Segment: Descriptive Statistics
Topic: Introduction to Data Analysis
Introduction to Data Analysis
Table of Contents
1. Responsibilities of a Data Analyst ................................................................................................... 4
2. Statistics Domain............................................................................................................................. 4
2.1 Descriptive Statistics ............................................................................................................... 4
2.2 Inferential Statistics ................................................................................................................ 5
2.2.1 Types of Inferences ......................................................................................................... 6
3. Summary ......................................................................................................................................... 7
4. Glossary ........................................................................................................................................... 7
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Introduction to Data Analysis
Introduction
Data analysis and making decisions is inevitable for all business entities. Data analysis provides a
range of statistical tools for organising, presenting, analysing, and interpreting data. There is an
upsurge in demand for data analysts throughout the world. Data analysts are now able to collect
tremendous amounts of data and data analysis had become relatively easier with the usage of
new world technology.
Learning Objectives
At the end of this topic, you will be able to:
List out the common responsibilities of a data analyst
Distinguish between descriptive statistics and inferential statistics
Explain the types of inferences
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Introduction to Data Analysis
1. Responsibilities of a Data Analyst
Data analyst acts as a facilitator between an organisation and its stakeholders in summarising,
analysing and presenting the data in a more meaningful manner. Every industry from retail to
healthcare takes insights from the data analysts. In an increasingly competitive business
environment, data analysts with an understanding of statistical analysis techniques can make
better business decisions and possibly gain a competitive advantage.
A data analyst may need to perform data analysis for many different purposes. The most
common ones are to:
describe a data set using the results of an analysis
make inferences from the results of an analysis
estimate unknown quantities from appropriate sample data
test hypotheses about unknown quantities
quantify relationships among variables
make decisions based on statistical results.
2. Classification of Statistical Analysis
Data Analysts from various domains make use of various tools to describe data as well as to draw
relationships among the variables. All these methods and tools fall into two domains under
Statistics, namely, Descriptive Statistics and Inferential Statistics.
1.1 Descriptive Statistics
It deals with describing the data using graphs, tables, and various summary measures such as
measures of central tendency and measures of variation. Descriptive statistics provide general
insights about a problem or a situation at hand by describing the data. Irrespective of the size of
the data, data analysts can summarise and present the data to the clients or audience. Measures
of central tendency comprise tools such as mean, median, mode, etc., whereas, the measures
of variation involve range, variance, standard deviation, etc.
For example, assume that a manager of a retail chain wants to have insights about the sales data
of various products under his organisation. He can make use of various charts and measures
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Introduction to Data Analysis
such as mean and standard deviation to get better inputs about the products sold by the
organisation.
1.2 Inferential Statistics
It speaks about drawing some meaningful inferences from the data after performing suitable
statistical tests. In other words, inferential statistics allow the data analyst to make meaningful
predictions from the data.
Suppose we wish to learn about Fortune 500 companies. These 500 companies become the
population that we need to collect data about. To collect the data, we could look at published
data in libraries or on the web, mail questionnaires to company managers, or conduct face to
face or telephone interviews.
Suppose we wish to learn about all the companies in Europe. This population is too large to
collect data about. We may then resort to sampling. The population is a set of all the elements
under a study of interest or research, whereas the sample is a subset derived from a population.
Fig. 1: Population and Sample
Using the appropriate computed results from the sample data it is possible to infer the
parameters of the population. By designing the sampling experiment suitably, we can make the
inference as reliable as needed.
Sometimes it may be difficult to define the population. For example, a store manager may be
interested in knowing about the characteristics of all potential customers. The population should
then include anyone who is a potential customer. However, it is hard to know who exactly those
people are. In such cases, one has to make some assumptions and proceed. The store manager
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Introduction to Data Analysis
may randomly pick customers entering the store and treat them as a representative sample of
the population.
In another example, an inspector may be interested in the average weight of all the parts to be
produced by a machine. Since all the parts have not been produced yet, the population is not
there yet. The inspector may randomly pick parts being produced by the machine and treat them
as a representative sample of the population.
1.2.1 Types of Inferences
It is possible to make two types of inferences from such data, namely, estimation and hypothesis.
Estimation
When the inferences we make about the population parameters are about their exact values,
then the process is called estimation.
For example, we might estimate the sales revenue of a company to be US$3,284,500 for the
coming year.
Hypothesis
Some inferences made regarding population parameters are not about their exact values.
For example, we may be interested in simply testing whether a parameter is not less than 100,
because someone has claimed that it is not less than 100 and a few others have challenged that
claim. This process is called hypothesis testing.
Sometimes a hypothesis might be made about two or more population parameters. Such a
hypothesis can also be tested using sample data.
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Introduction to Data Analysis
2. Summary
Here is a quick recap of what we have learnt so far:
Data analysis provides a range of statistical tools for organising, presenting, analysing, and
interpreting data.
Descriptive statistics deals with describing the data using graphs, tables, and various
summary measures such as measures of central tendency and measures of variation.
Inferential statistics speaks about drawing some meaningful inferences from the data after
performing suitable statistical tests.
The population is a set of all the elements under a study of interest or research whereas the
sample is a subset derived from a population.
It is possible to make two types of inferences from data, namely, estimation and hypothesis.
When inferences are made about the exact values of the population parameters, then this
process is called estimation.
In hypothesis testing, the inferences are made about the population parameters which are
not about their exact values.
3. Glossary
Sampling The process of selecting a subset of population with a view to
study the characteristics of that population.
Estimation The process of inferring the value of an unknown parameter using
sampling.
Hypothesis testing The process of testing whether a statement regarding a population
parameter is true using sampling.
Descriptive statistics Numerical values are computed and used to describe the values in
a data set.
Inferential Statistics Drawing meaningful predictions from the data by using estimation
and hypothesis testing.
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