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Chapter 1Chapter 1
Why Study Why Study Statistics?Statistics?
©
Dealing with Dealing with UncertaintyUncertainty
Everyday decisions are Everyday decisions are based on incomplete based on incomplete
informationinformation
The price of IBM stock The price of IBM stock willwill be higher in six months be higher in six months
than it is now. than it is now.
Dealing with Dealing with UncertaintyUncertainty
The price of IBM stock The price of IBM stock is is likely tolikely to be higher in six be higher in six months than it is now. months than it is now.
versus
If the federal budget deficit If the federal budget deficit is as high as predicted, is as high as predicted,
interest rates interest rates willwill remain remain high for the rest of the year. high for the rest of the year.
Dealing with Dealing with UncertaintyUncertainty
If the federal budget deficit If the federal budget deficit is as high as predicted, is as high as predicted, it is it is probableprobable that interest rates that interest rates will remain high for the rest will remain high for the rest
of the year.of the year.
versus
SamplingSampling
Population and SamplePopulation and SampleA populationpopulation is the complete set of all items in which an investigator is interested. A population is the set of all of the outcomes from a system or process that is to be studied. NN represents population size.
Examples of Examples of PopulationsPopulations
Names of all registered voters in Coles County, Illinois.
Incomes of all families living in the Charleston-Mattoon Area.
Annual returns of all stocks traded on the New York Stock Exchange.
Grade point averages of all the students at Eastern Illinois University.
SamplingSampling
Population and SamplePopulation and SampleA samplesample is an observed subset of population values with sample size given by nn.
SamplingSampling
Random SamplesRandom SamplesSimple random samplingSimple random sampling is a procedure in which every possible sample of n objects is equally likely to be chosen.
SamplingSampling
Random SamplesRandom SamplesSimple random samplingSimple random sampling is a procedure in which every possible sample of n objects is equally likely to be chosen. The resulting sample is usually called a random sample.
Making DecisionsMaking Decisions
Data, Information, KnowledgeData, Information, Knowledge1. Data: specific observations of measured
numbers.2. Information: processed and summarized
data yielding facts and ideas.3. Knowledge: selected and organized
information that provides understanding, recommendations, and the basis for decisions.
Making DecisionsMaking Decisions
Descriptive and Inferential Statistics
Descriptive StatisticsDescriptive Statistics include graphical and numerical procedures that summarize and process data and are used to transform data into information.
Making DecisionsMaking Decisions
Descriptive and Inferential Statistics
Inferential Statistics Inferential Statistics provide the bases for predictions, forecasts, and estimates that are used to transform information to knowledge.
The Journey to Making The Journey to Making DecisionsDecisions
Begin Here:
Identify the Problem
Data
Information
Knowledge
Decision
Descriptive Statistics,Probability, Computers
Experience, Theory,Literature, InferentialStatistics, Computers