Chapter 1Chapter 1

Why Study Why Study Statistics?Statistics?

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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