Chapter 1
Statistics and Statistical Software
Preview: The study of statistics is vitally important, yet many people have only a vague understanding of it. Statistical analyses play a role in everything from politics and social science to studies of biological diversity, and individuals with a deep understanding of the science are always in high demand. Many people think they understand statistics, but the actual results of a statistical analysis can be counterintuitive. That is why it is so important to move beyond intuition and into the realm of science. It is important to realize that statistics is not an end in itself. Rather, it is a means for the identification and analysis of problems, and it is a useful tool to arrive at better decisions. The statistical method is used to make decisions with ramifications in the real world, and that makes the science a vital part of modern business. Simply put, statistics attempts to make sense of data. Descriptive statistics involves the collection and description of data. Once the data has been collected and described, the researcher is able to understand the context in which the results are presented. Inferential statistics collects data from a subset of the population and uses that information to draw conclusions about the population as a whole. The populations used in a statistical analysis can be anything from a group of water quality measurements in a river system to the heights of soldiers in the U.S. Army. The science behind the analysis is the same no matter where the data are drawn from. No matter what kind of data is being analyzed, the statistical analysis process uses the same steps: problem definition, data collection, data analysis, and reporting the final analysis. This process is designed to be rigorous and scientific, providing an impartial look at the data and an impartial analysis of the results.
Learning Objectives: At the conclusion of this chapter, you should be able to:
- Set up Microsoft Excel to run statistical analyses
- Understand the importance of random sampling
- Demonstrate how to use Microsoft Excel to identify a random sample
- Understand basic vocabulary in the statistics field
- Explain the importance in using statistics for business decision making
- Identify the sources and types of data used in business.
Introduction
Statistics is one of those strange entities that people describe as useful or even important without knowing precisely what it is; people seem to intuitively know about statistics (or think they know). For example, one of the first questions we ask when teaching a statistics course is (naturally): âWhat do you think statistics is?â Answers typically range from âstatistics consists of compiling lots of numbers [...]â to âstatistics deals with collecting and analyzing dataâ; indeed, most students have something to say. Even prolific writers such as Mark Twain have an opinion about statistics; he is reported to have said: âthere are three kinds of lies: lies, damned lies, and statisticsâ (the exact origin of this phrase is unclear). Contrast that, for example, with what would happen if you ask people what âcalculusâ is and whether they think it might be useful for them: You most likely earn a majority of blank stares (and not even Mark Twain came up with any quips about calculus).
Thus, statistics as a mathematical topic has an advantage: You do not necessarily have to convince people it is useful; you merely have to ensure they know exactly what it is and how to use it (and how it can be abused). In addition, statistics has a lot to do with data analysis and everybody relies on data in one way or another:
- Corporate presidents decide company policy based on quarterly sales figures.
- Politicians decide on campaign strategy base...