Lecture 1

What is Applied Statistics? / Why we study Applied Statistics?

Goal of Applied Statistics

Decision
making Knowledge
Inferential
Statistics

Information

Descriptive
Statistics
Identify Data
the collection
problem

What is data?
Raw
Data materials of
statistics

Usually
numbers

Example: number of family members of

Must contain 20 families:
information 4,7,4,3,5,3,6,5,7,2,4,6,4,5,3,7,3,5,4,7

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Types of Statistics
• Statistics has two aspects: theoretical and applied.
• Theoretical or mathematical statistics deals with the development,
derivation, and proof of statistical theorems, formulas, rules, and laws.
• Applied statistics involves the applications of those theorems, formulas,
rules, and laws to solve real-world problems.
• Your course is designed with applied statistics and not with theoretical
statistics.

Types of Applied Statistics

Broadly speaking, applied statistics can be divided into two areas:
1. descriptive statistics and
2. inferential statistics.

Descriptive Statistics
Descriptive statistics consists of methods for organizing, displaying, and describing
data by using tables, graphs, and summary measures.

Inferential Statistics
• A major portion of statistics deals with making decisions, inferences,
predictions, and forecasts about populations based on results obtained from
samples.
• Inferential statistics consists of methods that use sample results to help make
decisions or predictions about a population.

Population versus Sample

• In statistics, the collection of all elements of interest is called a population.
A representative part of elements selected from this population is called a
sample.

Examples

Problem of Interest Population

Per month family income of JU students All the students of JU
Per month production of garments industry in BD All the garment industries in BD
Per tree coconut production in BD All the coconut trees in BD

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Representative Sample
• A sample that represents the characteristics of the population as closely as
possible is called a representative sample.

Census and Sample Survey

• A survey that includes every member of the population is called a census.
• The technique of collecting information from a portion of the population
is called a Sample survey.

Variable
• A variable is a characteristic under study that assumes different values for
different elements. In contrast to a variable, the value of a constant is fixed.

Example
Human being related variables: Height, weight, age, number of family
members, Gender, Marital status

Other Examples of variables are:

• the incomes of households,
• the number of houses built in a city per month during the past year,
• number of workers per garment industry,
• the gross profits of companies,
• the number of insurance policies sold by a salesperson per day during the
past month,

Types of variables
A variable may be classified as quantitative or qualitative.

Quantitative Variable
• A variable that can be measured numerically is called a quantitative
variable.
• If you ask question to the respondent about a quantitative variable,
respondent will respond by a number.
• The data collected on a quantitative variable are called quantitative data.

Examples
Incomes, heights, weight, gross sales, prices of homes, number of cars owned, and
number of accidents.

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Quantitative variables may be classified as either discrete variables or continuous
variables.

Discrete Variable
A variable whose values are countable is called a discrete variable. In other words,
a discrete variable can assume only certain values with no intermediate values.

Examples:
• number of family members,
• number of cars sold on any day at a car dealership,
• number of accidents in a day,
• number of people visiting a bank on any day,
• number of cattle owned by a farmer, and
• number of students in a class.

Continuous Variables
Some variables cannot be counted, and they can assume any numerical value
between two numbers. Such variables are called continuous variables.

Examples:
• time taken to complete an examination,
• per month family income,
• height of a person,
• weight of a person,
• amount of soda in a 12-ounce can and
• yield of potatoes (in pounds) per acre.

Simply, values of a quantitative variable can be derived by two methods: by

counting or by measuring.
➢ Values of variable that can be derived by counting is called discrete
variable
➢ Values of variable that can be derived by measuring is called
continuous variable

Qualitative or Categorical Variable

A variable that cannot assume a numerical value but can be classified into two
or more nonnumeric categories is called a qualitative or categorical variable. The
data collected on such a variable are called qualitative data.

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Examples:
• the gender of a person,
• marital status of a person,
• the brand of a computer,
• the opinions of people, and
• the make of a car.

Cross-section versus Time-Series Data

Cross-Section Data
Data collected on different elements at the same point in time or for the same
period of time are called cross-section data.

Time-Series Data
Data collected on the same element for the same variable at different points in
time or for different periods of time are called time-series data.

Scale of Measurement
In statistics, there are four data measurement scales: nominal, ordinal, interval and
ratio.

Variable

Qualitative Quantitative

Scale Nominal Ordinal Interval Ratio

Nominal Scale
• This scale is the easiest one to understand.
• Nominal scales are used for labeling variables, without
any quantitative value.
• “Nominal” scales could simply be called “labels.”
• Notice that all of these scales are mutually exclusive (no overlap) and none
of them have any numerical significance.
• A good way to remember all of this is that “nominal” sounds a lot like
“name” and nominal scales are kind of like “names” or labels.

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Example: Gender: Male and Female
Hair color: Brown, Black, Gray, Others
Marital Status: Unmarried, married, divorced, separated, widow.

Ordinal Scale
• With ordinal scales, the order of the values is what’s important and
significant, but the differences between each one is not really known.
• Take a look at the examples below. In each case, we know that a #4 is
better than a #3 or #2, but we don’t know–and cannot quantify–
how much better it is.
Examples:
How do feel today?
1. Very unhappy,
2. Unhappy,
3. Ok,
4. Happy,
5. Very happy

How satisfied are you with my class?

1. Very unsatisfied,
2. Somewhat unsatisfied,
3. Neutral,
4. Somewhat satisfied,
5. Very satisfied

Interval scale
• Interval scales are numeric scales in which we know both the order and the
exact differences between the values.
• Interval scales are nice because the realm of statistical analysis on these data
sets opens up.
• “Interval” itself means “space in between,” which is the important thing to
remember–interval scales not only tell us about order, but also about the
value between each item.
• The classic example of an interval scale is Celsius temperature because the
difference between each value is the same. For example, the difference
between 60 and 50 degrees is a measurable 10 degrees, as is the difference
between 80 and 70 degrees.
• Here’s the problem with interval scales: they don’t have a “true zero.” For
example, there is no such thing as “no temperature,” at least not with

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 celsius. In the case of interval scales, zero doesn’t mean the absence of
value, but is actually another number used on the scale, like 0 degrees
celsius. Negative numbers also have meaning. Without a true zero, it is
impossible to compute ratios. With interval data, we can add and subtract,
but cannot multiply or divide.

Ratio Scale
• Ratio scales are the ultimate pleasure when it comes to data measurement
scales because they tell us about the order, they tell us the exact value
between units, AND they also have an absolute zero–which allows for a
wide range of both descriptive and inferential statistics to be applied.
• Good examples of ratio variables include height, weight, and duration.