Methods For Describing Sets of Data

Statistics for Business and
Economics
Thirteenth Edition
Chapter 2
Methods for
Describing Sets
of Data
Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Slide - 1
Contents (1 of 2)
1. Describing Qualitative Data

2. Graphical Methods for Describing Quantitative
Data
3. Numerical Measures of Central Tendency
4. Numerical Measures of Variability

5. Using the Mean and Standard Deviation to
Describe Data
Contents (2 of 2)
6. Numerical Measures of Relative Standing

7. Methods for Detecting Outliers: Box Plots and z-
scores
8. Graphing Bivariate Relationships
9. The Time Series Plot
10.Distorting the Truth with Descriptive Techniques
Learning Objectives
1. Describe data using graphs

2. Describe data using numerical measures
3. Describe quantitative data using numerical
measures
4. Describe the relationship between two
quantitative variables using graphs
5. Detecting descriptive methods that distort the
truth
Section 2.1 Describing Qualitative
Data
Key Terms
A class is one of the categories into which
qualitative data can be classified.
The class frequency is the number of
observations in the data set falling into a particular
class.
The class relative frequency is the class
frequency divided by the total numbers of
observations in the data set.
The class percentage is the class relative
frequency multiplied by 100.
Data Presentation (1 of 8)
Summary Table
1. Lists categories & number of elements in

category
2. Obtained by tallying responses in category
3. May show frequencies (counts), % or both
Bar Graph
Pie Chart
1. Shows breakdown of
total quantity into
categories
2. Useful for showing
relative differences
3. Angle size
•  360   percent 
Pareto Diagram
Like a bar graph, but with the categories arranged

by height in descending order from left to right.
Section 2.1 Summary
Bar graph: The categories (classes) of the qualitative
variable are represented by bars, where the height of each
bar is either the class frequency, class relative frequency,
or class percentage.
Pie chart: The categories (classes) of the qualitative
variable are represented by slices of a pie (circle). The size
of each slice is proportional to the class relative frequency.
Pareto diagram: A bar graph with the categories (classes)
of the qualitative variable (i.e., the bars) arranged by height
in descending order from left to right.
Thinking Challenge
You’re an analyst for IRI. You want to show the

market shares held by Web browsers in 2016.
Construct a bar graph, pie chart, & Pareto
diagram to describe the data.
Browser M kt. Share (%)
ar e
Firefox 14
Internet Explorer 81
Safari 4
Others 1
Bar Graph Solution*
Pie Chart Solution*
Pareto Diagram Solution*
Section 2.2 Graphical Methods for
Describing Quantitative Data
Dot Plot
1. Horizontal axis is a scale for the quantitative

variable, e.g., percent.
2. The numerical value of each measurement is
located on the horizontal scale by a dot.
Stem-and-Leaf Display
1. Divide each observation
into stem value and leaf
value
• Stems are listed in
order in a column
• Leaf value is placed in
corresponding stem row
to right of bar
2. Data: 21, 24, 24, 26, 27,

27, 30, 32, 38, 41
Determining the Number of Classes in a
Histogram
Number of Observations Number of Classes
in Data Set
Less than 25 5-6
25-50 7-14
More than 50 15-20
Histogram
Class Frequency
15.5-25.5 3
25.5-35.5 5
35.5-45.5 2
Section 2.2 Summary (1 of 2)
Dot plot: The numerical value of each quantitative
measurement in the data set is represented by a dot on a
horizontal scale. When data values repeat, the dots are
placed above one another vertically.
Stem-and-leaf display: The numerical value of the
quantitative variable is partitioned into a “stem” and a “leaf.”
The possible stems are listed in order in a column. The leaf
for each quantitative measurement in the data set is placed
in the corresponding stem row. Leaves for observations
with the same stem value are listed in increasing order
horizontally.
Section 2.2 Summary (2 of 2)
Histogram: The possible numerical values of the

quantitative variable are partitioned into class
intervals, where each interval has the same width.
These intervals form the scale of the horizontal
axis. The frequency or relative frequency of
observations in each class interval is determined.
A horizontal bar is placed over each class interval,
with height equal to either the class frequency or
class relative frequency.
Section 2.3 Numerical Measures of
Central Tendency
Two Characteristics (1 of 2)
The central tendency of the set of

measurements-that is, the tendency of the data to
cluster, or center, about certain numerical values.
Two Characteristics (2 of 2)
The variability of the set of measurements-that is,

the spread of the data.
Mean
The mean of a set of quantitative data is the sum

of the measurements divided by the number of
measurements contained in the data set.
n
x i
x i 1
n
Example 1
Calculate the mean of the following six sample

measurements:
10.3, 4.9, 8.9, 11.7, 6.3, 7.7
n
x i
10.3  4.9  8.9  11.7  6.3  7.7
x i 1

n 6
49.8
  8.3
6
Symbols for the Sample and Population
Mean
In this text, we adopt a general policy of using

Greek letters to represent population numerical
descriptive measures and Roman letters to
represent corresponding descriptive measures for
the sample. The symbols for the mean are
Sample mean = x
Population mean  
Median
1. Measure of central tendency

2. Middle value in ordered sequence
If n is odd, middle value of sequence
If n is even, average of 2 middle values
3. Position of median in sequence
n 1
Positioning Point 
2
4. Not affected by extreme values

Median Example Odd-Sized Sample
Raw Data: 24.1 22.6 21.5 23.7 22.6
Ordered: 21.5 22.6 22.6 23.7 24.1

Position: 1 2 3 4 5
Median = 22.6
Median Example Even-Sized Sample
Raw Data: 1
0.3 4.9 8.9 1 1.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 1 0.3 1 1.7
Position: 1 2 3 4 5 6
7.7  8.9
Median =  8.3
2
Skewed
A data set is said to be skewed if one tail of the

distribution has more extreme observations than
the other tail.
Shape
1. Describes how data are distributed
2. Measures of Shape
• Skew = Symmetry
Mode
1. Measure of central tendency

2. Value that occurs most often
4. May be no mode or several modes
5. May be used for quantitative or qualitative data
Mode Example
No Mode
Raw Data: 1
0.3 4.9 8.9 1 1.7 6.3 7.7
One Mode
Raw Data: 6.3 4.9 8.9 6.3 4.9 4.9
More Than 1 Mode

Raw Data: 21 28 28 41 43 43
Thinking Challenge 1 (1 of 3)
You’re 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.
Describe the stock prices
in terms of central
tendency.
Solution
17, 16, 21, 18, 13, 16, 12, 11
17  16  21  18  13  16  12  11
x
8
 15.5
Raw Data: 17 1 6 21 1 8 13 1 6 12 1 1
Ordered: 11 1 2 1 3 1 6 1 6 1 7 18 21
Median = 16
Mode
Raw Data: 17 16 21 1
8 13 16 12 1 1
Mode = 16
Variability
Range
1. Measure of dispersion
2. Difference between largest & smallest observations

Range  xlargest – xsmallest
3. Ignores how data are distributed
Range = 10 − 7 = 3 Range = 10 − 7 = 3
Variance & Standard Deviation
1. Measures of dispersion
2. Most common measures
3. Consider how data are distributed
4. Show variation about mean ( x or  )
Sample Variance Formula
n
 x  x 
2
i
s 
2 i 1
n 1
 x1  x    x2  x      xn  x 
2 2 2

n 1
Sample Standard Deviation Formula
s  s2
n
 x  x 
2
i
 i 1
n 1
 x1  x    x2  x      xn  x 
2 2 2

n 1
Symbols for Variance and Standard
Deviation
s 2 = Sample variance
s = Sample standard deviation
2 = Population variance
 = Population standard deviation
Example 2
Calculate the variance and standard deviation. 10.3,
4.9, 8.9, 11.7, 6.3, 7.7
Solution
The first step is finding the mean. Which we calculated
earlier to be 8.3.
(10.3  8.3) 2
 (4.9  8.3) 2
 ...  (7.7  8.3) 2
s2 
6 1
s 2  6.368
s  6.368  2.52
You’re 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 variance
and standard deviation
of the stock prices?
Solution
Sample Variance
17 1 6 21 18 13 16 12 1 1
The mean = 15.5
(17  15.5) 2
 (16  15.5) 2
 ...  (11  15.5) 2
s2 
8 1
 11.14
s  11.14  3.337
Section 2.5 Using the Mean and
Standard Deviation to Describe
Data
Using the Mean and Standard Deviation
to Describe Data: Chebyshev’s Rule
a. No useful information is provided on the fraction of measurements that fall within 1
standard deviation of the mean [i.e., within the interval ( x  s, x  s ) for samples
and (   ,    ) for populations].
b. At least ¾ will fall within 2 standard deviations of the mean [i.e., within the interval
( x  2 s, x  2 s ) for samples and (  2 ,   2 ) for populations].

8
c. At least of the measurements will fall within 3 standard deviations of the mean
9
[i.e., within the interval ( x  3s, x  3s ) for samples and (  3 ,   3 )
for populations].
d. Generally, for any number k greater than 1, at least (1  1/ k 2 ) of the
measurements will fall within k standard deviations of the mean [i.e., within the
interval ( x  ks, x  ks ) for samples and (  k ,   k ) for populations].

Interpreting Standard Deviation:
Chebyshev’s Theorem
No useful information
At least 3 / 4 of the data
At least 8 / 9 of the data

Chebyshev’s Theorem Example (1 of 2)
Previously we found the

mean closing stock price of
new stock issues is 15.5
and the standard deviation
is 3.34.
Use this information to form
an interval that will contain
at least 75% of the closing
stock prices of new stock
issues.
Chebyshev’s Theorem Example (2 of 2)
At least 75% of the closing stock prices of new
stock issues will lie within 2 standard deviations of
the mean.
x  15.5 s  3.34
( x – 2 s, x  2 s)  (15.5 – 2  3.34, 15.5  2  3.34)
  8.82, 22.18 
Interpreting Standard Deviation: Empirical
Rule (1 of 2)
Applies to data sets that are mound shaped and

symmetric
Approximately 68% of the measurements lie in the
interval x  s to x  s
Approximately 95% of the measurements lie in the
interval x  2 s to x  2 s
Approximately 99.7% of the measurements lie in
interval x  3s to x  3s
Interpreting Standard Deviation: Empirical
Rule (2 of 2)
Approximately 68% of the measurements
Approximately 95% of the measurements
Approximately 99.7% of the measurements

Empirical Rule Example (1 of 2)
Previously we found the

mean closing stock price of
new stock issues is 15.5
and the standard deviation
is 3.34. If we can assume
the data is symmetric and
mound shaped, calculate
the percentage of the data
that lie within the intervals
x  s, x  2s, x  3s.
Empirical Rule Example (2 of 2)
According to the Empirical Rule, approximately

68% of the data will lie in the interval ( x  s, x  s ),
Approximately 95% of the data will lie in the interval
( x  2 s, x  2 s ),
(15.5 – 2  3.34, 15.5  2  3.34)   8.82, 22.18 
Approximately 99.7% of the data will lie in the
interval ( x  3s, x  3s ),
(15.5 – 3  3.34, 15.5  3  3.34)   5.48, 25.52 
Relative Standing
Numerical Measures of Relative
Standing: Percentiles
Describes the relative location of a measurement

compared to the rest of the data are called
measures of relative standing.
th
The p percentile is a number such that p% of
the data falls below it and (100 – p )% falls above it
Median = 50th percentile
Quartiles
Measure of noncentral tendency
Split ordered data into 4 quarters
Lower quartile QL is 25th percentile.
Middle quartile Q2 is the median.

Upper quartile QU is 75th percentile.
Percentile Example
You scored 560 on the GMAT exam. This score
puts you in the 58th percentile.
What percentage of test takers scored lower than
you did?
58% of test takers scored lower than 560.
What percentage of test takers scored higher than
you did?
 100 – 58 %  42% of test takers scored higher
than 560.
Numerical Measures of Relative
Standing: z-Scores
Describes the relative location of a measurement

compared to the rest of the data
Sample z-score Population z-score
xx x µ
z z
s 
Measures the number of standard deviations away
from the mean a data value is located
z-Score Example (1 of 2)
The mean time to assemble a

product is 22.5 minutes with a
standard deviation of 2.5
minutes.
Find the z-score for an item that
took 20 minutes to assemble.
Find the z-score for an item that
took 27.5 minutes to assemble.
z-Score Example (2 of 2)
x  20,   22.5   2.5
x 20  22.5
z   1.0
 2.5
x  27.5,   22.5   2.5

x   27.5  22.5
z   2.0
 2.5
Interpretation of z-Scores for Mound-
Shaped Distributions of Data
1. Approximately 68% of the measurements will

have a z-score between −1 and 1.
2. Approximately 95% of the measurements will
3. Approximately 99.7% of the measurements will
Interpretation of z-Scores
Section 2.7 Methods for Detecting
Outliers: Box Plots and z-Scores
Outlier
An observation (or measurement) that is unusually
large or small relative to the other values in a data set
is called an outlier. Outliers typically are attributable to
one of the following causes:
1. The measurement is observed, recorded, or
entered into the computer incorrectly.
2. The measurement comes from a different
population.
3. The measurement is correct but represents a rare
(chance) event.
Quartiles Review
Measure of noncentral tendency
Split ordered data into 4 quarters
Lower quartile QL is 25th percentile.

Middle quartile Q2 is the median.
Upper quartile QU is 75th percentile.
Interquartile range: IQR  QU - QL

Quartile left parenthesis Q sub 2
right parenthesis Example
Raw Data: 1
0.3 4.9 8.9 1 1.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 1 0.3 1 1.7
Position: 1 2 3 4 5 6
Q2 is the median, the average of the two middle
scores  7.7  8.9  / 2  8.3
Raw Data: 1
0.3 4.9 8.9 1 1.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 1 0.3 1 1.7
Position: 1 2 3 4 5 6
QL is median of bottom half = 6.3
Raw Data: 1
0.3 4.9 8.9 1 1.7 6.3 7.7
Ordered: 4.9 6.3 7.7 8.9 10.3 1 1.7
Position: 1 2 3 4 5 6
QU is median of top half = 10.3
Interquartile Range
1. Measure of dispersion
2. Also called midspread
3. Difference between upper and lower quartiles
Interquartile Range = QU - QL
4. Spread in middle 50%
Thinking Challenge 3
You’re 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,
Q1 and Q3 , and the
interquartile range?
Quartile Solution* (1 of 2)
Q1
Raw Data: 1
7 16 21 1 8 1 3 1 6 1 2 1 1
Ordered: 1 1 12 13 1 6 1 6 1 7 1 8 21
Position:
QL is the median of the bottom half, the average of
the two middle scores  12  13 / 2  12.5
Quartile Solution* (2 of 2)
Q3
Raw Data: 1
7 16 21 1 8 1 3 1 6 1 2 1 1
Ordered: 1 1 12 13 1 6 1 6 1 7 1 8 21
Position:
QU is the median of the bottom half, the average of
the two middle scores  17  18  / 2  17.5
Interquartile Range Solution*
Interquartile Range
Raw Data: 1
7 16 21 1 8 1 3 1 6 1 2 1 1
Ordered: 1 1 12 13 1 6 1 6 1 7 1 8 21
Position:
Interquartile Range = Q3  Q1
= 17.5 −12.5 = 5
Box Plot (1 of 3)
1. Graphical display of data using 5-number

summary
Box Plot (2 of 3)
2. Draw a rectangle (box) with the ends (hinges)
drawn at the lower and upper quartiles ( QL and
QU ). The median data is shown by a line or
symbol (such as “+”).

3. The points at distances 1.5(IQR) from each hinge
define the inner fences of the data set. Line
(whiskers) are drawn from each hinge to the most
extreme measurements inside the inner fence.
Box Plot (3 of 3)
3. A second pair of fences, the outer fences, are

defined at a distance of 3(IQR) from the hinges.
One symbol (*) represents measurements
falling between the inner and outer fences, and
another (0) represents measurements beyond
the outer fences.
4. Symbols that represent the median and extreme
data points vary depending on software used.
You may use your own symbols if you are
constructing a box plot by hand.
Shape & Box Plot
Detecting Outliers
Box Plots: Observations falling between the inner
and outer fences are deemed suspect outliers.
Observations falling beyond the outer fence are
deemed highly suspect outliers.
z-scores: Observations with z-scores greater than
3 in absolute value are considered outliers. (For
some highly skewed data sets, observations with
z-scores greater than 2 in absolute value may be
outliers.)
Section 2.8 Graphing Bivariate
Relationships
Graphing Bivariate Relationships
Describes a relationship between two quantitative

variables
Plot the data in a scattergram (or scatterplot)
Scattergram Example (1 of 2)
You’re a marketing analyst for Hasbro Toys. You

gather the following data:
Ad $ (x) Sales (Units) (y)
1 1
2 1
3 2
4 2
5 4
Draw a scattergram of the data

Scattergram Example (2 of 2)
Section 2.9 The Time Series Plot
Time Series Plot
Used to graphically display data produced over

time
Shows trends and changes in the data over time
Time recorded on the horizontal axis
Measurements recorded on the vertical axis
Points connected by straight lines
Time Series Plot Example (1 of 2)
Average
The following data Date Price
shows the average
Oct 16, 2006 $2.219
retail price of regular
ober
Oct 23, 2006 $2.173

gasoline for 8 weeks in ober
Oct 30, 2006 $2.177

2016. ober
Nov 6, 2006 $2.158

Draw a time series
ember
Nov 13, 2006 $2.185

plot for this data.
ember
Nov 20, 2006ember $2.208

Nov 27, 2006ember $2.236
Dec 4, 2006 ember $2.298
Time Series Plot Example (2 of 2)
Section 2.10 Distorting the Truth
with Descriptive Statistics
Errors in Presenting Data
1. Use area to equate to value

2. No relative basis in comparing data batches
3. Compress the vertical axis
4. No zero point on the vertical axis
5. Gap in the vertical axis
6. Use of misleading wording
7. Knowing central tendency without knowing
variability
Reader Equates Area to Value
Bad Presentation Good Presentation
Minimum Wage
1960: $1.00
1970: $1.60
1980: $3.10
1990: $3.80
No Relative Basis
Compressing Vertical Axis
No Zero Point on Vertical Axis
Gap in the Vertical Axis
Changing the Wording
Changing the title of the graph can influence the

reader.
We’re not doing so well. Still in prime years!
Knowing only central tendency
Knowing Only the central tendency might lead one

to purchase Model A. Knowing the variability as
well may change one’s decision!
Key Ideas (1 of 8)
Describing Qualitative Data
1. Identify category classes
2. Determine class frequencies
3. Class relative frequency = (class freq) / n
4. Graph relative frequencies
Key Ideas (2 of 8)
Graphing Quantitative Data

1 Variable
1. Identify class intervals
2. Determine class interval frequencies
3. Class interval relative frequency =
 class interval frequencies  / n
4. Graph class interval relative frequencies
Key Ideas (3 of 8)
2 Variables
Scatterplot
Time series plot
Key Ideas (4 of 8)
Numerical Description of Quantitative Data
Central Tendency
Mean
Median
Mode
Key Ideas (5 of 8)
Variation
Range
Variance
Standard Deviation
Interquartile range
Key Ideas (6 of 8)
Relative standing
Percentile score
z-score
Key Ideas (7 of 8)
Rules for Detecting Quantitative Outliers
Interval Chebyshev’s Rule Empirical Rule

xs At least 0%  68%
x  2s At least 75%  95%
x  3s At least 89% All
Key Ideas (8 of 8)
Method Suspect Highly Suspect

Box plot: Values between Values beyond
inner and outer outer fences
fences
z-score 2 | z | 3 | z | 3

Methods For Describing Sets of Data

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Methods For Describing Sets of Data

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Statistics for Business and

1. Describing Qualitative Data

4. Numerical Measures of Variability

6. Numerical Measures of Relative Standing

1. Describe data using graphs

1. Lists categories & number of elements in

Like a bar graph, but with the categories arranged

You’re an analyst for IRI. You want to show the

1. Horizontal axis is a scale for the quantitative

2. Data: 21, 24, 24, 26, 27,

Histogram: The possible numerical values of the

The central tendency of the set of

The variability of the set of measurements-that is,

The mean of a set of quantitative data is the sum

Calculate the mean of the following six sample

In this text, we adopt a general policy of using

1. Measure of central tendency

4. Not affected by extreme values

Raw Data: 24.1 22.6 21.5 23.7 22.6

Ordered: 21.5 22.6 22.6 23.7 24.1

A data set is said to be skewed if one tail of the

1. Measure of central tendency

5. May be used for quantitative or qualitative data

More Than 1 Mode

You’re a financial analyst

2. Difference between largest & smallest observations

3. Ignores how data are distributed

You’re a financial analyst

( x  2 s, x  2 s ) for samples and (  2 ,   2 ) for populations].

d. Generally, for any number k greater than 1, at least (1  1/ k 2 ) of the

interval ( x  ks, x  ks ) for samples and (  k ,   k ) for populations].

At least 3 / 4 of the data

At least 8 / 9 of the data

Previously we found the

( x – 2 s, x  2 s)  (15.5 – 2  3.34, 15.5  2  3.34)

Applies to data sets that are mound shaped and

Approximately 68% of the measurements

Approximately 95% of the measurements

Approximately 99.7% of the measurements

Previously we found the

According to the Empirical Rule, approximately

Describes the relative location of a measurement

Lower quartile QL is 25th percentile.

Middle quartile Q2 is the median.

Describes the relative location of a measurement

The mean time to assemble a

x  27.5,   22.5   2.5

1. Approximately 68% of the measurements will

Lower quartile QL is 25th percentile.

Interquartile range: IQR  QU - QL

Q2 is the median, the average of the two middle

scores  7.7  8.9  / 2  8.3

QU is median of top half = 10.3

the two middle scores  12  13 / 2  12.5

the two middle scores  17  18  / 2  17.5

Interquartile Range = Q3  Q1

1. Graphical display of data using 5-number

symbol (such as “+”).

3. A second pair of fences, the outer fences, are

Describes a relationship between two quantitative

You’re a marketing analyst for Hasbro Toys. You

Draw a scattergram of the data

Used to graphically display data produced over