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Wa0000

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abdulqayumsomo
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CEC 3106:Economic Statistics I

Lecture one:Introduction to statistics

Abdiaziz Ahmed
Department of Economics and Development Studies
University of Nairobi
Email: [email protected]

Venue:LT 301
March 13th 2024

Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 1/8
Table of Contents

1 Content of Lecture One


Definition and nature of statistics
Subdivision with statistics
Definition of basic Statistical terms
Variable Types
Importance of statistics

Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 2/8
What is statistics?

Statistics is a collection of procedures and principles for gathering


data and analyzing information to help people make decisions when
faced with uncertainty.
Statistics is a branch of mathematics that deals with collecting,
organizing, analyzing, interpreting, and presenting data.
In economics, statistics is used to make sense of economic
phenomena, test hypotheses, and inform decision-making.
Involves the following steps:
1 Asking the right questions
2 Collecting useful data
3 Summarizing and analyzing data
4 Making decisions and generalizations based on the observed data
5 Turning the data and subsequent decisions into new knowledge

Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 3/8
Subdivision with statistics

Descriptive Statistics: Methods of organizing, summarizing, and


presenting data in a convenient and informative way.
Inferential statistics: Body of methods used to draw conclusions or
inferences about characteristics of populations based on sample data.

Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 4/8
Definition of basic Statistical terms
Population is the complete set of ALL items in which an investigator
is interested.
1 The population size is denoted by N.
2 Examples include: Health expenditure of ALL households in Kenya,
Age of ALL HIV/AIDS patients in Nairobi City County, Level of formal
education of ALL individuals in Uganda etc.
A parameter is a summary measure of a population.
Population and Sample: Population sizes are often large – usually
prohibitively expensive to collect complete information (time and
resources). A sample is a subset of a population. The sample size is
denoted by n.
A statistic is a summary measure of a sample. Examples include:
Health expenditure of households in 3 selected counties in Kenya, Age
of HIV/AIDS patients in Makadara, Nairobi.
Distinction between samples and population is important because of
inferential statistics.
Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 5/8
Definition of basic Statistical terms contd

Sample must be representative of the population to make valid


statements about the population.
Variables are characteristics of populations or samples that are of
interest for us. Examples include: Malaria medication used, Age, The
waiting time for medical services.
Data are the actual values of variables. Examples include: Quinine,
32 years, 3 weeks.

Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 6/8
Variable Types
Numerical Variables
1 Discrete variables produce responses that come from a counting
process and have finite values. Examples include the number of
hospitals in the Western Cape with a radiographer, number of children
in a household, number of languages a person speaks, etc.
2 Continuous variables produce responses that are outcomes of a
measurement process and have an infinite number of steps, forming a
continuum. Examples include height of Grade 2 children, weight of
first-year economics students, speed of a train, etc.
Categorical and Ordinal Variables
1 Categorical variables take on a limited number of categories which
are unordered. Examples include reported illness in the past 2 months
(Yes/No), sex (male/female), ownership of a cell phone (Yes/No),
marital status (married, divorced, widowed), etc.
2 Ordinal variables take on a limited number of categories which are
ordered. Examples include self-reported health status (Excellent, Very
Good, Good, Fair, Poor), highest educational degree, highest household
income (1=0- KES 24000; 2= KES 24001-KES 48000, 3= KES 48001-
KES 80,000), etc.
Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 7/8
Importance of statistics
Why Study Statistics in Economics?
1 Data Analysis: Economics deals with complex real-world data.
Statistics provides tools to analyze this data and extract meaningful
insights.
2 Inference: Statistics allows economists to draw conclusions about
populations based on sample data.
3 Policy Analysis: Economic policies are often evaluated using statistical
methods to assess their effectiveness and impact.
4 Forecasting: Statistics is used to forecast economic trends, such as
GDP growth, inflation rates, and unemployment.
Applications of Statistics in Economics:
1 Demand and Supply Analysis: Estimating demand and supply curves
using regression analysis.
2 Macroeconomic Analysis: Analyzing macroeconomic variables such as
GDP, inflation, and unemployment rates.
3 Financial Economics: Assessing risk and return in financial markets
using statistical techniques.
4 Policy Evaluation: Evaluating the impact of government policies on
economic outcomes using econometric methods.
Abdiaziz Ahmed CEC 3106:Economic Statistics I Venue:LT 301March 13th 2024 8/8

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