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2003 Pearson Prentice Hall

Numerical Data
Properties & Measures
Numerical Data
Properties
Mean
Median
Mode
Central
Tendency
Range
Variance
Standard Deviation
Variation
Skew
Shape
Interquartile Range
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2003 Pearson Prentice Hall
Range
1. Measure of Dispersion
2. Difference Between Largest & Smallest
Observations
3. Ignores How Data Are Distributed
Range = X X
l est smallest arg
7 8 9 10 7 8 9 10
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2003 Pearson Prentice Hall
Numerical Data
Properties & Measures
Numerical Data
Properties
Mean
Median
Mode
Central
Tendency
Range
Interquartile Range
Variance
Standard Deviation
Variation
Skew
Shape
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2003 Pearson Prentice Hall
Variance &
Standard Deviation
1. Measures of Dispersion
2. Most Common Measures
3. Consider How Data Are Distributed
4. Show Variation About Mean (X or )
4 6 8 10 12
X = 8.3
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2003 Pearson Prentice Hall
Sample Variance
Formula
n - 1 in denominator!
(Use N if Population
Variance).
S
X X
n
X X X X X X
n
i
i
n
n
2
2
1
1
2
2
2 2
1
1
=


=
+ + +

=

c h
c h c h c h

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2003 Pearson Prentice Hall
Sample Standard
Deviation Formula
S S
X X
n
X X X X X X
n
i
i
n
n
=
=


=
+ + +

=

2
2
1
1
2
2
2 2
1
1
c h
c h c h c h

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2003 Pearson Prentice Hall
Critical Thinking
1. Why the variance formula must be
defined as the square of the deviation
of the data from the mean? Why not
just the deviation of the data from the
mean?
2. Which should be preferred? Variance
or Standard Deviation?
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2003 Pearson Prentice Hall
Variance Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7
S
X X
n
X
X
n
S
i
i
n
i
i
n
2
2
1 1
2
2 2 2
1
8 3
10 3 8 3 4 9 8 3 7 7 8 3
6 1
6 368
=


= =
=
+ + +

=
= =

c h
a f a f a f
where .
. . . . . .
.

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2003 Pearson Prentice Hall
Variation Solution*
Sample Variance
Raw Data: 17 16 21 18 13 16 12 11
S
X X
n
X
X
n
S
i
i
n
i
i
n
2
2
1 1
2
2 2 2
1
15 5
17 15 5 16 15 5 11 15 5
8 1
11 14
=


= =
=
+ + +

=
= =

c h
a f a f a f
where .
. . .
.

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2003 Pearson Prentice Hall
Variation Solution*
Sample Standard Deviation
S S
X X
n
i
i
n
= =


= =
=

2
2
1
1
11 14 3 34
c h
. .
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2003 Pearson Prentice Hall
Summary of
Variation Measures
Measure Equation Description
Range X
largest
- X
smallest
Total Spread
Interquartile Range Q
3
- Q
1
Spread of Middle 50%
Standard Deviation
(Sample)
X X
n
i


( )

2
1
Dispersion about
Sample Mean
Standard Deviation
(Population)
X
N
i X
( )


2
Dispersion about
Population Mean
Variance
(Sample)
E ( X
i
- X )
2
n - 1
Squared Dispersion
about Sample Mean
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2003 Pearson Prentice Hall
Shape
Can indicate What the
Distribution of the Data Set
is
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2003 Pearson Prentice Hall
Numerical Data
Properties & Measures
Numerical Data
Properties
Mean
Median
Mode
Central
Tendency
Range
Interquartile Range
Variance
Standard Deviation
Variation
Skew
Shape
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2003 Pearson Prentice Hall
Shape
1. Describes How Data Are Distributed
2. Measures of Shape
Skew = Symmetry
Right-Skewed Left-Skewed Symmetric
Mean = Median = Mode Mean Median Mode Mode Median Mean
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2003 Pearson Prentice Hall
Quartiles & Box Plots
1. Quartiles measure the
noncentral tendency
2. Box Plots describe quartiles
and median together by
using boxes.
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2003 Pearson Prentice Hall
Quartiles
1. Measure of Noncentral Tendency
2. Split Ordered Data into 4 Quarters
3. Position of i-th Quartile
25% 25% 25% 25%
Q
1
Q
2
Q
3
Positionin g Point of Q
i n
i
=
+ 1
4
a f
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2003 Pearson Prentice Hall
Quartile (Q
1
) Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 10.3 11.7
Position: 1 2 3 4 5 6
Q Position
Q
1
=
+
=
+
= ~
=
1 1
4
1 6 1
4
1 75 2
6 3
1
n
a f a f
.
.
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2003 Pearson Prentice Hall
Quartile (Q
2
) Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 10.3 11.7
Position: 1 2 3 4 5 6
Q Position
Q
2
=
+
=
+
=
=
+
=
2 1
4
2 6 1
4
3 5
7 7 8 9
2
8 3
2
n
a f a f
.
. .
.
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2003 Pearson Prentice Hall
Quartile (Q
3
) Example
Raw Data: 10.3 4.9 8.9 11.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 10.3 11.7
Position: 1 2 3 4 5 6
Q Position
Q
3
=
+
=
+
= ~
=
3 1
4
3 6 1
4
5 25 5
10 3
3
n
a f a f
.
.
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2003 Pearson Prentice Hall
Numerical Data
Properties & Measures
Numerical Data
Properties
Mean
Median
Mode
Central
Tendency
Range
Interquartile Range
Variance
Standard Deviation
Variation
Skew
Shape
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2003 Pearson Prentice Hall
Interquartile Range
1. Measure of Dispersion
2. Also Called Midspread
3. Difference Between Third & First
Quartiles
4. Spread in Middle 50%
5. Not Affected by Extreme Values
Interquart ile Range = Q Q
3 1
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2003 Pearson Prentice Hall
Thinking Challenge
Youre a financial analyst
for Prudential-Bache
Securities. You have
collected the following
closing stock prices of
new stock issues: 17, 16,
21, 18, 13, 16, 12, 11.
What are the quartiles,
Q
1
and Q
3,
and the
interquartile

range?
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2003 Pearson Prentice Hall
Q
1

Raw Data: 17 16 21 18 13 16 12 11
Ordered: 11 12 13 16 16 17 18 21
Position: 1 2 3 4 5 6 7 8
Quartile Solution*
Q Position
Q
1
=
+
=
+
=
=
1 1
4
1 8 1
4
2 5
12 5
1
n
a f a f
.
.
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2003 Pearson Prentice Hall
Quartile Solution*
Q
3

Raw Data: 17 16 21 18 13 16 12 11
Ordered: 11 12 13 16 16 17 18 21
Position: 1 2 3 4 5 6 7 8
Q Position
Q
3
=
+
=
+
= ~
=
3 1
4
3 8 1
4
6 75 7
18
3
n
a f a f
.
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2003 Pearson Prentice Hall
Interquartile Range
Solution*
Interquartile Range
Raw Data: 17 16 21 18 13 16 12 11
Ordered: 11 12 13 16 16 17 18 21
Position: 1 2 3 4 5 6 7 8
Interquart ile Range = = = Q Q
3 1
18 0 12 5 5 5 . . .
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2003 Pearson Prentice Hall
Box Plot
1. Graphical Display of Data Using
5-Number Summary
Median
4 6 8 10 12
Q
3
Q
1
X
largest
X
smallest
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2003 Pearson Prentice Hall
Shape & Box Plot
Right-Skewed Left-Skewed Symmetric
Q
1
Median Q
3
Q
1
Median Q
3
Q
1
Median Q
3
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2003 Pearson Prentice Hall
Pearsons coefficient of
skewness
There are a number of formula to
estimate the skewness coefficient. The
simplest and most popular is the
Pearsons coefficient of skewness.

Deviation Standard
median) - 3(mean
or
Deviation Standard
mode - Mean
skewness of t coefficien s Pearson' = =
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2003 Pearson Prentice Hall
Chart Junk
Bad Presentation Good Presentation
1960: $1.00
1970: $1.60
1980: $3.10
1990: $3.80
Minimum Wage Minimum Wage
0
2
4
1960 1970 1980 1990
$
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2003 Pearson Prentice Hall
Distorting the Truth
with Descriptive Techniques
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2003 Pearson Prentice Hall
Errors in Presenting Data
1. Using Chart
Junk
2. No Relative
Basis in Comparing
Data Batches
3. Compressing the
Vertical Axis
4. No Zero Point on
the Vertical Axis
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2003 Pearson Prentice Hall
No Relative Basis
Good Presentation
As by Class As by Class
Bad Presentation
0
100
200
300
FR SO JR SR
Freq.
0%
10%
20%
30%
FR SO JR SR
%
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2003 Pearson Prentice Hall
Compressing
Vertical Axis
Good Presentation
Quarterly Sales Quarterly Sales
Bad Presentation
0
25
50
Q1 Q2 Q3 Q4
$
0
100
200
Q1 Q2 Q3 Q4
$
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2003 Pearson Prentice Hall
No Zero Point
on Vertical Axis
Good Presentation
Monthly Sales Monthly Sales
Bad Presentation
0
20
40
60
J M M J S N
$
36
39
42
45
J M M J S N
$
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2003 Pearson Prentice Hall
Conclusion

1. Analyzed Numerical Data Using
Summary Measures
End of Chapter
Any blank slides that follow are
blank intentionally.