Basics of Statistics

Statistics is the art and science of collecting, analyzing, interpreting, presenting, and organizing data.

Why Study Statistics?

In business, we make decisions under uncertainty. Statistics provides the tools to minimize risk and make data-driven choices.

Types of Statistics

  • Descriptive Statistics: Summarizing data (e.g., "The average salary is $50,000").
  • Inferential Statistics: Making predictions about a population based on a sample (e.g., "Based on the survey, we predict 60% of voters will win").

Data Types & Scales

Knowing your data type determines which test you can use.

1. Qualitative (Categorical)

  • Nominal: Names/Labels (e.g., Gender, Eye Color). No order.
  • Ordinal: Ordered categories (e.g., Ratings: Poor, Fair, Good).

2. Quantitative (Numerical)

  • Interval: Differences are meaningful, but no true zero (e.g., Temperature in Celsius).
  • Ratio: True zero exists (e.g., Height, Weight, Salary).

Population vs Sample

Analogy

Population: The entire soup in the pot.

Sample: A spoonful of the soup.

Parameter: A fact about the whole pot (e.g., "The soup is salty"). Symbol: $\mu$ (mean).

Statistic: A fact about the spoonful (e.g., "This spoon is salty"). Symbol: $\bar{x}$ (mean).

Test Yourself

Q1: "Zip Code" is an example of which level of measurement?

  • Nominal
  • Ordinal
  • Interval

Q2: A numerical value describing a sample is called a:

  • Parameter
  • Statistic
  • Variable