STATISTICS

WEEK 1-1
Abdul Hakim, SE, MEc, PhD
Introduction and Data
Collection
FE-UII
Introduction


Statistical thinking will one day be as
necessary for efficient citizenship as the ability
to read and write.

H.G. Wells

Statistics = data.

Modern statistics encompasses the collection, presentation,
and characterization of information to assists in both data
analysis and the decision-making process.

In accounting (to name but a few):
o To select samples for auditing purposes
o To understand the cost drivers in cost accounting.
In finance:
o To track trends in financial measures over time
o To develop ways of forecasting values of these measures
at future points of time.

History:
o During the Egyptian, Greek and Roman civilizations, data
were obtained.
o In the Middle Ages, church institutions often keep records
concerning births, deaths, and marriages.
Two types of statistics:

Descriptive statistics: methods involving the collection,
presentation, and characterization of a set of data in order to
describe properly the various features of that set of data
[measures of central tendency, dispersion, type of
distributions]

Inferential statistics: methods that make possible the
estimation of a characteristic of a population or the making o
a decision concerning a population based only on sample
results.
Some key terms:

A population (or universe) is the totality of items or things
under consideration.

A sample is the portion of the population that is selected for
analysis.

A parameter is a summary measure that is computed to
describe a characteristic of an entire population.

A statistic is a summary measure that is computed to
describe a characteristic from only a sample of the
population.

Data Collection
Data: numerical information needed to help us
make a more informed decision in a particular
situation.

We need data to:
o Provide the necessary input to a research in
study,
o Measure performance in an ongoing service or
production process,
o Assists in formulating alternative courses of
action in a decision making process,
o Satisfy our curiosity.


Obtaining Data
Using published sources of data

We can collect data compiled by other agents. The
one collecting the data is the primary source, while the
one compiling the data is the secondary sources. Say
you collect data about stock market from Bloomberg,
the data you are collecting is secondary data.

Designing an experiment

A trial (or test) exercised under a strict control to
demonstrate a known truth.

Conducting a survey
o Gathering data process by asking questions to the
participants (respondents) about certain things. There is no
control exercised under such a study.
o e.g.: finding out the perception of accountant about a new
regulation in public accounting practice.
o Explore on how to conduct a survey.
o Performing an observational study
o Gathering data process by observing the behaviour of
interest directly.
o Note: Gargabe in garbage out (GIGO). No matter how
good the process on analysing the data, the bad data
result in the bad results.


Characteristic of Data
Probabilistic data (e.g. Random data): Data obtained from a
random process, in which there is no control upon the results.

e.g.: Stock price index, market interest rate. These data can
be used for inferential process purposes.

Non probab)ilistic data (e.g. Non random data: data obtained
from a non-random process, in which there is control upon
the results.

e.g.: data on income level obtained from one district. This
data cannot be used to make an inferential process to explain
Indonesian population, since it does not represent the whole
population.

Types of Data
Numerical vs categorical data

Numerical data: data in numerical number.
e.g.: stock price index

categorical data: non-numerical data.
e.g.: types of car (sedan, truck, SUV)


Types of Data
Discrete vs continuous data

Discrete data: numerical responses that arise
from a counting process.
e.g.: number of houses in Yogyakarta.

Continuous data: numerical responses that
arise from a measuring process.
e.g.: height of students in a university.

Levels of measurement and
types of measurement scales
Nominal vs ordinal scales.
Nominal scale: categorical data with no ordering is implied.
e.g.: car ownership: yes or no.
Ordinal scale: categorical data in which ordering is implied.
e.g.: S&P bond ratings: AAA AA A BBB BB B CCC CC C
DDD DD D.

Interval vs ratio scales
Interval: an ordered scale in which the difference between
the measurements is a meaningful quantity
e.g.: temperature degrees: 1C, 2C, 3C, 4C. Note that 4C
does not necessarily means that it is 4 times warmer than
1C.


Ratio scales: all characteristics of interval
scales, and the ratios measurements are
sensible to consider.

e.g.: the height of students: 150 cm, 150 cm,...
2 m. Note that a student of 2 m tall is twice
taller than a student of 1 m tall.