A Guide to Business Statistics

Chapter 1Types of Data

Steven Wright once joked that “42.7% of all statistics are made up on the spot.”¹ One reason that his quip is effective is because there are good reasons to be suspicious of many of the statistics we encounter every day. Statistics are often reported as hard facts that cannot be argued with. This is not so. Statistics, and the data that the statistics are derived from, are generated by humans. Humans are not infallible and neither are the numbers reported from analyzing the data. As consumers of information, sometimes the statistics we encounter are just simply wrong or even nonsensical. There are examples of peer-reviewed publications reporting 200% reductions in some metric. Even reductions of 12,000% have been reported.² Without even glancing at the data analyzed in these studies, we know that such statistics are nonsense. You cannot decrease anything by more than 100%. Once you lose 100% of stuff, you are out of stuff. We tend to believe assertions when they are based on data. The problem is that we often do not look carefully at what type of data is being analyzed, how the data were gathered, and whether the results are valid. To be an active and informed citizen, you need to understand a bit about how statistics are generated and what they can tell us. It all starts with understanding the type of data being analyzed, which is the focus of this first chapter.

In the broadest terms, statistics is the science of collecting, analyzing, and interpreting ...