Getting Started with

Statistical Analysis
Applications in Business and Economics
In today’s global business and economic environment, anyone can access vast amounts of statistical
information. The most successful managers and decision makers understand the information and know
how to use it effectively.

Accounting- Public accounting firms use statistical sampling procedures when conducting audits for
their clients.

Finance- Financial analysts use a variety of statistical information to guide their investment
recommendations. In the case of stocks, the analysts review a variety of financial data including
price/earnings ratios and dividend yields. By comparing the information for an individual stock with
information about the stock market averages, a financial analyst can begin to draw a conclusion as to
whether an individual stock is over- or underpriced.
Data

● Data are the facts and figures collected, analyzed, and summarized for presentation and
interpretation.

● All the data collected in a particular study are referred to as the data set for the study.

● Elements are the entities on which data are collected.

● Variable is a characteristic of interest for the elements.

Elements
Scales of Measurement
Data collection requires one of the following scales of measurement: nominal, ordinal, interval,
or ratio. The scale of measurement determines the amount of information contained in the data
and indicates the most appropriate data summarization and statistical analyses.
● Nominal Scale- refers when the data for a variable consist of labels or names used to
identify an attribute of the element.

● Ordinal Scale- refers when the data exhibits the properties of nominal data and the order
or rank of the data is meaningful.
● Interval Scale- refers when the data have all the properties of ordinal data and the interval
between values is expressed in terms of a fixed unit of measure. Interval data are always
numeric.

● Ratio Scale- if the data have all the properties of interval data and the ratio of two values is
meaningful. Variables such as distance, height, weight, and time use the ratio scale of
measurement.
Categorical and Quantitative Data

Categorical data use either the nominal or ordinal scale of measurement.

Quantitative data are data that use numeric values to indicate how much
or how many. These are obtained using either the interval or ratio scale of
measurement.
● A categorical variable is a variable with categorical data, and a quantitative variable is a variable
with quantitative data. The statistical analysis appropriate for a particular variable depends upon
whether the variable is categorical or quantitative. If the variable is categorical, the statistical
analysis is limited.
● Arithmetic operations provide meaningful results for quantitative variables. For example,
quantitative data may be added and then divided by the number of observations to compute the
average value. This average is usually meaningful and easily interpreted. In general, more
alternatives for statistical analysis are possible when data are quantitative.
Cross-sectional and Time Series Data

● Cross-sectional data are data collected at the same or

Existing sources- Companies maintain a variety of databases about their employees, customers, and business
operations. Data on employee salaries, ages, and years of experience can usually be obtained from internal
personnel records. Other internal records contain data on sales, advertising expenditures, distribution costs,
inventory levels, and production quantities. The Internet continues to grow as an important source of data and
statistical information. Almost all companies maintain websites that provide general information about the
company as well as data on sales, number of employees, number of products, product prices, and product
specifications.
● Statistical Studies- Sometimes the data needed for a particular
application are not available through existing sources. In such cases,
the data can often be obtained by conducting a statistical study.
Statistical studies can be classified as either experimental or
observational.
● Anyone wanting to use data and statistical analysis as aids to decision making
must be aware of the time and cost required to obtain the data. The use of
existing data sources is desirable when data must be obtained in a relatively
short period of time. If important data are not readily available from an existing
source, the additional time and cost involved in obtaining the data must be
taken into account.
Data Acquisition Errors

● Managers should always be aware of the possibility of data errors in statistical studies. Using
erroneous data can be worse than not using any data at all. An error in data acquisition occurs
whenever the data value obtained is not equal to the true or actual value that would be obtained
with a correct procedure. Such errors can occur in a number of ways.
● For example, an interviewer might make a recording error, such as a transposition in writing the
age of a 24-year-old person as 42, or the person answering an interview question might
misinterpret the question and provide an incorrect response.
Descriptive Statistics

● Most of the statistical information in newspapers, magazines, company reports, and other
publications consists of data that are summarized and presented in a form that is easy for the
reader to understand. Such summaries of data, which may be tabular, graphical, or numerical, are
referred to as descriptive statistics.
Statistical Inference
● A population is the set of all elements of interest in a particular study.
● A sample is an analytic subset of a larger population. The use of samples allows researchers to conduct their
studies with more manageable data and in a timely manner.
● Characteristics of a population (like the population average) are called parameters, and characteristics of a
sample (like the sample average) are called statistics.
● When you confine your field of view to samples, your statistics are descriptive. When you broaden your
horizons and concern yourself with populations, your statistics are inferential.

The process of conducting a survey to collect data for the entire population is called a census. The process
of conducting a survey to collect data for a sample is called a sample survey. As one of its major
contributions, statistics uses data from a sample to make estimates and test hypotheses about the
characteristics of a population through a process referred to as statistical inference.
Relationship between population, samples,
parameters and statistics
Ethical Guidelines for Statistical Practice

Ethical issues arise in statistics because of the important role statistics plays in the
collection, analysis, presentation, and interpretation of data. In a statistical study,
unethical behavior can take a variety of forms including improper sampling,
inappropriate analysis of the data, development of misleading graphs, use of
inappropriate summary statistics, and/or a biased interpretation of the statistical
results.
Thank you!