be used statistics is some times
divided in to two main areas or branches.
1. Descriptive Statistics: is concerned with summary
calculations, graphs, charts and tables.
Example: Consider the national census conducted by the
U.S. government every 10 years.
 Results of this census give you the average age, income,
and other characteristics of the U.S. population.
 To obtain this information, the Census Bureau must
have some means to collect relevant data
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 Once data are collected, the bureau must organize and
summarize them.
 Finally, the bureau needs a means of presenting the
data in some meaningful form, such as charts, graphs,
or tables.
2. Inferential Statistics: is a method used to generalize from
a sample to a population.
Example: the average income of all families (the
population) in Ethiopia can be estimated from figures
obtained from a few hundred (the sample) families.
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 Stages in Statistical Investigation
There are five stages or steps in any statistical
investigation.
Those are:-
Collection of the data
Organization of the data
Presentation of the data
Analysis of data and
Inference of data.

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1. Collection of data:
the process of measuring, gathering, assembling the raw data up on which
the statistical investigation is to be based.
2. Organization of data:
Summarization of data in some meaningful way, e.g table form
3. Presentation of the data:
The process of re-organization, classification, compilation, and
summarization of data to present it in a meaningful form.

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4. Analysis of data:
The process of extracting relevant information from
the summarized data, mainly through the use of
elementary mathematical operation.
5. Inference of data:
The interpretation and further observation of the
various statistical measures through the analysis of
the data by implementing those methods by which
conclusions are formed and inferences made.
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 Definitions of some terms

a. Statistical Population:
It is the collection of all possible observations of a specified characteristic of
interest (possessing certain common property) and being under study. An
example is all of the students in AAU 3101 course in this term.
b. Sample: It is a subset of the population, selected using some sampling
technique in such a way that they represent the population.
c. Sampling: The process or method of sample selection from the
population.

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d. Sample size:
The number of elements or observation to be included in the
sample.
e. Census:
Complete enumeration or observation of the elements of the
population. Or it is the collection of data from every element in a
population
f. Parameter: Characteristic or measure obtained from a
population.
g. Statistic: Characteristic or measure obtained from a sample.
h. variable: It is an item of interest that can take on many different
numerical values/different values.
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 Types of Variables or Data:
1. Qualitative Variables:- are nonnumeric variables and can't be
measured. Examples include gender, religious affiliation, and state
of birth.
2. Quantitative Variables:- are numerical variables and can be
measured. Examples include balance in checking account, number
of children in family.
Note that quantitative variables are either discrete (which can
assume only certain values, and there are usually "gaps" between
the values, such as the number of bedrooms in your house) or
continuous (which can assume any value within a specific range,
such as the air pressure in a tire.)
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 Applications, Uses and Limitations of statistics

Applications of statistics:
 In almost all fields of human endeavor.
 Almost all human beings in their daily life are subjected to
obtaining numerical facts e.g. about price.
 Applicable in some process e.g. invention of certain drugs, extent
of environmental pollution.
 In industries especially in quality control area.
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Uses of statistics:
The main function of statistics is to enlarge our knowledge of
complex phenomena. The following are some uses of statistics:
 It presents facts in a definite and precise form.
 Data reduction.
 Measuring the magnitude of variations in data.
 Furnishes a technique of comparison
 Estimating unknown population characteristics.
 Testing and formulating of hypothesis.
 Studying the relationship between two or more variable.
 Forecasting future events.

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Limitations of statistics
As a science statistics has its own limitations. The
following are some of the limitations:
 Deals with only quantitative information.
 Deals with only aggregate of facts and not with
individual data items.
 Statistical data are only approximately and not
mathematical correct.
 Statistics can be easily misused and therefore
should be used by experts.
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 Scales of measurement
Proper knowledge about the nature and type of data to be dealt
with is essential in order to specify and apply the proper statistical
method for their analysis and inferences.
SCALE TYPES
Measurement is the assignment of numbers to objects or events in a
systematic fashion.
Four levels of measurement scales are commonly distinguished:-
Nominal
Ordinal
Interval and
Ratio and each of them possessed different properties of
measurement systems.
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 1. Nominal Scales
• Nominal scales are measurement systems that possess none of the
three properties stated above.
• Level of measurement which classifies data into mutually
exclusive, all inclusive categories in which no order or ranking can
be imposed on the data.
• No arithmetic and relational operation can be applied.
Examples:
Political party preference (Republican, Democrat, or Other,)
Sex (Male or Female.)
Marital status(married, single, widow, divorce)
Country code
Regional differentiation of Ethiopia.
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 2. Ordinal Scales
Ordinal Scales are measurement systems that possess the property of
order, but not the property of distance.
Level of measurement which classifies data into categories that can
be ranked. Differences between the ranks do not exist.
Arithmetic operations are not applicable but relational operations are
applicable.
Ordering is the sole property of ordinal scale.
Examples:
Letter grades (A, B, C, D, F).
Rating scales (Excellent, Very good, Good, Fair, poor).
Military status.
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 3. Interval Scales
Interval scales are measurement systems that possess the properties
of Order and distance, but not the property of fixed zero.
Level of measurement which classifies data that can be ranked
and differences are meaningful.
However, there is no meaningful zero, so ratios are meaningless.
All arithmetic operations except division are applicable.
Relational operations are also possible.
Examples:
IQ(measured depending on people intelligence)
Temperature in oF.

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 4. Ratio Scales
Ratio scales are measurement systems that possess all three properties: order,
distance, and fixed zero.
• The added power of a fixed zero allows ratios of numbers to be meaningfully
interpreted; i.e. the ratio of Bekele's height to Martha's height is 1.32, whereas
this is not possible with interval scales.
• Level of measurement which classifies data that can be ranked, differences
are meaningful, and there is a true zero. True ratios exist between the
different units of measure.
All arithmetic and relational operations are applicable.
Examples:
Weight Age
Height
Number of students
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