UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA (USIU-A)

COURSE DESCRIPTION: BUSINESS STATISTICS

COURSE CODE: BUS 6225-B

DATE: 15th February, 2019

NAME : HARUN, PATRICK

STUDENT I.D NUMBER: 658436

SUPERVISOR: DR. PHARES OCHOLA

INDIVIDUAL ASSIGNMENT

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5. DISTINGUISH BETWEEN DESCRPITIVE AND INFERENTIAL STATISTICS
HIGHLIGHTING THE KEY FEATURES OF EACH

 The study of statistics can be categorized into two main branches:- descriptive statistics and
inferential statistics.

 Descriptive and inferential statistics each give different insights into the nature of the data
gathered. One alone cannot give the whole picture. Together, they provide a powerful tool foboth
description and prediction

Descriptive statistics

 Descriptive Statistics refers to a discipline that quantitatively describes the important

characteristics of the dataset. It gives information that describes the data in some manner.

 For the purpose of describing properties, it uses measures of central tendency, i.e. mean, median,
mode and the measures of dispersion i.e. range, standard deviation, quartile deviation and
variance, etc.

Inferential Statistics
 Inferential Statistics is used to determine the probability of properties of the population on the
basis of the properties of the sample, by employing probability theory.

 Inferential Statistics is all about generalising from the sample to the population. It is a convenient
way to draw conclusions about the population when it is not possible to query each and every
member of the universe. The sample chosen is a representative of the entire population;
therefore, it should contain important features of the population.

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Key differences between Descriptive and Inferential Statistics

DESCRIPTIVE
INFERENTIAL STATISTICS
STATISTICS

Meaning it is concerned with describing it focuses on drawing conclusions about the

the population under study. population, on the basis of sample analysis and
observation.

What it Organize, analyze and present Compares, test and predicts data.
does? data in a meaningful way.

Form of Charts, Graphs and Tables Probability

final Result

Usage It describes a situation It explains the chances of occurrence of an

event

Function It explains already known data, It extends beyond the data known and aims at
to summarize sample. reaching a conclusion to learn about the
population.

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5.2 WRITE SHORT NOTES ON THE FOUR LEVEL OF MEASUREMENTS GIVING TWO
EXAMPLES OF EACH

 Nominal, Ordinal, Interval and Ratio are the four fundamental levels of measurement scales used
to capture data in the form of surveys and questionnaires. Each is in multiple choice
question. Each scale fulfills the function of the previous scale and all survey question scales.

Nominal Scale: 1st Level of Measurement

 This is a naming scale, where variables are simply “named” or labeled, with no specific order. It
is the scale used for labeling variables into distinct classifications and doesn’t involve a
quantitative value or order.
 It gives no numerical value of the options and therefore one cannot do calculations using the
variables on the scale. The numbers associated with variables of this scale are only tags for
categorization or division. This scale is the simplest of the four variable measurement scales.
 Nominal scale data can be collected by two primary ways:-
o By asking an open-ended question, the answers of which can be coded to a respective number of
label decided by the researcher; or
o By including a multiple choice question in which the answers will be labeled.

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 Data is analyses using the most common answer given to a specific question.
 Examples of Nominal Scale include:-

o What is your Gender? M- Male or F- Female

o What Car do you Prefer? BMW; Mercedez or Range Rover
o What is your political affiliation? Ruling Party or The opposition
o Civil status – single or married
o Religion – Muslim, Christian, Buddhist, Shinto

 Notice that the categories of each nominal variable do not indicate that one is superior or greater
than the other. These are mainly classifications that separate one group from the other.

Ordinal Scale: 2nd Level of Measurement

 It is the scale used to simply depict the order of variables and not the difference between each of
the variables. These scales are generally used to depict non-mathematical ideas such as
frequency, satisfaction, happiness, a degree of pain etc.

 Example: When using Ordinal Scale the kind of questions used include; how satisfied are you
with our services?
1. Very satisfied ; 2 Satisfied; 3 Neutral; 4 unsatisfied; 5 Very unsatisfied

 Here, the order of variables is of prime importance and so is the labeling. Very unsatisfied will
always be worse than unsatisfied and satisfied will be worse than very satisfied. Analyzing
results based on the order along with the name becomes a convenient process for the researcher.

Interval Scale: 3rd Level of Measurement

 Interval Scale is defined as a numerical scale where the order of the variables is known as well as
the difference between these variables.
 The interval scale of measurement measures variables better than the rank order mode of the
ordinal scale of measurement.

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 Examples of variables that can be measured using this statistical scale of measurement are the
following:-
o temperature in 5 degree intervals – 5, 10, 15, 20;
o Number of student absences in one week – week 1 absence, week 2 absence, week 3 absence;
o Water volume in 5 milliliter increments – 5 ml, 10 ml, 15 ml, 20 ml;

 Interval scale contains all the properties of ordinal scale, in addition to which, it offers a
calculation of the difference between variables. The main characteristic of this scale is the
equidistant difference between objects.

Ratio Scale: 4th Level of Measurement

 Ratio Scale is defined as a variable measurement scale that not only produces the order of variables but
also makes the difference between variables known along with information on the value of true zero. It is
calculated by assuming that the variables have an option for zero, the difference between the two
variables is the same and there is a specific order between the options.

 The ratio scale of measurement works similarly with the interval scale.

 Examples of ratio variables are the following:-

o weight in kilograms or pounds;
o height in meters or feet;
o distance of school from home;
o amount of money spent during vacation

5.3 STATE THE STRENGTH AND WEAKNESS OF THE FOLLOWING MEASURES OF

CENTRAL TENDENCY

 The relative position of the three measures of central tendency (mean, median, and mode)
depends on the shape of the distribution. All three measures are identical in a normal
distribution.
Mean

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 Mean refers to average. It is the commonly used method for measuring Central tendency. We
find mean by sum of the values divided by the total number of items. The Result is referred as
the Arithmetic mean.

 Mean= sum of the values/ total number of items

Median

 Median is the value which occupies the middle position when all the observations are arranged in
an ascending/descending order. It divides the frequency distribution exactly into two halves.
Fifty percent of observations in a distribution have scores at or below the median.
 It is easy to calculate the median. If the number of observations are odd, then (n + 1)/2th
observation (in the ordered set) is the median.
 When the total number of observations are even, it is given by the mean of n/2th and (n/2 + 1)th
observation.
Advantages
o It can be determined for ratio, interval, and ordinal scale;
o It is easy to compute and comprehend;
o It is not distorted by outliers/skewed data.

Disadvantages

o It does not take into account the precise value of each observation and hence does not use all
information available in the data;
o If we pool the observations of two groups, median of the pooled group cannot be expressed in
terms of the individual medians of the pooled groups;
o Unlike mean, median is not amenable to further mathematical calculation and hence is not used
in many statistical tests.

Mode

 Mode is defined as the value that occurs most frequently in the data. Some data sets do not have
a mode because each value occurs only once. On the other hand, some data sets can have more
than one mode. This happens when the data set has two or more values of equal frequency which

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 is greater than that of any other value. Mode is rarely used as a summary statistic except to
describe a bimodal distribution. In a bimodal distribution, the taller peak is called the major
mode and the shorter one is the minor mode.

Advantages

o It is the only measure of central tendency that can be used for data measured in a nominal scale;
o It can be calculated easily;

Disadvantages

o It is not used in statistical analysis as it is not algebraically defined and the fluctuation in the
frequency of observation is more when the sample size is small

 Mean is generally considered the best measure of central tendency and the most frequently used
one. However, there are some situations where the other measures of central tendency are
preferred.
 Median is preferred to mean when:-
o There are few extreme scores in the distribution;
o Some scores have undetermined values;
o There is an open ended distribution;
o Data are measured in an ordinal scale;
o Mode is the preferred measure when data are measured in a nominal scale;
o Geometric mean is the preferred measure of central tendency when data are measured in
a logarithmic scale.

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