Quantitative Methods: An Introduction for Business Management

4

Descriptive Statistics: On the Way to Elementary Probability

Some fundamental concepts of descriptive statistics, like frequencies, relative frequencies, and histograms, have been introduced informally in Chapter 1. Here we want to illustrate and expand those concepts in a slightly more systematic way. Our treatment will be rather brief since, within the framework of this book, descriptive statistics is essentially a tool for building some intuition paving the way for later chapters on probability theory and inferential statistics.

We introduce basic statistical concepts in Section 4.1, drawing the line between descriptive and inferential statistics, and illustrating the difference between sample and population, as well as between qualitative and quantitative variables. Descriptive statistics provides us with several tools for organizing and displaying data, some of which are outlined in Section 4.2. While displaying data graphically is useful to get some feeling for their distribution, we typically need a few numbers summarizing their essential features; quite natural summary measures such as mean and variance are dealt with in Section 4.3. Then, in Section 4.4 we consider measures of relative standing such as percentiles, which are a less obvious but quite important tool used to analyze data. We should mention that basic descriptive statistics does not require overly sophisticated concepts, and it is rather easy to understand. However, sometimes concepts are a bit ambiguous, ...