Applied Statistics in Business &

Economics, 6th edition

David P. Doane and Lori E. Seward

Prepared by Lloyd R. Jaisingh

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 Chapter 3
Describing Data Visually
Chapter Contents
3.1 Dot Plots
3.2 Frequency Distributions and Histograms
3.3 Effective Excel Charts
3.4 Line Charts
3.5 Column and Bar Charts
3.6 Pie Charts
3.7 Scatter Plots
3.8 Tables
3.9 Deceptive Graphs

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 Chapter 3
Chapter Learning Objectives
LO3-1: Dot plot.
LO3-2: Create a frequency distribution for a data set.
LO3-3: Make a histogram with appropriate bins.
LO3-4: Identify skewness, modal classes, and outliers in a
histogram.
LO3-5: Make an effective line chart.

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 Chapter 3
Chapter Learning Objectives (continued)
LO3-6: Make an effective column chart or bar chart.
LO3-7: Make an effective pie chart.
LO3-8: Make and interpret a scatter plot.
LO3-9: Make simple tables and pivot tables.
LO3-10: Recognize deceptive graphing techniques.

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 Chapter 3
3.1 Stem-and-Leaf Displays and Dot Plots
LO3-1: Dot plot.

Methods of organizing, exploring, and summarizing data include:

• Visual (charts and graphs) provides insight into characteristics of
a data set without using mathematics.
• Numerical (statistics or tables) provides insight into
characteristics of a data set using mathematics.

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 Chapter 3
LO3-1: Make a stem-and-leaf or dot plot (continued).
Begin with univariate data (a set of n observations on one
variable) and consider the following (Table 3.1):

Characteristic Interpretation

What are the units of measurement

(e.g., dollars)? Are the data integer or
Measurement continuous? Any missing observations?
Any concerns with accuracy
or sampling methods?

Where are the data values

Center concentrated? What seem to be typical
or middle data values?

How much dispersion is there in the

Variability data? How spread out are the data
values? Are there unusual values?

Are the data values distributed

Shape symmetrically? Skewed? Sharply
peaked? Flat? Bimodal?

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 Chapter 3
LO3-1: Make a stem-and-leaf or dot plot (continued, 2).
Preliminary Assessment
• Look at the data and visualize how they were collected and
measured.
• Sorting (Example: Price/Earnings Ratios)
• Sort the data as a first step and then summarize in a graphical
display. Here are the sorted P/E ratios (values from Table 3.2).

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 Chapter 3
LO3-1: Make a stem-and-leaf or dot plot (continued, 6).
Dot Plots
• A dot plot is the simplest graphical display of n individual values of numerical
data.
• Easy to understand.
• It reveals dispersion, central tendency, and the shape of the distribution .

Steps in Making a Dot Plot

1. Make a scale that covers the data range.
2. Mark the axes and label them.
3. Plot each data value as a dot above the scale at its approximate
location.

Note: If more than one data value lies at about the same axis location, the
dots are stacked vertically.

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 Chapter 3
LO3-1: Make a stem-and-leaf or dot plot (continued, 7).
Below is the dot plot for the P/E Ratios.

• The range is from 7 to 59.

• All but a few data values lie between 10 and 25.
• A typical “middle” data value would be around 17 or 18.
• The data are not symmetric due to a few large P/E ratios.

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 Chapter 3
LO3-1: Make a stem-and-leaf or dot plot (continued, 8).
Comparing Groups
• A stacked dot plot can be used to compares two or more groups
using a common X-axis scale.

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 Chapter 3
3.2 Frequency Distributions and Histograms

LO3-2: Create a frequency distribution for a data set.

Bins and Bin Limits
• A frequency distribution is a table formed by classifying n data values
into k classes (bins).
• Bin limits define the values to be included in each bin. Widths must
all be the same except when we have open-ended bins.
• For guidance, find the approximate width of each bin by dividing the
data range by the number of bins: (xmax – xmin)/k.
• Frequencies are the number of observations within each bin.
• Express as relative frequencies (frequency divided by the total) or
percentages (relative frequency times 100).

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 Chapter 3
LO3-2: Create a frequency distribution for a data set
(continued).
Constructing a Frequency Distribution
Herbert Sturges proposed the following rule:

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 Chapter 3
LO3-2: Create a frequency distribution for a data set
(continued, 2).
For the P/E ratio, the smallest P/E ratio was 7 and the largest P/E ratio was
59, so if we want to use k = 6 bins, we calculate the approximate bin width
as (59 − 7)/6 = 8.67.
To obtain “nice” limits, we could round the bin width up to 10 and choose
bin limits of 0, 10, 20, 30, 40, 50, 60.

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 Chapter 3
LO3-3: Make a histogram with appropriate bins.

Histograms
• A histogram is a graphical representation of a
frequency distribution.
• A histogram is a bar chart.
• Y-axis shows frequency within each bin.
• X-axis ticks shows end points of each bin.

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 Chapter 3
LO3-3: Make a histogram with appropriate bins (continued).

Consider 3 histograms for the P/E ratio data with different bin widths.
What do they tell you?

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 Chapter 3
LO3-3: Make a histogram with appropriate bins
(continued, 2).
• Choosing the number of bins and bin limits in creating
histograms requires judgment.
• One can use software programs to create histograms with
different bins. These include software such as:
• Excel
• MegaStat
• Minitab

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram.

Modal Class
• A histogram bar that is higher than those on either
side.
• Unimodal – a single modal class.
• Bimodal – two modal classes.
• Multimodal – more than two modal classes.
• Modal classes may be artifacts of the way bin limits are
chosen.

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram (continued).

Shape
• A histogram may suggest the shape of the population.
• It is influenced by the number of bins and bin limits.
• Skewness – indicated by the direction of the longer tail of
the histogram.
• Left-skewed – (negatively skewed) a longer left tail.
• Right-skewed – (positively skewed) a longer right tail.
• Symmetric – both tail areas are the same.

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram (continued, 2).

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram (continued, 3).

• An outlier is an extreme value that is far enough from

the majority of the data that it probably arose from a
different cause or is due to measurement error.
• We will define outliers more precisely in the next
chapter.
• For now, think of outliers as unusual points located in
the histogram tails.

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram (continued, 4).

Frequency Polygons and Ogive

• A frequency polygon is a line graph that connects the midpoints of
the histogram intervals, plus extra intervals at the beginning and end
so that the line will touch the X-axis.
• It serves the same purpose as a histogram but is attractive when you
need to compare two data sets (since more than one frequency
polygon can be plotted on the same scale).
• An ogive (pronounced “oh-jive”) is a line graph of the cumulative
frequencies.
• It is useful for finding percentiles or in comparing the shape of the
sample with a known benchmark such as the normal distribution
(that you will be seeing in the next chapter).

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 Chapter 3
LO3-4: Identify skewness, modal classes, and outliers in a
histogram (continued, 5).

Frequency Polygons and Ogives

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 Chapter 3
3.3 Effective Excel Charts
This section describes how to use Excel to create charts. Excel
offers a vast array of charts. Refer to Figure 3.8 and to the text
as well.

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 Chapter 3
3.4 Line Charts
LO3-5: Make an effective line chart.

Simple Line Charts

• Used to display a time
series or spot trends, or
to compare time
periods.
• Can display several
variables at once.

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 Chapter 3
LO3-5: Make an effective line chart (continued).
Simple Line Charts
• Two-scale line chart – used to compare variables that differ in
magnitude or are measured in different units.

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 Chapter 3
3.5 Column and Bar Charts
LO3-6: Make an effective column chart or bar chart.
• A column chart is a vertical display of the data.
• A bar chart is a horizontal display of the data.

Figure 3.14 shows

simple column and
bar charts
comparing market
shares among tire
manufacturers.

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 Chapter 3
LO3-6: Make an effective column chart or bar chart
(continued, 2).
Stacked Column Chart
• Bar height with the sum of
several subtotals. Areas may
be compared by color to
show patterns in the
subgroups and total.

Source: www.aamc.org

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 Chapter 3
3.6 Pie Charts

LO3-7: Make an effective pie chart.

Pie Chart
• A pie chart can only convey a general idea of the data.
• Pie charts should be used to portray data which sum to a
total (e.g., percent market shares).
• A pie chart should only have a few (i.e., 2 to 5) slices.
• Each slice can be labeled with data values or percents.

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 Chapter 3
LO3-7: Make an effective pie chart (continued).
Pie Chart
• A simple 2-D pie chart is best, as shown in Figure 3.17.

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 Chapter 3
LO3-7: Make an effective pie chart (continued, 2).
Pie Chart
• The 3-D pie chart adds visual interest, but the sizes of the pie
slices are harder to assess.

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 Chapter 3
LO3-7: Make an effective pie chart (continued, 3).
Bar Chart
• A simple bar chart can be used to display the same data, and would
be preferred by many statisticians.

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 Chapter 3
3.7 Scatter Plots
LO3-8: Make and interpret a scatter plot.

• Scatter plots can convey patterns in data pairs that would

not be apparent from a table.
• A scatter plot is a starting point for bivariate data analysis
in which we investigate the association and relationship
between two quantitative variables.
• View the next slide for an example.

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued).

The figure shows a scatter plot

with life expectancy on the X-
axis and birth rates on the Y-
axis. In this illustration, there
seems to be an association
between X and Y. That is,
nations with higher birth rates
tend to have lower life
expectancy (and vice versa). No
cause-and-effect relationship is
implied because, in this
example, both variables could
be influenced by a third variable
that is not mentioned (e.g., GDP
per capita).

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued, 2).
• Figure 3.21 shows some scatter plot patterns similar to those that you
might observe when you have a sample of (X, Y) data pairs.
• A scatter plot can convey patterns in data pairs that would not be
apparent from a table.

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued, 3).
Other examples of scatter plots.

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued, 4).

Other examples of scatter plots (continued).

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued, 5).

Other examples of scatter plots (continued).

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 Chapter 3
LO3-8: Make and interpret a scatter plot (continued, 6).

Other examples of scatter plots (continued).

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