(9th Edition)
Chapter 3
Numerical Descriptive Measures
Shape
Symmetric, Skewed
Using Box-and-Whisker Plots
Coefficient of Correlation
Pitfalls in Numerical Descriptive Measures and
Ethical Issues
Mean Mode
Median Range Coefficient of
Variation
Variance
Standard Deviation
Geometric Mean
© 2004 Prentice-Hall, Inc. Chap 3-4
Measures of Central Tendency
Central Tendency
X i
Geometric Mean
X i 1
n X G X1 X 2 Xn
N 1/ n
X i
i 1
N
© 2004 Prentice-Hall, Inc. Chap 3-5
Mean (Arithmetic Mean)
0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14
Mean = 5 Mean = 6
m
j 1
j fj
X
n
n sample size
c number of classes in the frequency distribution
m j midpoint of the jth class
f j frequencies of the jth class
© 2004 Prentice-Hall, Inc. Chap 3-8
Median
Robust Measure of Central Tendency
Not Affected by Extreme Values
0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 12 14
Median = 5 Median = 5
0 1 2 3 4 5 6
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Mode = 9 No Mode
© 2004 Prentice-Hall, Inc. Chap 3-10
Geometric Mean
RG 1 R1 1 R2 1 Rn
1/ n
1
© 2004 Prentice-Hall, Inc. Chap 3-11
Example
An investment of $100,000 declined to $50,000 at the
end of year one and rebounded back to $100,000 at end
of year two:
R1 0.5 (or 50%) R2 1 (or 100% )
Average rate of return:
( 0.5) (1)
R 0.25 (or 25%)
2
Geometric rate of return:
RG 1 0.5 1 1
1/ 2
1
0.5 2
1/ 2
1 11/ 2 1 0 (or 0%)
© 2004 Prentice-Hall, Inc. Chap 3-12
Quartiles
Split Ordered Data into 4 Quarters
25% 25% 25% 25%
Q1 Q2 Q3
Position of i-th Quartile i n 1
Qi
4
Data in Ordered Array: 11 12 13 16 16 17 18 21 22
1 9 1 12 13
Position of Q1 2.5 Q1 12.5
4 2
Q1 and Q3 are Measures of Noncentral Location
Q = Median, a Measure of Central Tendency
2
© 2004 Prentice-Hall, Inc. Chap 3-13
Measures of Variation
Variation
Measure of Variation
Difference between the Largest and the
Smallest Observations:
Range X Largest X Smallest
Ignores How Data are Distributed
Range = 12 - 7 = 5 Range = 12 - 7 = 5
7 8 9 10 11 12 7 8 9 10 11 12
Measure of Variation
Also Known as Midspread
Spread in the middle 50%
Difference between the First and Third
Quartiles
X X
2
i
S
2 i 1
n 1
Population Variance:
N
X
2
i
2 i 1
X X
2
i
S i 1
n 1
Population Standard Deviation: N
X
2
i
i 1
N
© 2004 Prentice-Hall, Inc. Chap 3-18
Standard Deviation
From a Frequency Distribution
(continued)
m X fj
c
2
j
j 1
S
n 1
n sample size
c number of classes in the frequency distribution
m j midpoint of the jth class
f j frequencies of the jth class
© 2004 Prentice-Hall, Inc. Chap 3-19
Comparing Standard Deviations
Data A Mean = 15.5
s = 3.338
11 12 13 14 15 16 17 18 19 20 21
Data B
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = .9258
Data C
Mean = 15.5
11 12 13 14 15 16 17 18 19 20 21 s = 4.57
4 6 8 10 12
© 2004 Prentice-Hall, Inc. Chap 3-24
Distribution Shape &
Box-and-Whisker Plot
Q1 Q2 Q3 Q1Q2Q3 Q1 Q2 Q3
X i X Yi Y
r i 1
n n
X X Y Y
2 2
i i
i 1 i 1
X X X
r = -1 r = -.6 r=0
Y Y
X X
© 2004 Prentice-Hall, Inc.
r = .6 r=1 Chap 3-30
Pitfalls in Numerical Descriptive
Measures and Ethical Issues
Data Analysis is Objective
Should report the summary measures that best
meet the assumptions about the data set
Data Interpretation is Subjective
Should be done in a fair, neutral and clear manner
Ethical Issues
Should document both good and bad results
Presentation should be fair, objective and neutral
Should not use inappropriate summary measures
to distort the facts Chap 3-31
© 2004 Prentice-Hall, Inc.
Chapter Summary