Chapter 1.
Basic Statistical Concepts
The key elements of statistics
Population- A collection of persons, objects, or items of interest.
Census- A process of gathering data from the whole population for a given measurement of
interest.
Sample- A portion of the whole.
Descriptive statistics- statistics that have been gathered on a group to describe or reach
conclusions about the same group.
Inferential statistics- statistics that have been gathered from a sample and used to reach
conclusions about the population from which the sample was taken.
Parameter- a descriptive measure of the population.
Statistic- a descriptive measure of a sample.
Variables, data, and data measurements
Variable- a characteristic of any entity being studied that is capable of taking on different
values.
Measurement- what occurs when a standard process is used to assign numbers to particular
attributes or characteristics of a variable.
Data- recorded measurements.
Nonmetric data- Nominal and ordinal-level data. Also called Qualitative data.
Nominal-level data- the lowest level of data measurement; used only to classify or categorize.
Ordinal-level data- Next-higher level of data from nominal-level data; can be used to order or
rank items, objects, or people.
Metric data- interval and ratio-level data. Also called quantitative data.
Interval-level data- Second highest level of data. These data have all the properties of ordinal-
level data, but in addition, intervals between consecutive numbers have meaning.
Ratio-level data- highest level of data measurement; contains same properties as interval-level
data, with the additional property that zero has meaning and represents the absence of the
phenomenon being measured.
Parametric statistics- a class of statistical techniques that contains assumptions about the
population and that is used only with interval and ratio-level data.
Nonparametric statistics- A class of statistical techniques that makes few assumptions about
the population and is particularly applicable to nominal and ordinal-level data.
Big Data
Big data- a large amount of ether organized or unorganized data from different sources that is
difficult to process using traditional data management and processing applications and is
analyzed to make an informed decision or evaluation.
4 detentions/ characteristics associated with big data:
1. Variety
2. Velocity
3. Veracity
4. Volume
Variety- refers to the many different forms of data based on data sources.
Velocity- Refers to the speed at which the data are available and at which they can be
processed.
Veracity- Has to do with the quality, correctness, and accuracy of data.
Volume- has to do with the ever-increasing size of data and databases.
Business Analytics
Business analytics- the application of processes and techniques that transform raw data into
meaningful information to improve decision-making.
Categories of business analytics
1. Descriptive analytics- often the first step in the analytics process, this is perhaps the
most commonly used of the three categories of business analytics. It takes traditional
data and describes what has happened or is happening in a business. It can be used to
condense big data into smaller, more useful, data. Sometimes referred to as reporting
analytics, it can be used to discover hidden relationships in data and identify
undiscovered patterns.
2. Predictive analytics- the second step in the analytics process, which finds relationships in
data that are not readily apparent with descriptive analytics.
3. Prescriptive analytics- takes uncertainty into account, recommends ways to mitigate
risks, and tries to see what the effect of future decisions will be in order to adjust the
decisions before they are made.
Data mining and data visualization
Data mining- the process of collecting, exploring, and analyzing
