ECON1203 Business and Economic Statistics

Week 1

Week 1 topics

Administrative details Descriptive statistics

Frequency distributions & histograms Shapes of distributions Describing bivariate relations

Key references

Course outline Keller Chs 1-3

Administrative details: Staff

Lecturer-in-charge: Room: Phone No: Email: Consultation Times: Other lecturers: Room: Phone No: Email: Consultation Times: Professor Denzil G Fiebig ASB 444 9385 3958 [email protected] Mon 1-3, Wed 11-12 (or by appointment) Dr Chris Bidner QUAD 3119 9385 5911 [email protected] Thurs 2-5 (or by appointment) Dr Jay Lee QUAD 3121 9385 3325 [email protected] Tues 11:30-12:30, 5-6, Thurs 10:30-11:30 (or by appointment) Dr Marian Vidal-Fernandez ASB 459 9385 3319 [email protected] Wednesdays 4:30-6:30, Fri 11:30-12:30 (or by appointment) Lee Lee Ooi ASB 463 9385 3565 [email protected] Mon 2-4, Tues 2-3 (or by appointment)

Room: Phone No: Email: Consultation Times:

Room: Phone No: Email: Consultation Times: Tutor-in-charge: Room: Phone No: Email: Consultation Times:

Administrative details: Teaching & Learning

Keller 9th ed. provides detail & basic reference material Lectures provide

Overview Emphasis of key points Some worked examples Review & discussion opportunities Preview participate practice
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Tutorials provide

Learning cycle

Administrative details: What youre expected to know

BES will utilize prior knowledge from high school mathematics

Basic algebra Basic as c ca calculus cu us Basic probability

This is presumed knowledge & there will be no mathematics instruction in BES But BES is about statistics not mathematics

Administrative details: Assessment

Online quizzes designed to give timely feedback

Weeks 3,6, & 12 Week 8

Assessment Percentage Component of total mark Feedback quizzes In-tutorial test Project Final examination Total 6 14 20 60 100

In-tutorial test

EXCEL important but no direct computing mark

Some tutorial problems have computing part Major project requires EXCEL

Weekly tutorials (Weeks 2-13) prepare you for

Final examination

Administrative details: Lectures

Lecture notes will be sparse Lecture discussion will be more expansive There should be benefit in attending lectures Use textbook to fill any remaining i i gaps Textbook provides extensive reference material Worked examples in lectures will appear with space for an answer Statistics in action (SIA) will use real case studies

Worked eg on frequency distributions (So, it its s probably a good idea to print out the lecture slides so you can fill in the answers as they occur.)

Administrative details: Why BES?

Its a Faculty requirement! BES covers basic statistics

Statistics = collecting, analyzing & interpreting data

Statistical information & analysis is pervasive in business & other disciplines

Provides skills for real-world decision making Provides foundation for all 2nd year econometrics subjects Underpins quantitative analysis across all ASB schools

Applications of interest to accounting, economics, finance, management & marketing students

the sexy job in the next 10 years will be statisticians. And Im not kidding. Hal Varian, Chief economist@Google
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Administrative details: Statistical & generic skills developed

By end of BES you should be able to

Identify appropriate statistical methods for describing data & making inferences about population parameters Apply appropriate statistical methods to samples of data Use statistical reasoning to aid in problem solving Use EXCEL to apply appropriate statistical methods Write a basic business report documenting statistical analyses Critically evaluate statistical work of others

Statistics in action (SIA)

Case studies using real, contemporary data

Motivating examples in lectures Material for tutorial problems Suggest prototype project problems

Examples may include

Baby bonus Cars in China Private health insurance Petrol prices Migrant wealth Sydney housing prices Crime statistics
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SIA: Baby bonus

Australian Government introduced a $3000 baby bonus in July 1, 2004

Increased again July 1, 2006 Analysis based on Gans & Leigh (2008) If so by how much? Note: change announced 7 weeks before implementation Daily births in Australia for 1975-2004 from Australian Bureau of Statistics (ABS)

Did women react to this economic incentive?

Data?

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SIA: Baby bonus

Heres (part of) the data BUT need descriptive statistics in order to

Summarize data Facilitate interpretation Analyse the research question

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SIA: Baby bonus

Figure 1: The Introduction Effect
Number of births per day 600 800 1000

Panel A: Raw Data

400

July 1

June 10

June 17

June 24

July 7

July 14

July 21

400

Number of births per day 500 600 700 800

900

Panel B: Controlling for Day-of-Week Effects

July 1

June 10

June 17

June 24

June 3

July 7

July 14

July 21

1975-2003

2004

July 28

July 28

June 3

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SIA: Baby bonus

What are the key features of these data?

Statistical concepts?

Population Parameter Sample Statistic Statistical inference

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Types of data

A variable is a characteristic of a population or of a sample from a population We observe values or observations of a variable A data set contains observations on variables Variables may be Discrete or continuous

Discrete example - football scores Continuous example - time remaining in football game

Quantitative (interval, numerical) or qualitative (nominal, categorical)

Scores & time are quantitative Gender is qualitative This course is poor, good, very good Standard & Poors ratings AAA > AAA- > AA+ > AA
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Ordinal data are qualitative but there is an ordering

Types of data

Type of observation can also be used to classify data Time series data refer to measurements at different points in time

Eg: SIA Baby bonus births per day E SIA Sydney Eg: S d housing h i prices i b by suburb b b

Cross sectional data are measurements at single point in time

Data type can influence what is appropriate by way of analysis Total number of births per day makes sense Suppose marital status is coded as Single =1, Married =2, Divorced =3, Widowed=4;

Does it make sense to total the marital status of a sample of individuals?

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Descriptive statistics

Difficult to determine key features of data

Need to organize & summarize data in order to extract information This is role of descriptive statistics

There is a vast range of tools & techniques

Some are graphical, some numerical Type of data may impact on which to use

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Frequency distributions

Want to summarize categorical data with associated counts UNSW interested in t transport t issues i

Mode of Frequency transport to campus Resident Walk Cycle Car Bus Other Total

Relative Frequency

How do people travel to campus? (http://www.facilities.unsw.e du.au/getting-uni ) Categories need to be mutually exclusive & exhaustive

100

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Bar charts & pie charts

Provide graphical representation of frequency distributions 2011 UNSW Travel S Survey sample l of f 5881

Barchartofmode oftransporttoUNSWcampus
3000

2500

2000

47 (0.8%) Resident 628 (10.7%) Walk 210 (3.6%) Bike 1032 (17.5%) Car 1188 (20.2%) Bus 2776 (47.2%) Other

1500

1000

500

0 Resident Walk Bike Car Bus Other

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Bar charts & pie charts

Pie charts show relative frequencies Whats What s in the Other Other category?

Piechart of modeoftransport toUNSWcampus

Resident 1% Walk 11% Bike 4%

Other 47%

Car 17%

Bus 20%

Modifiedpiechart ofmodeof transport toUNSWcampus

Resident 1% Walk 11% Bike 4%

Bus&train 45%

Car 17%

Other 2%

Bus 20%

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Histograms

Suppose data are quantitative & not qualitative

Obvious categories may not exist But we can create categories or classes Define lower and upper class limits These need to be mutually exclusive & exhaustive Too many doesnt summarize Too few no information No set rules although more observations more classes Classes need not be of equal width & may be open-ended Final marks for 60 students
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How many classes? (EXCEL calls them bins)

Keller Ex 3.3: Business Statistics Marks

Histograms

"Aussie" Marks histogram

35 30 25 20 15 10 5 0 49 64 74 Marks 84 100

Frequency

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Histograms

Beware of EXCEL features

incorrect

Histogram for Example 2.6

30 25 Frequency 20 15 10 5 0 50 60 70 Bin 80 90 More

Should be no gaps between bars for quantitative data Classes defined by upper limits when class midpoints may be more natural Bar areas should be proportional to frequencies (refer Ch 8, p 265)

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Other distributions & displays

Can convert information in frequency distributions into:

Cumulative frequency or (cumulative) relative frequency distributions Aussie marks eg - How many students got a credit or better? Associated cumulative histograms & ogives May be interesting information lost in histograms Do examiners avoid marks close to borderline?
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Stem-and-leaf displays

See Keller 3.1 for more discussion & examples

Key features: Shapes of histograms

Symmetry

Left half of histogram is a mirror image of right half Famous bell-shape is symmetric Asymmetric A t i histogram hi t Long tail to the right (positively skewed) Long tail to the left (negatively skewed) May be associated with outliers Modal class is class with highest frequency Histograms may be unimodal or multimodal
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Skewness

Number of modal classes

A key feature: Shapes of histograms

From Keller Ex 3.2 Histogram of returns on Investment A is Modal class is No. of modal classes?

Therefore histogram is

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Bivariate relations

Want to extend univariate analyses to characterize relationships between variables

Contingency table (Cross-tabulation table)

For relationship between qualitative variables For relationship between quantitative variables If one of the variables is time we get a time series plot (line chart)

Scatter plots

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Mode of transport example: Staff/student differences?

What does the bar graph highlight?

Mode Resident Walk Cycle Car Bus Bus & train Other Total

Staff

Commuter type Student

Total

0 97 52 472 186 230 25 1062

47 531 158 560 1002 2439 82 4819

47 628 210 1032 1188 2669 107 5881

Frequency

Is there a better representation?

Modeoftransport bycommutertype
3000 2500 2000 1500 1000 500 0 Resident Walk Bike Staff Car Students Bus Bus& train Other

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Scatter plots

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SIA: Cars in China

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SIA: Cars in China

What are the key features of these data?

Read Keller Ch 3.4

How does this graph rate in terms of characteristics for graphical excellence?
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Time series plot

Bivariate relationship between variable Y & time

With time series data order matters Business cycles defined by extended periods of growth or contraction Relatively sophisticated time plot

SIA: Baby bonus

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SIA: Petrol prices

Quarterly unleaded petrol prices: December 1980 to December 2005
120

100

Cents per litre

80

60

40

20

0 1982 Sept 1984 Sept 1986 Sept 1988 Sept 1990 Sept 1992 Sept 1994 Sept 1996 Sept 1998 Sept 2000 Sept 2002 Sept 2005 Sept

Sydney

Melbourne

Brisbane

33

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SIA: Petrol prices

What are the key features of these data?

Do these data inform motorists about the best time to buy petrol?

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SIA: Petrol prices

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SIA: Petrol prices

Pattern representative of daily price movements in Sydney in winter 2006 Consider daily data June 11 2006-July 10 2006

Notable price variation from day to day D t Determine i d day of f weekly kl peak k and dt trough h Common day for prices to peak was Thursday No peaks (or troughs) on Monday, Tuesday, Friday, Saturday or Sunday Common day for prices to trough was Tuesday No troughs on Wednesday, Thursday, Friday or Saturday No days when prices both peaked & troughed
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Consider longer period of daily data (not shown)

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SIA: Petrol prices

Would bar or pie charts be useful in displaying the weekly peak & trough data?

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