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BS 2nd Class

The document discusses key assumptions in statistics and different types of variables and scales of measurement. It explains that assumptions allow statistical tests and analyses to function correctly and help avoid biased conclusions. It also defines qualitative and quantitative variables and the nominal, ordinal, interval, and ratio scales of measurement.

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RitEsh SaHu
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23 views

BS 2nd Class

The document discusses key assumptions in statistics and different types of variables and scales of measurement. It explains that assumptions allow statistical tests and analyses to function correctly and help avoid biased conclusions. It also defines qualitative and quantitative variables and the nominal, ordinal, interval, and ratio scales of measurement.

Uploaded by

RitEsh SaHu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BUSINESS STATISTICS

SESSION II
Importance of Assumptions in Statistics
• Assumption about certain characteristic of the data
• Assumption of a chosen analysis allows to determine if we can correctly draw conclusions
from the results of the analysis.
• Think of assumptions as the requirements that must be fulfilled before conducting an
analysis.
• Violation of these assumptions changes the conclusion of the research and
interpretation of the results.
• Assumptions permits the tests to
• Function correctly
• Reach conclusions that are not biased by either over- or underrepresenting the magnitude of
relationships or the probability of a given outcome
• E.g.: Randomness, independence, normality, equal variance
Classification of Data
• Qualitative or Quantitative Variables

• How are we describing a variable?

• The statistical analysis that is appropriate


depends on whether the data for the variable
are categorical or quantitative.

• More alternatives for statistical analysis


when the data are quantitative
Qualitative/ Categorical Variable
• Measurement scale is categorical
• Grouped by specific categories
• Eg: color of your car; response to a yes/no question
Quantitative Variable
• Quantitative data are numerical data that can be expressed in numbers
• Indicate how many or how much
• Ordinary arithmetic operations are meaningful for quantitative data
• Eg: sales and demand, length, height, and volume

• Discrete (if measuring how many)


• Result of a counting process
• Eg: cars sold by Toyota in the last quarter, the number of houses sold last year, or the
number of defective parts produced by a company

• Continuous(if measuring how much)


• Data can take any value within a given range
• Ranges are defined as per the application
• Quantitative data are always numeric

• Qualitative data may be either numeric or nonnumeric

• E.g.: id numbers and automobile license plate numbers

• Most of the arithmetic operations are meaningful only with

quantitative data and are not meaningful with qualitative data.


What is/are the arithmetic operation that is appropriate
on Categorical variables?
• An identifying number for the household.
• Weight in pounds.
• Age in years.
• Travel time to work in minutes
• Level of education (a code differentiating different grades)
• Gender
• Income last year, in dollars.
• The Harris Poll did an online survey of 2286 adults within the United States. Among
the many questions, the survey asked if the respondents agreed or disagreed with
the statement, "Learning and habits from music education equip people to be
better team players in their careers.”
Following are the information about cars
• Make and Model
• Annual Fuel Cost
• Vehicle Class
• Mileage per gallon
• Transmission Type
Describing Data using Levels of Measurement

• Aka: Scales of Measurement


• The scale indicates the data summarization and statistical
analyses that are most appropriate.
Scales of Measurement - Nominal Scale
• Data are labels or names used to identify an attribute of the element
• Nonnumeric label or numeric code may be used.
• Observed data are classified into various distinct categories in which no ordering is implied
• Data obtained from a qualitative variable can be measured on a nominal scale.

• Weakest form of measurement


• Marital status:  Married  Single
• Stock ownership: Yes  No
• Political party affiliation:
•  Democrat
•  Republican
•  Independent
Scales of Measurement - Ordinal Scale
• A nonnumeric label or numeric code may be used.
• Establish a relative rank
• Value of interval is unknown

• Measure of non-numeric traits


• Tells which category is greater, but does not tell how much greater.

• Data obtained from a qualitative variable can be measured on a ordinal


scale.
• The data have the properties of nominal data and the order or rank of
the data is meaningful.
Scales of Measurement - Interval Scale

• Measurements are made on a quantitative


data
• Created when units of equal size is required

• Not only shows the order and direction but


also shows the exact difference in the value
• Interval data are always numeric
• Characteristics:
• Value of zero is arbitrary
• Zero is just a running value
• Distance is meaningful
Scales of Measurement - Ratio Scale
• Most informative scale
• The data have all the properties of interval data and the ratio
of two values is meaningful.
• Created by units of equal size (like an interval scale) with the
added condition that "zero" is not arbitrary
• zero value that indicates that nothing exists for the variable at the
zero point

• Variables such as distance, height, weight, and time use the


ratio scale.
Nominal
Qualitative Discrete
Ordinal
Data
Interval
Discrete or
Quantitative Continuous
Ratio
• A senator surveyed his constituents regarding his proposed water protection bill.
The choices for response were strong support, support, neutral, against, or
strongly against.
• socio economic status
• A national survey asked 1261 U.S. adult fast-food customers which meal
(breakfast, lunch, dinner, snack) they ordered
• NCCS classification - New Consumer Classification System
• Consider the assignments for describing electronic ways of expressing personal
opinions:
• 1 = Twitter
• 2 = e-mail
• 3 = text message
• 4 = Facebook
• 5 = blog

• GMAT Score
Why median and not mode for generalizing salary?

Consider the points A and B on the grey curve. If


we consider only mode, only point A will be
A considered as the generalized salary. But a
B
median will consider both the values at A and B
(How??: Refer text book about median calculation) to give a
generalized salary. Thereby providing a more
appropriate generalization than mode.

https://www.payscale.com/data/average-mean-median-mode
Can Ratio scale be negative?
Although negative values don't make any sense in ratio scale, it cannot be claimed that ratio scale cannot
be negative.
Eg: A value of zero calories means an absence of energy. However, if the definition of the measure is
changed, e.g., when the negative calories indicates an energy deficit rather than energy, a ratio scale will
have negative values.
Bank account balance: Although you can have a negative or positive account balance, there is a definite
and non-arbitrary meaning of an account balance of 0.

Ref:
http://web.pdx.edu/~newsomj/pa551/lecture1.htm
http://grants.hhp.coe.uh.edu/doconnor/PEP6305/Topic%20001%20Measurement1.2.htm

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