Contents

CHAPTER ONE ............................................................................................................................ 1

1. INTRODUCTION ..................................................................................................................... 1

1.1 Definition and Classification of Statistics ............................................................................ 1

1.2 Stages in Statistical Investigation ......................................................................................... 2
1.3 Definition of some basic statistical terms ............................................................................ 3
1.4 Application, Uses and Limitation of Statistics ..................................................................... 4
1.5.1 Types of Variables .................................................................................................................. 6

1.5.2 Scale of Measurement ............................................................................................................ 7

CHAPTER TWO ........................................................................................................................ 11

2. METHODS OF DATA COLLECTION AND PRESENTATION .......................................... 11

1.1 Methods of Data Collection ................................................................................................ 12

2.1.1 Source of Data ......................................................................................................................... 13

2.2 Methods of Data Presentation ............................................................................................. 14

2.2.1 Tabular Presentation ............................................................................................................... 15

2.2.2 Diagrammatic and Graphic Presentation of Data ............................................................... 21

CHAPTER 3 ................................................................................................................................. 29

3. MEASURES OF CENTERAL TENDENCY ........................................................................... 29

3.1 Introduction ............................................................................................................................. 29

3.2 Types of Measures of Central Tendency............................................................................. 32

3.2.1Arithmetic Mean ...................................................................................................................... 33

3.2.2 Geometric Mean ...................................................................................................................... 37

3.2.3 Harmonic Mean....................................................................................................................... 38

3.3.4 The Mode or Modal Value .................................................................................................... 39

3.2.5 Median ...................................................................................................................................... 41

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 1.2.6 Quantiles .................................................................................................................................. 45

CHAPTER FOUR ......................................................................................................................... 52

5. MEASURES OF VARIATION ................................................................................................ 52

4.1 Introduction ......................................................................................................................... 53

4.2 Objectives of Measuring Variation ..................................................................................... 53
4.3 Absolute and Relative Measures of Dispersion .................................................................. 53
4.3.1 The Range and Relative Range ............................................................................................. 54

4.3.2 The Quartile Deviation and Coefficient of Quartile Deviation ........................................ 55

4.3.3 The Mean Deviation And Coefficient Of Mean Deviation ............................................... 56

4.5 The standard Score (Z-score).. ............................................................................................ 63

4.6. Moments, Skewness and Kurtosis .......................................................................................... 64

CHAPTER FIVE .......................................................................................................................... 68

5. ELEMENTARY PROBABLITY ............................................................................................. 68

5.1 INTRODUCTION ............................................................................................................... 69

5.3 Counting Rules .................................................................................................................... 70
5.4 Approaches to Measuring Probability ................................................................................. 76
5.5 Conditional Probability and Independency ......................................................................... 81
5.5.1 Conditional Events: ................................................................................................................ 81

5.5.2 Conditional Probability of an Event ..................................................................................... 82

Review Exercise on Chapter Five ................................................................................................. 84

CHAPTER SIX ............................................................................................................................. 86

6. RANDOM VARIABLES AND PROBABILITY DISTRIBUTIONS ..................................... 86

Introduction ............................................................................................................................... 86
6.1 Random Variable................................................................................................................. 86
6.2 Probability Distribution ....................................................................................................... 88
6.3 Introduction to Expectation ................................................................................................. 90
6.4 Common Discrete Probability Distributions ....................................................................... 92
6.5 Common Continuous Probability Distributions .................................................................. 96

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 7.1 Introduction ....................................................................................................................... 103
7.2 Definitions of Some Basic Terms in Sampling ................................................................. 103
7.3 Sampling Techniques ........................................................................................................ 106
7.3 Sampling Distribution ....................................................................................................... 115
7.4 The Central Limit Theorem............................................................................................... 118
CHAPTER EIGHT ..................................................................................................................... 121

8. ESTIMATION AND HYPOTHESIS TESTING ................................................................... 121

8.1 Introduction ....................................................................................................................... 121

8.2 Statistical Estimation ......................................................................................................... 122
8.2.1 Point Estimation .................................................................................................................... 122

8.2.2 Interval Estimation................................................................................................................ 124

8.2 Hypothesis Testing ............................................................................................................ 128

8.3 Types and Size of Errors ................................................................................................... 133
8.4 Test of Association ............................................................................................................ 133
CHAPTER NINE ........................................................................................................................ 139

9. SIMPLE LINEAR REGRESSION AND CORRELATION .................................................. 139

9.1 Introduction ....................................................................................................................... 139

9.2 Simple Linear Regression ................................................................................................. 140
9.3 Simple Correlation and Coefficient of Determination ..................................................... 144
9.3.1 Simple correlation (r) ........................................................................................................... 144

9.3.2 Coefficient of Determination (r2) ................................................................................... 146

9.4 Spearman’s Rank Correlation Coefficient ....................................................................... 147
APPENDIX A ............................................................................................................................. 150

APPENDIX B ................................................................................Error! Bookmark not defined.

Answers for Exercises ................................................................Error! Bookmark not defined.

REFERENCES ........................................................................................................................... 153

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 CHAPTER ONE
1. INTRODUCTION

Objectives
At the end of this chapter students will be able to:
 define Statistics, population, census, sample survey, parameter and variable
 distinguish descriptive statistics and inferential statistics
 identify the types of variables and level of measurement
 identify applications, uses, and limitations of statistics

1.1 Definition and Classification of Statistics

We can define the word statistics in two ways.
Definition1. Statistics (Plural sense): statistics are numerical statements of facts in any department
of enquiry placed in relation to each other. The classified facts respecting the condition of the people
in a stated especially those facts which can be stated in numbers or in tables of numbers or in any
tabular or classified arrangement. The statistics of raw data themselves like numerical data on births,
marital status, death, transmitted diseases, employment (rates), unemployment(rates), production, price,
inflation rate.

Definition 2: Statistics (singular sense): Statistics is defined as the science of collecting,

organizing, presenting, analyzing and interpreting numerical data for the purpose of assisting in
making a more effective decision.
Classification of Statistics
Statistics is broadly divided into two categories based on how the collected data are used.
a) Descriptive Statistics: It is an area of statistics which is mainly concerned with the
methods and techniques used in collection, organization, presentation, and analysis of a
set of data without making any conclusions or inferences.
Example 1.2: Suppose that the mark of 10 students in Statistics course for sport science section A
is given as 55, 40, 50, 60, 78,90,80,75, 70 and 85. The average mark of the 10 students is 68.3 and
it is considered as descriptive statistics.

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 b) Inferential Statistics: Inferential statistics is an area of statistics which deals with the
method of inferring or drawing conclusion about the population based upon the results
of a sample. It consists of performing hypothesis testing, determining relationships among
variables and making predictions.
Example 1.3: the average income of all families (the population) in Ethiopia can be estimated from
figures obtained from a few hundred (the sample) families.
 It is important because statistical data usually arises from sample.

1.2 Stages in Statistical Investigation

The area of statistics points out the following five stages. These are collection, organization,
presentation, analysis and interpretation of data.
i. Collection of data: This is the process of obtaining measurements or counts or obtaining raw data.
Data can be collected in a variety of ways; one of the most common methods is through the use of
sample or census survey. Survey can also be done in different methods, three of the most common
methods are:
 Telephone survey
 Mailed questionnaire
 Personal interview.
ii. Organization of data: Data collected from published sources are generally in organized form.
However if an investigator has collected data through a survey, it is necessary to edit these data in
order to correct any apparent inconsistencies, ambiguities, and recording errors.
This phase also includes correcting the data for errors, grouping data into classes and tabulating.
iii. Presentation of data: After the data have been collected and organized they can be presented in
the form of tables, charts, diagrams and graphs. This presentation in an orderly manner facilitates
the understanding as well as analysis of data.
iv. Analysis of data: the basic purpose of data analysis is to dig out useful information for decision
making. This analysis may simply be a critical observation of data to draw some meaningful
conclusions about it or it may involve highly complex and sophisticated mathematical techniques.
v. Interpretation of data: Interpretation means drawing conclusions from the data collected and
analyzed. Correct interpretation will lead to a valid conclusion of the study & thus can aid in decision
making.

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1.3 Definition of some basic statistical terms

Population:A population is a totality of things, objects, peoples, etc about which

information is being collected. It is the totality of observations with which the researcher
is concerned. The population represents the target of an investigation, and the objective of
the investigation is to draw conclusions about the population hence we sometimes call it
target population.
Examples
 Population of trees under specified climatic conditions.
 Population of animals fed a certain type of diet.
 Population of farms having a certain type of natural fertility
 Population of households, etc
The population could be finite or infinite (an imaginary collection of units).
There are two ways of investigation: Census and sample survey.
Census: Census survey (studying the whole population without considering samples)
requires a great deal of time, money and energy. Trying to study the entire population is in
most cases technically and economically not [Link] solve this problem, we take a
representative sample out of the population on the basis of which we draw conclusions
about the entire population.
Sample survey:A sample is a subset or part of a population selected to draw conclusions
about the population
Therefore, sampling survey

 Helps to estimate the parameter of a large population.

 Is cheaper, practical, and convenient.
 Save time and energy.
 Easy to handle and analysis.

Sampling:The process of selecting a sample from the population is called sampling.

Parameter: Characteristic or measure obtained from a population. It is the population measurement
used to describe the population.

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Example: population mean and population standard deviation

Statistic: Characteristic or measure obtained from a sample. It is a measure used to describe the
sample
Sampling frame: A list of people, items or units from which the sample is taken.

Sample size:The number of elements or observation to be included in the sample.

Data: Data as a collection of related facts and figures from which conclusions may be drawn.
Variable: It is an item of interest that can take on many different numerical values.

1.4 Application, Uses and Limitation of Statistics

Application
No research activity can takes place without having the knowledge and application of statistics
 To control the quality of product in a given production process
 To compare the breaking strength of two types of minerals
 To determine the probability of reliability (how often the product fails?) of a product. if
a product requires frequently repairs it is unreliable
 To compare the improvement of yield due to certain additives like fertilizer, herbicides,
pesticide
Function/Uses of Statistics
Today the field of statistics is recognized as a highly useful tool to making decision process by managers of
modern business, industry, frequently changing technology. It has a lot of functions in everyday activities.
The following are some uses of statistics:

a. It condenses and summarizes a mass of data: the original set of data (raw data) is normally
voluminous and disorganized unless it is summarized and expressed in few presentable,
understandable & precise [Link] complex data may be reduced to totals, averages,
percentages, etc and presented either graphical or [Link] devices help us
to understand quickly the significant characteristics of the numerical data. Single figures
like averages & percentages can be grasped more easily than a mass of statistical data.
b. Statistics facilitates comparison of data: measures obtained from different set of data can
be compared to draw conclusion about those sets. Certain facts, by themselves, may be

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 meaningless unless they are capable of being compared with similar facts at other places or
at other period of time.
Example: we estimate the national income of Ethiopia not essentially for the value of that
fact itself but mainly in order to compare the income of today with that of the past & thus
draw conclusions as to whether the standard living of the people is on the increase, decrease
or stationary. Some of the methods of comparisons provided by statistics are totals, ratios,
averages (measures of central tendency), and measure of variation, graphs, diagrams &
coefficients.
c. Statistics helps to predict future trends: statistics is very useful for analyzing the past and
present data and forecasting future events.
d. Statistics helps to formulate & review policies: Statistics provide the basic material for
framing suitable policies. Statistical study results in the areas of taxation, on unemployment
rate, on inflation, on the performance of every sort of military equipment, etc, may convince
a government to review its policies and plans with the view to meet national needs and
aspirations.
e. Formulating and testing hypothesis: Statistical methods are extremely useful in
formulating and testing hypothesis and to develop new theories.

Limitations of Statistics
The field of statistics, though widely used in all areas of human knowledge and widely applied in a
variety of disciplines such as engineering, economics and research, has its own limitations. Some of
these limitations are:
a) It does not deal with individual values: as discussed earlier, statistics deals with aggregate of
facts. For example, wage earned by an individual worker at any one time, taken by itself is not a
statistics.
b) It does not deal with qualitative characteristics directly: statistics is not applicable to
qualitative characteristics such as beauty, honesty, poverty, standard of living and so on since these
cannot be expressed in quantitative terms. These characteristics, however, can be statistically dealt
with if some quantitative values can be assigned to these with logical criterion. For example,
intelligence may be compared to some degree by comparing IQs or some other scores in certain
intelligence tests.

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c) Statistical conclusions are not universally true: since statistics is not an exact science, as is the
case with natural sciences, the statistical conclusions are true only under certain assumptions.
d) It can be misused: statistics cannot be used to full advantage in the absence of proper
understanding of the subject matter.

1.5 Types of Variables & Measurement Scales

1.5.1 Types of Variables
A variable is a condition that can differ from one case to another or one object to the other. It is a
quantity which shows variability & takes on different values.
Example:- weight , height, age, production, blood pressure, heart beat, number of patients on a given
hospital, sex etc
There are two types of variables
A. Qualitative variables:
These are variables that can be placed in distinct category according to some characteristics.
Qualitative variables are nonnumeric and cannot be measured or counted.
Example: - religion, gender, race, beauty, religion, degree of pain, place of birth, ethnic group, type
of drug, stages of breast cancer (I, II, III, or IV), degree of pain (minimal, moderate, severe or
unbearable).
B. Quantitative variables:
Quantitative variables are that can be quantified or can have numerical values and it can be measured
and counting.
Example: weight, height, age, production, blood pressure, heart beat, number of patients on a given
hospital etc
A quantitative variable is one that can be measured and expressed numerically and they can be of
two types (discrete or continuous).
i. Discrete variables: are variables which can assume only a specific number of values.
Discrete variables are a result of counting and values are usually whole numbers,
Example: the number of items purchased,the number of HIV patient indifferent year, number of
students in Assosa university, number of chairs, number of accidents in a given year, number of
defective items in a given production process, number of employees, number of family members....

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ii. Continuous variable: continuous variables are variables that can have any value with in an
[Link] values of continuous variables are obtained by measurement.
Example: weight, height, blood pressure, age, expenditure, productions, rainfall generally any
measurable quantity etc.

1.5.2 Scale of Measurement

Proper knowledge about the nature and type of data to be dealt with is essential in order to specify
and apply the proper statistical method for their analysis and [Link] scale refers to
the property of value assigned to the data based on the properties of order, distance and fixed zero.
In mathematical terms measurement is a functional mapping from the set of objects {Oi} to the set
of real numbers {M(Oi)}.

The goal of measurement systems is to structure the rule for assigning numbers to objects in such a
way that the relationship between the objects is preserved in the numbers assigned to the objects.
The different kinds of relationships preserved are called properties of the measurement system.
Order
The property of order exists when an object that has more of the attribute than another object, is
given a bigger number by the rule system. This relationship must hold for all objects in the "real
world". The property of ORDER exists When for all i, j if Oi> Oj, then M(Oi) > M(Oj).

Distance

The property of distance is concerned with the relationship of differences between objects. If a
measurement system possesses the property of distance it means that the unit of measurement means

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the same thing throughout the scale of numbers. That is, an inch is an inch, no matters were it falls
- immediately ahead or a mile downs the road.

More precisely, an equal difference between two numbers reflects an equal difference in the "real
world" between the objects that were assigned the numbers. In order to define the property of
distance in the mathematical notation, four objects are required: Oi, Oj, Ok, and Ol . The difference
between objects is represented by the "-" sign; Oi - Oj refers to the actual "real world" difference
between object i and object j, while M(Oi) - M(Oj) refers to differences between numbers.
The property of distance exists, for all i, j, k, l
If Oi-Oj ≥ Ok- Ol then M(Oi)-M(Oj) ≥ M(Ok)-M( Ol ).

Fixed Zero
A measurement system possesses a rational zero (fixed zero) if an object that has none of the attribute
in question is assigned the number zero by the system of rules. The object does not need to really
exist in the "real world", as it is somewhat difficult to visualize a "man with no height". The
requirement for a rational zero is this: if objects with none of the attribute did exist would they be
given the value zero. Defining O0 as the object with none of the attribute in question, the definition
of a rational zero becomes: The property of fixed zero exists if M(O0) = 0.

Scale Types
Measurement is the assignment of values to objects or events in a systematic fashion. Four levels of
measurement scales are commonly distinguished: nominal, ordinal, interval, and ratio and each
possessed different properties of measurement systems. The first two are qualitative while the last
two are quantitative.

Nominal scale: TheNominal scales are measurement systems that possess none of the three
properties stated [Link] nominal scale applies to data that are used for category identification.
The nominal level of measurement is characterized by data that consist of names, labels, or
categories only. Nominal scale data cannot be arranged in an ordering scheme. The arithmetic
operations of addition, subtraction, multiplication, and division are not performed for nominal data.
In this scale one different from the other, they are not interchangeable & ranking, ordering,
mathematical comparisons (<,>,=) is impossible.

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Example1.4: eye color: (brown, black, others), sex: (male, female), Political party preference
(Republican, Democrat, or Others), Marital status: (married, single, widow, divorce), Regional
differentiation of Ethiopia.

Ordinal scale: - Ordinal Scales are measurement systems that possess the property of order, but not
the property of distance. The property of fixed zero is not important if the property of distance is not
[Link] nominal and ordinal scales are sometimes collectively called categorical scales.
However, an ordinal scale provides additional information. An ordinal scale of measurement, in
addition to the function of classification, allows cases to be ordered or ranked by degree according
to measurements of the variable. Arithmetic operations(+, -, *, ÷) are not applicable but relational
operations (<, >)are applicable.
Example1.5: Letter grading (A, B, C, D, F), rating scales (excellent, very good, good), etc

Interval Level: Interval scales are measurement systems that possess the properties of Order and
distance, but not the property of fixed [Link] of measurement which classifies data that can be
ranked and differences are meaningful. However, there is no meaningful zero, so ratios are
meaningless. Arithmetic operations such as Multiplication and division are not possible. But
addition, subtractionand Relational operations are applicable.
Note: Celsius & Fahrenheit temperature readings have no meaningful zero and ratios are
meaningless. The zero point of interval scale of measurement does not indicate an absence of the
measured scale. Example 0℃ does not mean absence of temperature.
Example 1.5: IQ, Temperature.

Ratio scale: Ratio scales are measurement systems that possess all three properties: order, distance,
and fixed zero. There exist a zero point (true zero, absolute zero, unique zero point) that means True
zero starting point. Ratio data Set apart from ordinal (increasing order) and interval data (equal
spacing) by having the additional property of an absolute lower value (such as zero) that corresponds
to the absence of the measure. There is a physical significant to this zero point, this means the zero
point of this scale indicate an absence of the measured scale. All arithmetic (+, -, *, ÷) and relational
operations are applicable. Ratio variables exhibit the characteristics of nominal, ordinal and interval
measurement. Ratio variables can be continuous or discrete.
Example 1.6:

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 Summary of chapter one

Dear student have you made yourself familiar with each of the following statistical concepts very
well? If not, please make sure that you are able to define, explain, describe, distinguish differences
or similarities among the terms considered in the unit by revising the lessons where you can find the
terms you are interested in.
 Cheek yourself whether you are able to define:
 Variables
 Population
 Census
 Sample surveys
 Cheek yourself whether you are able to distinguish between:
 Parameter and Statistic
 Qualitative and quantitative variable
 Cheek whether you can give sufficient explanation about:
 Types of statistical data
 Application of statistics
 Limitation of statistics
 Uses of statistics
 Measurement scales
 Cheek whether you are able to describe:
 Types of variable
 General steps for statistical investigation
 Cheek whether you are able to define the field of study “statistics”

Review Exercise on Chapter One

1. Classify the following sentences as belonging to the area of descriptive statistics or
inferential statistics.

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 i. As a result of recent cutbacks by oil-producing nations, we can expect the price of gasoline
to double in the next year.
ii. The average monthly income of all household in city x is 500 dollars based on sample data.
iii. Adane concludes that his chance of passing the first year this academic year is at least 80%
based on the statistics that 75% of the freshmen passed last year.
2. Suppose the CGPA of all students taking stat 3011 is 3.5, you determine the average CGPA
of a sample of 50 students is 2.8, then, Determine:
a) the population
b) the Sample
c) the variable under study
d) the parameter of interest and
e) Is the variable qualitative or quantitative
3. Classify each of the following first as qualitative or quantitative and second as nominal
(categorical) ordinal, interval, or ratio measure.
a) Times for swimmers to complete a 50-meter race
b) Months of the year Meskerm, Tikimit…
c) Socioeconomic status of a family when classified as low, middle and upper classes.
d) Blood type of individuals, A, B, AB and O.
e) Pollen counts provided as numbers between 1 and 10 where 1 implies there is almost no pollen
and 10 that it is rampant, but for which the values do not represent an actual counts of grains
of pollen.
f) Regions numbers of Ethiopia (1, 2, 3 etc.)
g) The number of students in a college;
h) The net wages of a group of workers;

CHAPTER TWO
2. METHODS OF DATA COLLECTION AND PRESENTATION

Objectives
Up on completing this chapter students will be able to:
 Describe the different method of data collection

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 Construct ungrouped (discrete), grouped (continuous), relative and cumulative frequency
distribution for raw data.
 Compute class mark, class width, class limits, class boundaries, relative frequency and
cumulative frequency.
 Present numerical data using suitable graphs or diagrams.

Introduction
This unit will deal how to collect and present the data you have collected so that they can be of use.
Thus the collected data also known as raw data are always in an unorganized form and need to be
organized and presented in a meaningful and readily comprehensible form in order to facilitate
further statistical analysis.

1.1 Methods of Data Collection

Definition some basic terms
Data: Data defined as any information collected as parts of a research project and numerical result
of any scientific measurement it may be in the form of counting or measurement.
Raw data: are collected data, which have not been organized numerically.
Array: is an arrangement of raw numerical data in ascending or descending order of magnitude. It
enables us to know the range of the data set easily and it also gives us some idea about the general
characteristics of the distribution.

Frequency: is the number of times a certain value of the variable repeated in the given data or the
number of times a certain value (set of value) occurs in a specific group.
There are two things which must be considered before starting the data collection. These are:

a. Statement of the purpose of investigation (objective)

b. Plan of data collection
A. Purpose of investigation (objective of statistical inquiry):
The objective of statistical investigation may be:
1. To supplement, disprove or to test some theory (hypothesis) which is current.
2. To discover a new theory (hypothesis)

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 3. To solve a problem involving the inter dependence of several group of facts

B. Plan of data collection: in planning data collection the following points should be
considered:
a. Scope of inquiry: decide with reference to
 Time: the work of collection of data must be finished within a reasonable time.
Reasonable depends on the nature of the phenomenon under investigation. If the
phenomenon is such where the conditions change quickly & frequently the duration
of the process of investigation should narrowed to such an extent that there is no
possibility of a change affecting the data.
 Space:
 Political & administrative (country, district, woreda, municipality)
 Economic division (agriculture & animal husbandry), mining , manufacturing,
trade, transport
 Natural or climate division (plaints, mountains, plateaus, forests )
 The number of items included in the study: it means the questions of choice
between the census and the sampling technique of data collection.
 Census: each item constituting for information in the population(the
universe is enumerated)
 Sample: a limited number of items is taken in to account(this limited of
items regarded as the sample of the population)

2.1.1 Source of Data

Any scientific investigation requires data related to the study. The required data is obtained from
two sources called primary & secondary.
A. Primary Sources: is a source of data that supplies firsthand information for the use of
immediate purpose. Primary data are data originally collected for the immediate purpose.
The sources of primary data are the objects under study themselves and there is also a direct
contact between the investigator and the items(objects) under investigation because of this it
is more expensive.
B. Secondary Sources: When an investigator uses data, which have already been collected by
others, such data are called "Secondary Data". Such data are primary data for the agency that

13
 collected them, and become secondary for someone else who uses these data for his own
purposes. The secondary data can be obtained from journals, reports, government
publications, publications of professionals and research organizations. Secondary data are
less expensive to collect both in money, cost and time.
NB:
 Primary data are more expensive than secondary data.
 Data which are primary for one may be secondary for the other.

Method of Primary Data Collection

In primary data collection, you collect the data yourself using methods such as interviews,
observations, laboratory experiments and questionnaires. The key point here is that the data you
collect is unique to you and your research and, until you publish, no one else has access to it. There
are many methods of collecting primary data and the main methods include:
 Questionnaire methods: it includes personal interview (face to face, telephone) &
mail interview.
 Observation: It involves recording the behavioral patterns of people, objects and
events in a systematic manner.
 Diaries: A diary is a way of gathering information about the way individuals spend
their time on professional activities. They are not about records of engagements or
personal journals of thought! Diaries can record either quantitative or qualitative data,
and in management research can provide information about work patterns and
activities.
 Laboratory experiment: Conducting laboratory experiments on fields of chemical,
biological sciences and so on.

2.2 Methods of Data Presentation

Having collected and edited the data, the next important step is to organize it. That is to present it in
a readily comprehensible condensed form that aids in order to draw inferences from it. It is also
necessary that the like be separated from the unlike ones.
The presentation of data is broadly classified in to the following two categories:
• Tabular presentation

14
 • Diagrammatic and Graphic presentation.
2.2.1 Tabular Presentation
Classification is the process of arranging items/data/ in to classes or categories according to their
similarities or differences. Classification is a preliminary and it prepares the ground for proper
presentation of data. Tabular presentation of data is presented by using Frequency distribution.

A Frequency distribution is a table that presents data according to some criteria with the
corresponding number of items following in each class (i.e. with the corresponding frequencies)
A frequency distribution is essentially the classification of data in to an appropriate number of
mutually exclusive (non-overlapping) classes.
There are 3 types of Frequency distribution. These are:
1. Categorical Frequency distribution
2. Ungrouped Frequency distribution
3. Grouped Frequency distribution
There are specific procedures for constructing each type.

1) Categorical Frequency distribution: Used for data that can be place in specific categories such
as nominal, or ordinal. e.g. marital status and Letter grade

Example 2.1: a social worker collected the following data on marital status for 25
persons.(M=married, S=single, W=widowed, D=divorced)
M S D W D
S S M M M
W D S M M
W D D S S
S W W D D
Solution:
Since the data are categorical, discrete classes can be used. There are four types of marital status
M, S, D, and W. These types will be used as class for the distribution. We follow procedure to
construct the frequency distribution.
Step 1: Make a table as shown.

15
 Class Tally Frequency Percent
(1) (2) (3) (4)
M
S
D
Step 2: Tally the W data and place the result in column
(2).
Step 3: Count the tally and place the result in column (3).
Step 4: Find the percentages of values in each class by using;
f
% * 100 Where f= frequency of the class, n=total number of value.
n
Percentages are not normally a part of frequency distribution but they can be added since they
are used in certain types diagrammatic such as pie charts.
Step 5: Find the total for column (3) and (4).
Combing the entire steps one can construct the following frequency distribution.

Class Tally Frequency Percent

(1) (2) (3) (4)
M ///// 6 20
S //// // 7 28
D //// // 7 28
W //// 5 24

2) Ungrouped Frequency distribution: Is a table of all the potential raw score values that could
possible occur in the data along with the number of times each actually [Link]
frequency distribution is often constructed for small set or data on discrete variable.

Steps for constructing ungrouped frequency distribution:

 First find the smallest and largest raw score in the collected data.
 Arrange the data in order of magnitude and count the frequency.
 To facilitate counting one may include a column of tallies.
Example:
The following data represent the mark of 20 students.

16
 80 76 90 85 80
70 60 62 70 85
65 60 63 74 75
76 70 70 80 85
Construct a frequency distribution, which is ungrouped.
Solution:
Step 1: Find the range, Range=Max-Min=90-60=30.
Step 2: Make a table as shown
Step 3: Tally the data.
Step 4: Compute the frequency.
Mark Tally Frequency
60 // 2
62 / 1
63 / 1
65 / 1
70 //// 4
74 / 1
75 / 1
76 // 2
80 /// 3
85 /// 3
90 / 1

Each individual value is presented separately, that is why it is named ungrouped frequency
distribution.
1) Grouped Frequency Distribution: is used when the range of the data is large, the data must
be grouped in to classes that are more than one unit in width.

Definition of some basic terms

 Grouped frequency distribution: is a FD when several numbers are grouped into one class.
 Class limits (CL): It separate one class from another. The limits could actually appear in the
data and have gaps between the upper limits of one class and the lower limit of the next class.
 Unit of measure (U): This is the possible difference between successive values. E.g. 1, 0.1,
0.01, 0.001, etc

17
 Class boundaries: Separate one class in a grouped frequency distribution from the other. The
boundary has one more decimal place than the raw data. There is no gap between the upper
boundaries of one class and the lower boundaries of the succeeding class. Lower class
boundary is found by subtracting half of the unit of measure from the lower class limit and
upper class boundary is found by adding half unit measure to the upper class limit.
 Class width (W): The difference between the upper and lower boundaries of any consecutive
class. The class width is also the difference between the lower limit or upper limits of two
consecutive class.
 Class mark (Midpoint): is the average of the lower and upper class limits or the average of
upper and lower class boundary.
 Cumulative frequency: It is the number of observation less than or greater than the upper
class boundary of class.
 CF (Less than type): it is the number of values less than the upper class boundary of a given
class.
 CF (Greater than type): it is the number of values greater than the lower class boundary of a
given class.
 Relative frequency (Rf ):The frequency divided by the total frequency. This gives the present
of values falling in that class.
Rfi = fi/n= fi/ ∑fi , where fi is frequency of ith class and n= total number of observation or
items
 Relative cumulative frequency (RCf): The running total of the relative frequencies or the
cumulative frequency divided by the total frequency gives the present of the values which are
less than the upper class boundary or the reverse.
CRfi=Cfi/n=Cfi/∑fi

Guidelines for classes

1. There should be between 5 and 20 classes.
2. The classes must be mutually exclusive. This means that no data value can fall into two
different classes
3. The classes must be all inclusive or exhaustive. This means that all data values must be
included.

18
 4. The classes must be continuous. There are no gaps in a frequency distribution.
5. The classes must be equal in width.

Steps for constructing Grouped frequency Distribution

1. Find the largest and smallest values
2. Compute the Range(R) = Maximum - Minimum
3. Select the number of classes desired, usually between 5 and 20 or use Sturges rule
k  1  3.32 log n where k is number of classes desired and n is total number of observation.
4. Find the class width by dividing the range by the number of classes and rounding up, not off.
R
w .
k
5. Pick a suitable starting point less than or equal to the minimum value. The starting point is
called the lower limit of the first class. Continue to add the class width to this lower limit to
get the rest of the lower limits.
6. To find the upper limit of the first class, subtract U from the lower limit of the second class
([Link] = LCLi-U) . Then continue to add the class width to this upper limit to find the rest
of the upper limits.
7. Find the boundaries by subtracting U/2 units from the lower limits and adding U/2 units from
the upper limits. The boundaries are also half-way between the upper limit of one class and
the lower limit of the next class. Mathematically expressed as:

LCBi = LCLi – ½ U, where LCBi is lower class boundary of the ith class
UCBi = UCLi + ½ U, where UCBi is upper class boundary of the ith class

8. Find class mark (CM)

CMi = (UCLi + LCLi)/ 2 or CMi = (UCBi + LCBi)/ 2.
9. Tally the data.
10. Find the frequencies.
11. Find the cumulative frequencies. Depending on what you're trying to accomplish, it may not
be necessary to find the cumulative frequencies.
12. If necessary, find the relative frequencies and/or relative cumulative frequencies

Example:Construct a frequency distribution for the following data.

19
 11 29 6 33 14 31 22 27 19 20
18 17 22 38 23 21 26 34 39 27
Solutions:
Step 1: Find the highest and the lowest value H=39, L=6
Step 2: Find the range; R=H-L=39-6=33
Step 3: Select the number of classes desired using Sturges formula;
k =1+3.32log (20) =5.32=6(rounding up)
Step 4: Find the class width; w=R/k=33/6=5.5=6 (rounding up)
Step 5: Select the starting point, let it be the minimum observation.
 6, 12, 18, 24, 30, 36 are the lower class limits.
Step 6: Find the upper class limit; e.g. the first upper class=12-U=12-1=11
 11, 17, 23, 29, 35, 41 are the upper class limits.
So combining step 5 and step 6, one can construct the following classes.
Class limits
6 – 11
12 – 17
18 – 23
24 – 29
30 – 35
36 – 41
Step 7: Find the class boundaries;
E.g. for class 1 Lower class boundary=6-U/2=5.5
Upper class boundary =11+U/2=11.5
 Then continue adding class width (w)on both boundaries to obtain the rest boundaries. By
doing so one can obtain the following classes.
Class boundary
5.5 – 11.5
11.5 – 17.5
17.5 – 23.5
23.5 – 29.5
29.5 – 35.5
35.5 – 41.5
Step 8: find the class marks (CM)
CMi = (UCLi + LCLi )/ 2, CM1 = 5+11/2 =8.5, then continued to add W to find the rest class marks.
So the class marks are:
8.5, 14.5 , 20.5, 26.5, 32.5, 38.5

20
 Step 8: tally the data.
Step 9: Write the numeric values for the tallies in the frequency column.
Step 10: Find cumulative frequency.
Step 11: Find relative frequency or/and relative cumulative frequency.

The complete frequency distribution follows:

Class limit Class boundary Class Tally Freq. Cf (less Cf(more rf. rcf(less than
Mark than than type) type
type)
6 – 11 5.5 – 11.5 8.5 // 2 2 20 0.10 0.10
12 – 17 11.5 – 17.5 14.5 // 2 4 18 0.10 0.20
18 – 23 17.5 – 23.5 20.5 //// // 7 11 16 0.35 0.55
24 – 29 23.5 – 29.5 26.5 //// 4 15 9 0.20 0.75
30 – 35 29.5 – 35.5 32.5 /// 3 18 5 0.15 0.90
36 – 41 35.5 – 41.5 38.5 // 2 20 2 0.10 1.00

2.2.2 Diagrammatic and Graphic Presentation of Data

The most convenient and popular way of describing data is using graphical presentation. It is easier
to understand and interpret data when they are presented graphically than using words or a frequency
table. A graph can present data in a simple and clear way. Also it can illustrate the important aspects
of the data. This leads to better analysis and presentation of the data. In this article, we discuss the
approach for the most commonly used diagrammatic or graphical methods.
[Link] Diagrammatic Presentation of Data
The three most commonly used diagrammatic presentation for discrete as well as qualitative data
are:
 Pie charts
 Bar charts
 Pictogram
A) Pie chart
A pie chart is a circle that is divided in to sections or wedges according to the percentage of
frequencies in each category of the distribution. The angle of the sector is obtained using:
𝑉𝑎𝑙𝑢𝑒𝑜𝑓𝑡ℎ𝑒𝑝𝑎𝑟𝑡
𝐴𝑛𝑔𝑙𝑒𝑜𝑓𝑎𝑠𝑒𝑐𝑡𝑜𝑟 = ∗ 360%
𝑇ℎ𝑒𝑤ℎ𝑜𝑙𝑒𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦
Example: Draw a suitable diagram to represent the following population in a town.
Men Women Girls Boys

21
 2500 2000 4000 1500
Solutions:

Step 1: Find the percentage.

Step 2: Find the number of degrees for each class.

Step 3: Using a protractor and compass, graph each section and write its name corresponding
percentage.

Class Frequency Percent Degree

Men 2500 25 90
Women 2000 20 72
Girls 4000 40 144
Boys 1500 15 54

[Link] chart of the population in a town

Frequency,
Boys, 1500, Frequency,
15% Men, 2500,
25%

Frequency,
Frequency,
Girls, 4000, 40%
Women, 2000,
20%

B) Pictogram:is a device used to represent data by means of pictures or small symbols. We

decide about a suitable picture to represent a definite number of units in which the variable
is measured.
Example: The following table shows the orange production in a plantation from production year
1990-1993. Represent the data by a pictogram.
Production year 1990 1991 1992 1993
Amount (in kg) 3000 3850 3500 5000

Figure 2: Pictogram of the data on Orange productions from 1990 to 1993.

22
 C) Bar Charts: Used to represent & compare the frequency distribution of discrete variables
and attributes or categorical [Link] can be drawn either vertically or horizontally.
In presenting data using bar diagram,

 All bars must have equal width and the distance between bars must be equal.
 The height or length of each bar indicates the size (frequency)of the figure represented.

There are different types of bar charts. The most common being:

 Simple bar chart

 Component or sub divided bar chart.
 Multiple bar charts.
I. Simple bar chart
 Are used to display data on one variable.
 They are thick lines (narrow rectangles) having the same breadth. The magnitude of a
quantity is represented by the height /length of the bar.

Example: Draw a bar chart for the following coffee production data from 1990 to 1995.

Year 1990 1991 1992 1993 1994 1995

Amount (in 50 75 92 64 100 120

1000 tones)

Figure 3: Production of coffee from 1990 to 1995

23
 120

Amount of coffee in 1000 tons

100

80

60

40

20

0
1990 1991 1992 1993 1994 1995

Production year

II. Component Bar Chart:

When there is a desire to show how a total (or aggregate) is divided in to its component parts, we
use component bar chart. The bars represent total value of a variable with each total broken in to its
component parts and different colors or designs are used for identifications

Example: The following data represent sale by product, 1957- 1959 of a given company for three
products A, B, C.

Product Sales($) Sales($) Sales($)

In 1957 In 1958 In 1959
A 12 14 18
B 24 21 18
C 24 35 54

Draw a component bar chart to represent the sales by product from 1957 to 1959.

Figure3. Component bar chartof sales by product from 1957 to 1959.

24
 SALES BY PRODUCT 1957-1959

100

80

Sales in $
Product C
60
Product B
40
Product A
20

0
1957 1958 1959
Year of production

III. Multiple Bar charts: These are used to display data on more than one variable. They
are used for comparing different variables at the same time.

Example: Draw a multiple bar chart to represent the sales by product from 1957 to 1959.

Figure4. Multiple bar chartssales by product from 1957 to 1959.

Sales by product 1957-1959

60
50
Sales in $

40 Product A
30 Product B
20 Product C

10
0
1957 1958 1959
Year of production

[Link] Graphical Presentation of Data

The histogram, frequency polygon and cumulative frequency graph or ogive is most commonly
applied graphical representation for continuous data.

Procedures for constructing statistical graphs:

 Draw and label the x and y axes.

25
 Choose a suitable scale for the frequencies or cumulative frequencies and label it on the y-axes.
 Represent the class boundaries for the histogram or ogive or the mid points for the frequency
polygon on the x-axes.
 Plot the points.
 Draw the bars or lines to connect the points.
i. Histogram: is a graph which displays the data by using vertical bars of various heights to
represent frequencies. Class boundaries are placed along the horizontal axes. Class marks and
class limits are sometimes used as quantity on the x-axis.

Example: Construct a histogram for the frequency distribution of the time spent by the automobile
[Link] frequency distribution is:

Time (class boundaries) Class mark Number of workers

15.5-16.5 18.5 3

16.5-27.5 24.5 6

27.5-33.5 30.5 8

33.5-39.5 36.5 4

39.5-45.5 42.5 3

45.5-51.5 48.5 1

[Link] time in minutes spent by automobile workers to travel from home to work.

26
 ii. Frequency polygon
Frequency polygon is a line graph. The frequency is placed along the vertical axis and classes mid
points are placed along the horizontal axis. Add two classes with zero frequencies at the two ends of
the frequency distribution;this is to make it a complete polygon.

Example: Construct a frequency polygon for the frequency distribution of the time spent by the
automobile workers.

Figure 5: The time in minutes spent by automobile workers to travel from home to work.

iii. Ogive (cumulative frequency polygon):

Ogive is a graphplotting the cumulative frequencies of a distribution against the boundaries. There are
two type of Ogive namely less than Ogive and more than Ogive. Less than Ogive plotted against
upper class boundaries and more than Ogive plotted against lower class boundaries. That is class

27
boundaries are plotted along the horizontal axis and the corresponding cumulative frequencies
are plotted along the vertical axis. The points are joined by a free hand curve.
Exercise: Construct an ogive for the time spent by the automobile workers

Cheek list of chapter two

Dear student make sure that you are able to define, explain, describe, distinguish differences or
similarities among the terms considered in the chapter two:
 Cheek yourself whether you are able to describe the different method of data collection
 Cheek yourself whether you are able to distinguish between Primary data and secondary data
 Cheek yourself whether you are able to define:
 Raw Data
 Frequency
 Frequency distribution
 Cheek yourself whether you are able toconstruct ungrouped (discrete), grouped (continuous),
relative and cumulative frequency distribution for raw data.
 Cheek yourself whether you are able tocompute class mark, class width, class limits, class
boundaries, relative frequency and cumulative frequency.
 Cheek yourself whether you are able topresent numerical data using suitable graphs or diagrams
such as histograms, frequency polygon, ogive, pie chart, pictogram and bar charts(i.e simple bar
chart, component bar chart and multiple bar chart ).

Review Exercise on Chapter Two

1. Which of the diagrams is most appropriate for each of the following data set? Draw the diagrams.
a. Students enrolled to a certain department from year 1 to 3
No. of students
Year Male Female
1 50 20
2 45 15
3 40 10

2. Suppose data collected for heights (in cms) 0f 390 cows were tabulated in a frequency
distribution and the following results were obtained.
fi: 6, 25, 48, 72, 116, 60, 38, 22, 3
CM1 =112, CM2=117 where CMi ith class mark

28
 Determine:
i. the class interval size (class width)
ii. the class limits
iii. class boundaries
iv. class marks
v. the less than cumulative frequency distribution
vi. the class intervals having the highest frequency
vii. Above which height do we find 50% of the cows?
viii. Below which height do we get 25% of the cows?
Draw
A. histogram
B. a frequency polygon
C. a less than ogive for the above data

CHAPTER 3
3. MEASURES OF CENTERAL TENDENCY

Objectives
At the end of this chapter students will be able to:
 Identify types of measure of central tendency
 Understand the data easily.
 Define and calculate the mean, mode, median, quartiles, deciles and percentiles with their
interpretation.
 Summarize an aggregate of statistical data by using single measure and make comparison

3.1 Introduction
On the scale of values of a variable there is a certain stage at which the largest number of items tends
to cluster/center around. Since this stage is usually in the center of distribution, the tendency of the
statistical data to get concentrated at this stage/value is called" central tendency“.The various

29
measures determining the actual value at which the data tends to concentrate are called measures of
central tendency. So, a measure of central location is the single value that best represents the whole
series. This single value is called the average of the group. An average which is representative is
called typical average and an average which is not representative and has only a theoretical value is
called a descriptive average.

A typical average should posses the following:

 It should be rigidly defined.

 It should be based on all observation under investigation.
 It should be as little as affected by extreme observations.
 It should be capable of further algebraic treatment.
 It should be as little as affected by fluctuations of sampling.
 It should be ease to calculate and simple to understand.

The Summation Notation ()

Statistical Symbols: Let X1, X2 ,X3 …XN be a number of measurements where N is the total number
of observation and Xi is ith [Link] often in statistics an algebraic expression of the form
X1+X2+X3+...+XN is used in a formula to compute a statistic. It is tedious to write an expression
like this very often, so mathematicians have developed a shorthand notation to represent a sum of
scores, called the summation notation.
N
 The symbol X
i 1
i is a mathematical shorthand for X1+X2+X3+...+XN

The expression is read, "the sum of X sub i from i equals 1 to N." It means "add up all the
numbers."
Example 3.1: Suppose the following were scores made on the first homework assignment for five
students in the class: 5, 7, 7, 6, and 8. in this example set of five numbers, where N=5, the summation
could be written:

30
The "i=1" in the bottom of the summation notation tells where to begin the sequence of summation.
If the expression were written with "i=3", the summation would start with the third number in the
set. For example:

Sometimes if the summation notation is used in an expression and the expression must be written a
number of times, as in a proof, then a shorthand notation for the shorthand notation is employed.
When the summation sign "∑" is used without additional notation, then "i=1" and "N" are assumed.
For example:

Properties of summation
n

 k  nk
i 1
where k is any constant

n n

 kX
i 1
i  k X i
i 1
where k is any constant

n n

 (a  bX i )  na  b X i
i 1 i 1
where a and b are any constant

n n n

(X
i 1
i  Yi )   X i   Yi
i 1 i 1

Example 3.2: considering the following data determine

X Y

31
 5 6
7 7
7 8
6 7
8 8
5 5
a)  Xi
i 1
e) (X
i 1
i  Yi )
5 5
b) Y
i 1
i f) X Y
i 1
i i

5 5

10 X
2
c) g) i
i 1 i 1
5 5 5
d) (X i  Yi ) h) ( X i )( Yi )
i 1 i 1 i 1

Solutions:
5
a) X
i 1
i  5  7  7  6  8  33
5
b) Y
i 1
i  6  7  8  7  8  36
5
c) 10  5 *10  50
i 1
5
d) (X
i 1
i  Yi )  (5  6)  (7  7)  (7  8)  (6  7)  (8  8)  69  33  36
5
e) (X
i 1
i  Yi )  (5  6)  (7  7)  (7  8)  (6  7)  (8  8)  3  33  36
5
f) X Y
i 1
i i  5 * 6  7 * 7  7 * 8  6 * 7  8 * 8  241
5

X  5 2  7 2  7 2  6 2  8 2  223
2
g) i
i 1
5 5
h) ( X i )( Yi )  33 * 36  1188
i 1 i 1

3.2 Types of Measures of Central Tendency

There are several different measures of central tendency; each has its advantage and disadvantage.
 The Mean (Arithmetic, Geometric and Harmonic)
 The Mode
 The Median
 Quantiles (Quartiles, Deciles and Percentiles)

32
The choice of these averages depends up on which best fit the property under discussion.

1.2.1 Arithmetic Mean:Is defined as the sum of the magnitude of the items divided by the
number of [Link] mean of X1, X2 ,X3 …Xn is denoted by A.M ,m or X and is given
by:
X 1  X 2  ...  X n
X 
n
n

X i
X  i 1

n
If X1 occurs f1 times, if X2occurs f2 times, … , if Xn occurs fn times
k

fX i i
X
k

f
i 1
Then the mean will be k , where k is the number of classes and i n
f
i 1
i
i 1

Example3.3: Obtain the mean of the following number

2, 7, 8, 2, 7, 3, 7

Solution:
Xi fi Xifi
2 2 4
3 1 3
7 3 21
8 1 8
Total 7 36

f i Xi
36
X  i 1
4
  5.15
f
7
i
i 1

Arithmetic Mean for Grouped Data

If data are given in the shape of a continuous frequency distribution, then the mean is obtained as
follows:
k

f i Xi
th th
X  i 1
k
, Where Xi =the class mark of the i class and fi = the frequency of the i class
f i 1
i

33
Example 3.4: calculate the mean for the following age distribution.

Class frequency
6- 10 35
11- 15 23
16- 20 15
21- 25 12
26- 30 9
31- 35 6

Solutions:
 First find the class marks
 Find the product of frequency and class marks
 Find mean using the formula.

Class fi Xi Xifi
6- 10 35 8 280 6
11- 15 23 13 299
f X i i
1575
16- 20 15 18 270 ►X  i 1
  15.75
6

f
21- 25 12 23 276 100
i
26- 30 9 28 252 i 1
31- 35 6 33 198
Total 100 1575

Special properties of Arithmetic mean

n
1. The sum of the deviations of a set of items from their mean is always zero. i.e.  ( X i  X )  0.
i 1

2. The sum of the squared deviations of a set of items from their mean is the minimum. i.e.
n n

 ( Xi  X )2   ( X i  A)2 , A  X
i 1 i 1

3. If X 1 is the mean of n1 observations, if X 2 is the mean of n 2 observations, … , if X k is the

mean of n k observation, then the mean of all the observation in all groups often called the
combined mean is given by:
k

X n  X 2 n 2  ....  X k n k X n i i
Xc  1 1  i 1
n1  n 2  ...n k
k

n
i 1
i

Example 3.5: In a class there are 30 females and 70 males. If females averaged 60 in an
examination and boys averaged 72, find the mean for the entire class.
Solutions:

34
Females Males
X 1  60 X 2  72
n1  30 n2  70
2

X 1n1  X 2 n2 X n i i
Xc   i 1
n1  n2 2

n
i 1
i

30(60)  70(72) 6840

 Xc    68.40
30  70 100

4. If a wrong figure has been used when calculating the mean the correct mean can be obtained
without repeating the whole process using:
(CorrectValue  WrongValue)
CorrectMean  WrongMean 
n
Where n is total number of observations.
Example 3.6: An average weight of 10 students was calculated to be [Link] it was discovered
that one weight was misread as 40 instead of 80 kg. Calculate the correct average weight.

Solutions:
(CorrectValue  WrongValue)
CorrectMean  WrongMean 
n
(80  40)
CorrectMean  65   65  4  69k.g.
10

5. The effect of transforming original series on the mean.

a) If a constant k is added/ subtracted to/from every observation then the new mean will
be the old mean± k respectively.
b) If every observations are multiplied by a constant k then the new mean will be k*old

mean

Example 3.7:

1. The mean of n Tetracycline Capsules X1, X2, …, Xn are known to be 12 gm. New set of
capsules of another drug are obtained by the linear transformation Yi = 2Xi – 0.5 ( i = 1,
2, …, n ) then what will be the mean of the new set of capsules.

35
 Solutions:
NewMean  2 * OldMean  0.5  2 * 12  0.5  23.5
2. The mean of a set of numbers is 500.
a) If 10 is added to each of the numbers in the set, then what will be the mean of the new
set?
b) If each of the numbers in the set are multiplied by -5, then what will be the mean of the
new set?
Solutions:
a).NewMean  OldMean  10  500  10  510
b).NewMean  5 * OldMean  5 * 500  2500

Weighted Arithmetic Mean

While calculating simple arithmetic mean, all items were assumed to be of equally importance (each
value in the data set has equal weight). When the observations have different weight, we use
weighted average. Weights are assigned to each item in proportion to its relative importance.

If 𝑥1 , 𝑥2 , … , 𝑥𝑛 represent values of the items and 𝑤1 , 𝑤2 , … , 𝑤𝑛 are the corresponding weights, then
the weighted mean, (𝑥̅𝑤 ) is given by

w1 x1  w2 x2    wn xn  wi xi
xw  
w1  w2    wn  wi
Example 3.8:
A student’s final mark in Mathematics, Physics, Chemistry and Biology are respectively A, B, D
and C. If the respective credits received for these courses are 4, 4, 3 and 2, determine the approximate
average mark the student has got for the course.
Solution
We use a weighted arithmetic mean, weight associated with each course being taken as the number
of credits received for the corresponding course.
𝑥𝑖 4 3 1 2 Total

𝑤𝑖 4 4 3 2 13

36
 𝑥𝑖 𝑤𝑖 16 12 3 4 35

w1 x1  w2 x2    wn xn  wi xi
xw  
w1  w2    wn  wi
16+12+3+4 35
= = = 2.69, Average mark of the student is approximately 2.69.
13 13

Merits and Demerits of Arithmetic Mean

Merits:
 It is based on all observation.
 It is suitable for further mathematical treatment.
 It is stable average, i.e. it is not affected by fluctuations of sampling to some extent.
 It is easy to calculate and simple to understand.

Demerits:
 It is affected by extreme observations.
 It cannot be used in the case of open end classes.
 It cannot be determined by the method of inspection.
 It cannot be used when dealing with qualitative characteristics, such as intelligence, honesty,
beauty.

3.2.2 Geometric Mean

The geometric mean like arithmetic mean is calculated average. It is used when observed values are
measured as ratios, percentages, proportions, indices or growth rates.

The geometric mean, G.M. of a set of n observation 𝑥1 , 𝑥2 , … , 𝑥𝑛 is defined as the nth root of their
product.

G.M  n x1 .x2  xn = antilog ( 1 ∑ 𝑙𝑜𝑔𝑥𝑖 )

𝑛

Taking the logarithms of both sides

1
log(G.M)  log(n X 1 * X 2 * ... * X n )  log(X 1 * X 2 * ... * X n ) n
1 1
 log(G.M)  log(X 1 * X 2 * .... * X n )  (log X 1  log X 2  ...  log X n )
n n
1 n
 log(G.M)   log X i
n i1
 The logarithm of the G.M of a set of observation is the arithmetic mean of their logarithm.
1 n
 G.M  Anti log(  log X i )
n i1

37
 Example 3.9:

Find the G.M of the numbers 2, 4, 8.

Solutions:
G.M  n X1 * X2 * ... * Xn  3 2 * 4 * 8  3 64  4

Geometric mean for discrete data arranged in FD:- When the numbers 𝑥1 , 𝑥2 , … , 𝑥𝑘 occur with
frequencies 𝑓1 , 𝑓2 , … , 𝑓𝑚 , respectively, then the geometric mean is obtained by

1
G.M .  n x1f1 .x2f2 ..xmfm = antilog ( ∑ 𝑓𝑖 𝑙𝑜𝑔𝑥𝑖 )
𝑛

Example 3.9
Compute the geometric mean of the following values: 3, 3, 4, 4, 4, 5, 6 and 6.
Solution
Values 3 4 5 6

Frequency 2 3 1 2

8
G.M. = √32 𝑋43 𝑋51 𝑋62 = 4.236
The geometric mean for the given data is 4.236.
Geometric mean for grouped data: The above formula can also be used whenever the frequency
distribution is grouped continuous, class marks of the class intervals are considered as xi.
Properties of geometric mean
 It is less affected by extreme values.
 It takes each and every observation into consideration.
 If the value of one observation is zero its values becomes zero.
3.2.3 Harmonic Mean
It is a suitable measure of central tendency when the data pertains to speed, rate and time. The
harmonic of n values is defined as n divided by the sum of their reciprocal.
Harmonic mean for individual series:- If 𝑥1 , 𝑥2 , … , 𝑥𝑛 are n observations, then harmonic mean
can be represented by the following formula:

38
 n
H .M 
1 1 1
 
x1 x2 xn

Example 3.10: A cyclist pedals from his house to his college at speed of 10 km/hr and back from
the college to his house at 15 km/hr. Find the average speed.
Solution: Here the distance is constant
The simple H.M is appropriate for this problem.
X1= 10km/hr X2=15km/hr
2
H.M   12km/hr
1 1

10 15
Harmonic mean for discrete data:- If the data is arranged in the form of frequency distribution

n
H .M  m
, where n   f k
f1 f 2 f
  m k 1

x1 x 2 xm

Harmonic mean for continuous grouped data: Whenever the frequency distribution are grouped
continuous, class marks of the class intervals are considered as 𝑥𝑖 and the above formula can be
used as
𝑛 m
H.M. = 𝑓𝑖 where n   f k
∑𝑛
𝑖=1𝑥 k 1
𝑖

𝑥𝑖 is the class mark of ith class

Properties of harmonic mean
 It is unique for a given set of data.
 It takes each and every observation into consideration.
 Difficult to calculate and understand.
 Appropriate measure of central tendency in situations where data is in ratio, speed or rate.

3.3.4 The Mode or Modal Value

The mode or the modal value is the value with the highest frequency and denoted by 𝑥̂. The mode
may not exist and even if it does exist, it may not be unique.A distribution is called a bimodal
distribution if it has two data values that appear with the greatest frequency. If a distribution has
more than two modes, then the distribution is multimodal. If a distribution has no modes, then the
distribution is non-modal.
39
 Mode for ungrouped data:In case of discrete distribution the value having the maximum frequency
is the modal value.

Examples3.11:
1. Find the mode of 5, 3, 5, 8, 9
The Mode (𝑥̂ ) =5
2. Find the mode of 8, 9, 9, 7, 8, 2, and 5.
It is a bimodal (𝑥̂ ): 8 and 9
3. Find the mode of 4, 12, 3, 6, and 7.
No mode for this data.

Mode for Grouped Data

If data are given in the shape of continuous frequency distribution, the mode is defined as:

 1 
X̂  L mo  w 
 1   2 
Where:
Xˆ  the mod e of the distribution
w  the sizeof the mod al class
1  f mo  f1
 2  f mo  f 2
f mo  frequencyof the mod al class
f1  frequencyof the class preceedingthe mod al class
f 2  frequencyof the class followingthe mod al class

Note: The modal class is a class with the highest frequency.

Example 3.12: Following is the distribution of the size of certain farms selected at random from a
district. Calculate the mode of the distribution.

Size of farms No. of farms

5-15 8
15-25 12
25-35 17
35-45 29
45-55 31
55-65 5
65-75 3

Solutions:

40
45  55 is the mod al class, sin ce it is a class with the highest frequency.
Lmo  45
w  10
1  f mo  f1  2
 2  f mo  f 2  26
f mo  31
f1  29
f2  5

 Xˆ  45  10
2 

 2  26 
 45.71

Merits and Demerits of Mode

Merits:
 It is not affected by extreme observations.
 Easy to calculate and simple to understand.
 It can be calculated for distribution with open end class
Demerits:
 It is not rigidly defined.
 It is not based on all observations
 It is not suitable for further mathematical treatment.
 It is not stable average, i.e. it is affected by fluctuations of sampling to
some extent.
 Often its value is not unique.

Note: being the point of maximum density, mode is especially useful in finding the most popular
size in studies relating to marketing, trade, business, and industry. It is the appropriate average to be
used to find the ideal size.

3.2.5 Median
The median is as its name indicates the middle most value in the arrangement which divides the data
into two equal parts. It is obtained by arranging the data in an increasing or decreasing order of
magnitude. If X1, X2, …Xn be the observations, then the numbers arranged in ascending order will
be X[1], X[2], …X[n], where X[i] is ith smallest value ( i.e. X[1]< X[2]< …<X[n] )
~
Median is denoted by X .

41
 Median for ungrouped data:We arrange the sample in ascending order of the variable of interest.
Then if the sample size n is odd the median is the middle value or the sample size n is even themedian
is the average of the two middle values.
The median is obtained by
 X ( n1) 2  th , If n is odd.
~ 
X  1
(X  X
n 2
)th If n is even

2  ( n 2)  1


Example:Find the median of the following numbers.

a) 6, 5, 2, 8, 9, 4.
b) 2, 1, 8, 3, 5

Solutions:
a) First order the data: 2, 4, 5, 6, 8, 9 b) Order the data: 1, 2, 3, 5, 8Here n=5, which is odd.
Here n=6, which is even, then the middle value is the 3rd observation. So the median is 3
~ 1
X  (X n  X n )
2 [2] [  1]
2

1
 ( X [3]  X [ 4 ] )
2
1
 ( 5  6)  5.5
2
Median for grouped data: If data are given in the shape of continuous frequency distribution, the
median is defined as:
~ w n
X  L med  (  c)
f med 2
Where :
L med  lower class boundary of the median class.
w  the size of the median class
n  total number of observations.
c  the cumulativefrequency(less than type) preceeding the median class.
f med  thefrequency of the median class.

Remark:
The median class is the class with the smallest cumulative frequency (less than type) greater than
n
or equal to .
2
Example: Find the median of the following distribution.

42
 Class Frequency

40-44 7

45-49 10

50-54 22

55-59 15

60-64 12

65-69 6

70-74 3

Solutions:
 First find the less than cumulative frequency.
 Identify the median class.
 Find median using formula.

Class Frequency [Link](less

than type)

40-44 7 7

45-49 10 17

50-54 22 39

55-59 15 54

60-64 12 66

65-69 6 72

70-74 3 75

n 75
  37.5
2 2
39 is the first cumulative frequencyto be greater thanor equalto 37.5
 50  54 is the median class.

43
 L  49.5, w  5
med
n  75, c  17, f  22
med

~
 X L  w ( n  c)
med f 2
med
 49.5  5 (37.5  17)
22
 54.16

Merits and Demerits of Median

Merits:
 Median is a positional average and hence not influenced by extreme observations.
 Can be calculated in the case of open end intervals.
 Median can be located even if the data are incomplete.

Demerits:
 It is not a good representative of data if the number of items is small.
 It is not amenable to further algebraic treatment.
 It is susceptible to sampling fluctuations.

44
 mean=median =
mode. However, for a moderately asymmetrical (nonsymmetrical) distribution, mean and mode lie
on the two ends and median lies between them and they have the following important empirical
relationship, which is (Mean – Mode) = 3(Mean - Median).

1.2.6 Quantiles
When a distribution is arranged in order of magnitude of items, the median is the value of the middle
term. Their measures that depend up on their positions in distribution quartiles, deciles, and
percentiles are collectively called quantiles.

[Link] Quartiles
Quartiles are measures that divide the frequency distribution in to four equal [Link] value of the
variables corresponding to these divisions are denoted Q1, Q2, and Q3 often called the first, the second
and the third quartile respectively.Q1 is a value which has 25% items which are less than or equal to
it. Similarly Q2 has 50%items with value less than or equal to it and Q3 has 75% items whose values
are less than or equal to it.
45
 iN
To find Qi (i=1, 2, 3) we count of the classes beginning from the lowest class.
4

For grouped data: we have the following formula

w ( iN  c) , i  1,2,3
Q
i  LQ i  f 4
Qi
Where :
L  lower class boundary of the quartile class.
Qi
w  the size of the quartile class
N  total number of observations.
c  the cumulative frequency (less than type) preceeding the quartile class.
f  thefrequency of the quartile class.
Qi

Remark:
The quartile class (class containing Qi ) is the class with the smallest cumulative frequency (less
iN
than type) greater than or equal to .
4

1) Deciles:Deciles are measures that divide the frequency distribution in to ten equal parts.
The values of the variables corresponding to these divisions are denoted D1, D2,.. D9 often called the
first, the second,…, the ninth deciles respectively.
iN
To find Di (i=1, 2,..9) we count of the classes beginning from the lowest class.
10

For grouped data: we have the following formula

w iN
Di  LD i  (  c) , i  1,2,...,9
f Di 10
Where :
LDi  lower class boundaryof the decile class.
w  the size of the decileclass
N  total number of observations.
c  the cumulative frequency (less than type) preceeding the decile class.
f Di  thefrequency of the decile class.

46
Remark:
The deciles class (class containing Di) is the class with the smallest cumulative frequency (less
iN
than type) greater than or equal to .
10

2) Percentiles:Percentiles are measures that divide the frequency distribution in to hundred equal
[Link] values of the variables corresponding to these divisions are denoted P1, P2,.. P99 often
called the first, the second,…, the ninety-ninth percentile respectively.
iN
To find Pi (i=1, 2,..99) we count of the classes beginning from the lowest class.
100

For grouped data: we have the following formula

w iN
P L  (  c) , i  1,2,...,99
i P
i f P 100
i
Where :
L  lower class boundary of the percentile class.
P
i
w  the size of the percentile class
N  total number of observations.
c  the cumulative frequency (less than type) preceeding the percentile class.
f  thefrequency of the percentile class.
P
i

Remark:

The percentile class (class containing Pi) is the class with the small cumulative frequency
iN
(less than type) greater than or equal to .
100
Example: Considering the following distribution

Calculate:
a) All quartiles.
b) The 7th decile.
c) The 90th percentile.

Values Frequency

47
 140- 150 17

150- 160 29

160- 170 42

170- 180 72

180- 190 84

190- 200 107

200- 210 49

210- 220 34

220- 230 31

230- 240 16

240- 250 12

Solutions:
 First find the less than cumulative frequency.
 Use the formula to calculate the required quantile.

Values Frequency [Link](less

than type)

140- 150 17 17

150- 160 29 46

160- 170 42 88

170- 180 72 160

180- 190 84 244

190- 200 107 351

200- 210 49 400

210- 220 34 434

48
 220- 230 31 465

230- 240 16 481

240- 250 12 493

a) Quartiles:
i. Q1
- determine the class containing the first quartile.
N
 123.25
4
 170  180 is the class containingthe first quartile.

LQ  170 ,
1
w 10
N  493 , c  88 , f Q  72
1

w N
 Q1  LQ1  (  c)
fQ 4
1

10
 170  (123.25  88)
72
 174.90

ii. Q2
- determine the class containing the second quartile.
2* N
 246.5
4
 190  200 is the class containingthe sec ond quartile.
LQ  190 ,
2
w 10
N  493 , c  244 , f Q 107
2

49
 w 2* N
 Q2  LQ  (  c)
2
fQ 2
4
10
 170  (246.5  244)
72
 190.23

iii. Q3
- determine the class containing the third quartile.
3* N
 369.75
4
 200  210 is the class containingthe third quartile.

LQ  200 ,
3
w 10
N  493 , c  351 , f Q  49
3

w 3* N
 Q3  LQ 3  (  c)
fQ3
4
10
 200  (369.75  351)
49
 203.83

b) D7
- determine the class containing the 7th decile.
7* N
 345.1
10
190  200 is the class containingthe seventh decile.
LD  190 ,
7
w 10
N  493 , c  244 , f D 107
7

50
 w 7* N
 D7  LD  (  c)
7
f D 10
7

10
 190  (345.1  244)
107
 199.45

c) P90
- determine the class containing the 90th percentile.
90 * N
 443.7
100
 220  230 is the class containingthe 90th percentile.
LP  220 ,
90
w 10
N  493 , c  434 , f P  3107
90

w 90 * N
 P90  LP  (  c)
90
f P 100
90

10
 220  (443.7  434)
31
 223.13

Review Exercise on Chapter Three

1. Given the data 5,6,7,4,9,10,12,20,3,8 if each item is multiplied by 5 and 6 is added then,the new mean
will be_________

2. Marks of 75 students are summarized in the following frequency distribution:

Marks No. of students If 20% of the students have marks between 55 and 59
0-44 7
45-49 10 a. Find the missing frequencies f4 and f5.
50-54 22 b. Find the mean.
55-59 f4 c. Median
60-64 f5 d. Mode
65-69 6
70-74 3

3. The following data on income in the form of cumulative frequency distribution is given:
Find (a) The mean

51
 INCOME [Link] PERSONS

100---200 15

100---300 33

100---400 63

100---500 83

100---600 100

(b) The median, mode and all quartiles

(c) The 2nd and the 8th deciles
(d) The 40th and the 90th percentiles

CHAPTER FOUR
5. MEASURES OF VARIATION

Objectives:
After completing this chapter, you should be able to
 Explain the meaning of measures of dispersion
 Describe data, using measures of variation, such as the range, mean deviation, variance and
standard Deviation.
 Understand thecharacteristics, uses, advantages, anddisadvantages of eachmeasure of
dispersion.
 Understand Chebyshev's theorem and the Empirical Rule as they relate to a set of
observations.

 Apply the Z-score to find out the relative standing of values.

 Explain measures of skewness and kurtosis.

 Identify the position of the mean, median, and mode for both symmetric and skewed
distributions.

52
4.1 Introduction
In addition to locating the center of the observed values of the variable in the data, another important
aspect of a descriptive study of the variable is numerically measuring the extent of variation around
the center. Two data sets of the same variable may exhibit similar positions of center but may be
remarkably different with respect to variability.

Just as there are several different measures of center, there are also several different measures of
variation. In this section, we will examine three of the most frequently used measures of variation;
the sample range, the sample interquartile range and the sample standard deviation. Measures of
variation are used mostly only for quantitative variables.

4.2 Objectives of Measuring Variation

The general object of measuring dispersion is to obtain a single summary figure which adequately
exhibits whether the distribution is compact or spread out.
 To judge the reliability of measures of central tendency
 To control variability itself.
 To compare two or more groups of numbers in terms of their variability.
 To make further statistical analysis.

4.3 Absolute and Relative Measures of Dispersion

The measures of dispersion which are expressed in terms of the original unit of a series are termed
as absolute measures. Such measures are not suitable for comparing the variability of two
distributions which are expressed in different units of measurement and different average size.
Relative measures of dispersions are a ratio or percentage of a measure of absolute dispersion to an
appropriate measure of central tendency and are thus pure numbers independent of the units of
measurement. For comparing the variability of two distributions (even if they are not measured in
the same unit), we compute the relative measure of dispersion instead of absolute measures of
dispersion.

53
It is useful for comparing variation in two or more distributions where units of measurements are
the same. Various measures of dispersions are in use. The most commonly used measures of
dispersions are:

1. Range and Relative Range

2. Quartile Deviation and Coefficient of Quartile Deviation
3. Mean Deviation and Coefficient of Mean Deviation
4. Standard Deviation and Coefficient of Variation.

4.3.1 The Range and Relative Range

The Range (R): The range is the largest score minus the smallest score. It is a quick and dirty
measure of variability, although when a test is given back to students they very often wish to know
the range of scores. Because the range is greatly affected by extreme scores, it may give a distorted
picture of the scores. Range for grouped frequency distribution is the upper class boundary of the
last class interval minus the lower class boundary of the first class interval, i.e., R = UCBlci - LCBfci
.
The following two distributions have the same range, 13, yet appear to differ greatly in the amount
of variability.
Distribution 1: 32 35 36 36 37 38 40 42 42 43 43 45
Distribution 2: 32 32 33 33 33 34 34 34 34 34 35 45
For this reason, among others, the range is not the most important measure of variability.

Range for grouped data:

If data are given in the shape of continuous frequency distribution, the range is computed as:

R  UCLk  LCL1 , UCLk is upperclasslim it of the last class.

UCL1 is lower class lim it of the first class.
This is sometimes expressed as:

R  X k  X1 , X k is class mark of the last class.

X 1 is classmark of the first class.
Merits and Demerits of range
Merits:

54
  It is rigidly defined.
 It is easy to calculate and simple to understand.
Demerits:
 It is not based on all observation.
 It is highly affected by extreme observations.
 It is affected by fluctuation in sampling.
 It cannot be computed in the case of open end distribution.
 It is very sensitive to the size of the sample.

Relative Range (RR): It is also sometimes called coefficient of range and given by:

CR = (highest value – smallest value)/(highest value + smallest value)

Example:
1. Find the relative range of the above two distribution. (Exercise!)
2. If the range and relative range of a series are 4 and 0.25 respectively. Then what is the value of:
a. Smallest observation
b. Largest observation

Solution: (2)
R  4  L  S  4 __________ _______(1)
RR  0.25  L  S  16 __________ ___( 2)
Solving (1) and (2) at the same time , one can obtain the following value
L  10 and S  6

4.3.2 The Quartile Deviation and Coefficient of Quartile Deviation

The Quartile Deviation (Semi-inter quartile range, Q.D): The inter quartile range is the
difference between the third and the first quartiles of a set of items and semi-inter quartile range is
half of the inter quartile range.

Q.D =

Coefficient of Quartile Deviation (C.Q.D):

55
 C.Q.D = =

Remark: Q.D or C.Q.D includes only the middle 50% of the observation.

4.3.3 The Mean Deviation And Coefficient Of Mean Deviation

The Mean Deviation (M.D): The mean deviation of a set of items is defined as the arithmetic mean
of the values of the absolute deviations from a given average. Depending up on the type of averages
used we have different mean deviations.

a) Mean Deviation about the mean

MD = .

For the case of a frequency distribution data where the values X1, X2, X3, …, Xm occur f1, f2, f3, …,
fm times respectively, then mean deviation is obtained by:

MD = .

For grouped data that is if the data is given in the form of frequency distribution of K-classes in
which mi and fi are the class marks and frequency of the ith class respectively then the mean deviation

is given by: MD = .

1
b. Mean deviation from median =
n
 | xi  Md . |
1
c. Mean deviation from mode =
n
 | xi  mod e |
 In the case of frequency distribution:
1
b’. Mean deviation from median =
n
 fi | xi  Md . |
1
c’. Mean deviation from mode =
n
 fi | xi  Mode. |
Steps to calculate M.D:

56
 1. Find the arithmetic mean,
2. Find the deviations of each reading from and
3. Find the arithmetic mean of the deviations, ignoring sign.

Example: calculate the mean deviation for the following data:

Xi 10 8 9 7 6
Fi 8 9 13 6 3

Solution: first find the mean as = = (10*8 + 8*9 +…+6*3)/(8+9+…+3) = 8.4, then

Xi 10 8 9 7 6
fi 8 9 13 6 3
│Xi - │ 1.6 0.6 0.4 1.4 2.4
fi │Xi - │ 12.8 7.8 3.6 8.4 7.2

Thus, MD = = (12.8 + …+ 7.2)/ (8+…+3) = 39.8/39 =1.02.

Interpretation: each value deviates on average 1.02 from the arithmetic mean, 8.4.

Note: You can also calculate the mean deviation about the Median and Mode.

Coefficient of Mean Deviation (C.M.D):

CMD = .

Exercise: find the coefficient of mean deviation about the mean for the above example.

4.2.4 The Variance, Standard Deviationand the Coefficient of Variation

The Variance: is the "average squared deviation from the mean" and it measures the average of the
square of the deviations from the mean for each observations.
Suppose we have population of N observations, say X1, X2, X3, …, XN, then we define the population
variance as:

= = .

But most of the time we have sample of n observations, say X1, X2, X3, …, Xn from the population
of N, then we define the sample variance as:

57
 = .

This measure of variation is universally used to show the scatter of the individual measurements
around the mean of all the measurements in a given distribution. But the disadvantage is that the
units of variance are the square of the units of the original observations. The easiest way for this
difficulty is to use the square root of the variance as a measure of variability called the standard
deviation.

The population and the sample standard deviations denoted by σ and S respectively are defined as:

σ= and S = = .

For the case of frequency distribution data the population and sample variance are given as:

= and =

and the square roots of these will give the corresponding standard deviations.
Variance and Standard Deviation for Grouped Data
To obtain the variance and standard deviation of data presented in a grouped frequency distribution,
we make the same assumptions that made in the calculation of the mean for grouped data in which
each value falling in to a class is identically distributed and observations in each class represented
by the class mark. The calculation is the same to the formula of data given in frequency distribution
except that Xi is substitute by the mid points of each class and m by k.

The following steps are used to calculate the sample variance:

1. Find the arithmetic mean.

2. Find the difference between each observation and the mean.
3. Square these differences.
4. Sum the squared differences.
5. Since the data is a sample, divide the number (from step 4 above) by the number of
observations minus one, (i.e., n-1), where n is the number of observations in the data set.

58
Example: Areas of spray able surfaces with DDT from a sample of 15 houses are as follows (m2):
101, 105, 110, 114, 115, 124, 125, 125, 130, 133, 135, 136, 137, 140, 145. Find the variance and
standard deviation of the above distribution.

Solution: The mean of the sample is 125 m2, then

S2 = = {(101-125)2 +(105-125)2 + ….(145-125)2} / (15-1) = 178.71m4

Hence, the standard deviation = S = (178.71m4)1/2 = 13.37 m2.

It implies that each spray surface of the house deviates from the mean by 13.37 m 2 on average.

Examples: Find the variance and standard deviation of the following sample data

a) 5, 17, 12, 10.

b) The data is given in the form of grouped frequency distribution.
Class Frequency
40-44 7
45-49 10
50-54 22
55-59 15
60-64 12
65-69 6
70-74 3

Solutions: a) = 11
Xi 5 10 12 17 Total
(Xi- )2 36 1 1 36 74

Then S2 = 74/(4-1) = 24.67 and S = (24.67) ½ = 4.97

b) = 55
mi(midpoint) 42 47 52 57 62 67 72 Total

59
 fi(mi- )2 1183 640 198 60 588 864 867 4400

Then S2 = 4400 /(75-1) = 59.46 and S = (59.46) ½ = 7.71

Some Important Properties of Variance and Standard Deviation

1. For normal (symmetric) distribution the following holds.
 Approximately 68.27% of the data values fall within one standard deviation of the mean. i.e. with in

( X  S, X  S)
 Approximately 95.45% of the data values fall within two standard deviations of the mean. i.e. with in

( X  2S , X  2S )
 Approximately 99.73% of the data values fall within three standard deviations of the mean. i.e. with in

( X  3S , X  3S )

2. Chebyshev's Theorem
For any data set ,no matter what the pattern of variation, the proportion of the values that fall within
1
k standard deviations of the mean or ( X  kS , X  kS ) will be at least 1  2 , where k is a number
k
greater than 1. i.e. the proportion of items falling beyond k standard deviations of the mean is at
1
most
k2
Example: Suppose a distribution has mean 50 and standard deviation 6. What percent of the
numbers are:
a) Between 38 and 62
b) Between 32 and 68
c) Less than 38 or more than 62.
d) Less than 32 or more than 68.

Solutions:
a) 38 and 62 are at equal distance from the mean,50 and this distance is 12
 ks  12
12 12
k   2
S 6

60
 1
 Applying the above theorem, at least (1  ) *100%  75% of the numbers lie between 38 and 62.
k2
b) Similarly done.
1
c) It is just the complement of a) i.e. at most * 100%  25% of the numbers lie less than 32 or
k2
more than 62.
d) Similarly done.

3. Consider a sample X1, ….., Xn, which will be referred to as the original sample. To create a
translated sample X1+C, add a constant C to each data point. Let Yi = Xi+C, i = 1, …., n.
Suppose we want to compute the standard deviation of the translated sample, we can show that
the following relationship holds: If Yi = Xi + C, i = 1, …., n, then Sy = [Link], the standard
deviation of Y will be the same as the standard deviation of X.
4. What happens to the standard deviation if the units or scales being worked with are changed?
A re-scaled sample can be created: If Yi = CXi, i=1, ……., n, then Sy = CSx and S2y = C2S2x.
Therefore, to find the variance and standard deviation of the Y’s compute the variance and
standard deviations of the X’s and multiply it by the constant C2 and C, respectively.
Example: If we have a sample of temperature in °C with a standard deviation of 1.8, then
what is the standard deviation of a sample temperature in °F?

Solution: Let Yi denote the °F temperature that corresponds to a °C temperature of Xi.

Since the required transformation to convert the data to °F would be: Yi = Xi + 32, i= 1,

2, 3, …, [Link] the standard deviation in oF would be: Sy = 9/5(1.8) = 3.24 0F.

5. On the other hand, where several standard deviations for a variable are available and if we need
to compute the combined standard deviation, the pooled standard deviation (Sp) of the entire
group consisting of all the samples may be computed as:

Sp = , where niand Si represent number of observations and standard

deviation of each single sample, respectively.

61
4. The value of S is usually positive and it is zero only when all of the data values are the same.
Values close together will yield a small SD, whereas values spread apart will yield a larger SD. Also,
larger values of S indicate greater amount of variation.

Example: The standard deviation of systolic blood pressure was found to be 10.6 and 15.2 mm Hg,
respectively, for two groups of 12 and 15 men. What is the standard deviation of systolic pressure
of all the 27 men?

Solution: Given: Group 1: S1 = 10.6 and n1 = 12 Group 2: S2 = 15.2 and n2 = 15, then

Sp = = {(11*10.62 + 14*15.52)/(11*14)}1/2 = 13.37 mm Hg.

Coefficient of Variation (CV): The coefficient of variation (CV) is defined by *100%. The

coefficient of variation is most useful in comparing the variability of several different samples, each
with different means. This is because a higher variability is usually expected when the mean
increases, and the CV is a measure that accounts for this variability.

The coefficient of variation is also useful for comparing the reproducibility of different variables.
CV is a relative measure free from unit of measurement.

Examples: An analysis of the monthly wages paid (in Birr) to workers in two firms A and B
belonging to the same industry gives the following results.

Value Firm A Firm B

Mean wage 52.5 47.5
Median wage 50.5 45.5
Variance 100 121

Solution: [Link] = *100% = 10/52.5 = 19.05% and

[Link] = *100% = 11/47.5 = 23.16%.

Since [Link] < [Link], in firm B there is greater variability in individual wages.

62
 Exercises 4.1
1. Find the missing information from the following data.
Group 1 Group 2 All group
Mean 55 70 60
Sample size 100 ? 150
Standard 15 10 ?
deviation
2.A meteorologist interested in the consistency of temperatures in three cities during a given week
collected the following data. The temperatures for the five days of the week in the three cities were
City 1 25 24 23 26 17
City2 22 21 24 22 20
City3 32 27 35 24 28
Which city have the most consistent temperature, based on these data?

4.5 The standard Score (Z-score)

The Z-scoreis the number of standard deviations that a given value X is below or above the mean

and defined as Z = (for the sample data sets) and Z = (for the population data sets).

Values above the mean have positive z-scores and values below the mean have negative Z-scores.
The numerical value of the Z-score reflects because of this Z-score is also referred to as relative
measure of relative standing. Scores are generally meaningless by themselves unless they are
compared to the distribution or scores from some reference group. In addition to comparison the
data sets it is useful to transform a given data sets in to a new distribution and the resulting data has
mean value zero and variance one which is the standard normal distribution (we will see it in chapters
of hypothesis testing).

Note: A Z-score value less than -2 and greater than 2 considers as unusual value while between -2
and 2 is considers as ordinary values.

Examples 1. Two sections were given introduction to statistics examinations. The following
information was given.

Value Section 1 Section 2

63
 Mean 78 90
Standard deviation 6 5
Student A from section 1 scored 90 and student B from section 2 scored 95. Relatively speaking
who performed better?

Solution: ZA = = (90-78)/6 = 2 and ZB = = (95-90)/5 = 1.

Student A performed better relative to his section because the score of student A is two standard
deviation above the mean score of his section while, the score of student B is only one standard
deviation above the mean score of his section.

Exercise 4.2
1. Two groups of people were trained 100km race and tested to find out which group is faster to
complete the race. For the two groups the following information was given:
Value Group one Group two
Mean 10.4 min 11.9 min
[Link]. 1.2 min 1.3 min
Relatively speaking:
a. Which group is more consistent in its performance?
b. Suppose a person A from group one take 9.2 minutes while person B from Group two take 9.3
minutes, who was faster in completing the race? Why?

4.6. Moments, Skewness and Kurtosis

In describing a numerical data set it is not only necessary to summarize the data by presenting
appropriate measures of central tendency, dispersion and relative standing, it is also necessary to
consider the shape of the data – the manner, in which the data are distributed. There are two measures
of the shape of a data set: skewness and kurtosis.

Moments
Moments are statistical measures used to describe the characteristics of a distribution and we can
have moment about any number A and /or about the mean (called central moment).
The rth moment of the distribution about the mean is:

64
 𝑟
∑𝑛 ̅̅̅̅
𝑖=1(𝑋𝑖 −𝑋)
𝜇𝑟 = for ungrouped data set and
𝑛
𝑟
∑𝑘 ̅̅̅̅
𝑖=1 𝑓𝑖 (𝑋𝑖 −𝑋)
𝜇𝑟 = for grouped data set.
𝑛

The rth moments of the distribution about A is:

𝑟
∑𝑛
𝑖=1(𝑋𝑖 −𝐴)
𝜇𝑟 = for ungrouped data set and
𝑛

𝑟
∑𝑘
𝑖=1 𝑓𝑖 (𝑋𝑖 −𝐴)
𝜇𝑟 = for grouped data set.
𝑛

Skewness
If the distribution of the data is not symmetrical, it is called asymmetrical or skewed. Skewness
characterizes the degree of asymmetry of a distribution around its mean.
The direction of the skewness depends upon the location of the extreme values. If the extreme values
are the larger observations, the mean will be the measure of location most greatly distorted toward
the upward direction. Since the mean exceeds the median and the mode, such distribution is said to
be positive or right-skewed. The tail of its distribution is extended to the right.
On the other hand, if the extreme values are the smaller observations, the mean will be the measure
of location most greatly reduced. Since the mean is exceeded by the median and the mode, such
distribution is said to be negative or left-skewed. The tail of its distribution is extended to the left.

Right-skewed distribution Left-skewed distribution

For a sample data, the skewness is defined by the formula:

𝑛 𝑋𝑖 −𝑋̅ 3
Sk = (𝑛−1)(𝑛−2) ∑𝑛𝑖=1 ( ) , where n = no of obsns in the sample & s = SD of the sample.
𝑠

65
 Mean  Mode
It is also possible to find skewness as: SK=
S tan dard deviation
Properties of Skewness
 If SK = 0, then the distribution is symmetrical.
 If SK> 0, then the distribution is positively skewed.
 If SK< 0, then the distribution is negatively skewed.
 There is no theoretical limit to this measure, however, in practice the value given by
this formula falls between -3 and 3.

Kurtosis
Kurtosis characterizes the relative peakedness or flatness of a distribution compared with the bell-
shaped distribution (normal distribution) or kurtosis is the degree of measure of peakedness of a
distribution.
If a distribution is very peaked than a normal distribution, then it is called Leptokurtic distribution
and if it is flat it is called Pletykurtic and if it is moderate (normal) we call it Mesokurtic.
Kurtosis of a sample data set is calculated directly from the data by the formula:
𝑛(𝑛+1) 𝑋𝑖 −𝑋̅ 4 3(𝑛− 1)2
𝛽 = {(𝑛−1)(𝑛−2)(𝑛−3) ∑𝑛𝑖=1 ( ) } - (𝑛−2)(𝑛−3)
𝑠

It is also possible to calculate the measure of kurtosis from the rth moment about the mean of the
𝜇4
sample data as: 𝛽 = , where 𝜇4 is the 4th moment about the mean.
𝑠4

Interpretation of the value of 𝜷

1. If 𝛽 =3, then the distribution is mesokurtic.
2. If 𝛽> 3, then the distribution is leptokurtic.
3. If 𝛽< 3, then the distribution is platykurtic.
If we want to our reference point to be zero, we can change the above coefficient as: φ = 𝛽 - 3.

Accordingly, If φ =0, then the distribution is said to be mesokurtic.

If φ > 0, then the distribution is said to be leptokurtic.
If φ < 0, then the distribution is said to be platykurtic.

66
 The distributions with positive and negative kurtosis

Review Exercise on Chapter Four

1. A dietitian obtains the amounts of sugar (in grams) from one gram in each of 16 different cereals
are: 0.03 0.24 0.30 0.47 0.43 0.07 0.47 0.13 0.44 0.39 0.48 0.17 0.13 0.09 0.45 and 0.43.
Then find IQR, MD, variance, SD, CV, skewness and kurtosis of the amount of sugar.

2. Random samples of 10 boys are selected from the population of a certain camp, and each boy’s
weight and height are measured and recorded. The average weight of boys in the sample is
32.66kg with a standard deviation of 3.9kg and the average height is 95.5cm with a standard
deviation of 5.2cm. Is measurement of weight or height has less variable?
3. Some characteristics of annually family income distribution (in Birr) in two regions is as follows:

Region Mean Median Standard Deviation

A 6250 5100 960
B 6980 5500 940
a) Calculate coefficient of skewness for each region
b) For which region is, the income distribution more skewed. Give your interpretation for this
Region
c) For which region is the income more consistent?
(a) Calculate the pearsonian coefficient of skewness and give appropriate conclusion.
(b) Are smaller values more or less frequent than bigger values for this distribution?

67
(c) If a constant k was added on each observation, what will be the new pearsonian coefficient of
skewness? Show your steps. What do you conclude from this?
5. The median and the mode of a mesokurtic distribution are 32 and 34 respectively. The 4th moment
about the mean is 243. Compute the Pearsonian coefficient of skewness and identify the type of
skewness. Assume (n-1 = n).
6. If the standard deviation of a symmetric distribution is 10, what should be the value of the fourth
moment so that the distribution is mesokurtic?

CHAPTER FIVE

5. ELEMENTARY PROBABLITY

68
Objectives
After completing this chapter, you should be able to
 Determine sample spaces, using the fundamental counting rule.
 Find the number of ways that r objects can be selected from n objects, using the permutation
rule.
 Find the number of ways that r objects can be selected from n objects without regard to order,
using the combination rule.
 Find the probability of an event, using the counting rules.
 Find the probability of an event, using classical probability or empirical probability.
 Find the conditional probability of an event and independency.

5.1 INTRODUCTION

A cynical person once said, “The only two sure things are death and taxes.” This philosophy no
doubt arose because so much in people’s lives is affected by chance. From the timeyou awake until
you go to bed, you make decisions regarding the possible events that aregoverned at least in part by
chance. For example, should you carry an umbrella to worktoday?Will your car battery last until
spring? Should you accept that new job?

Probability as a general concept can be defined as the chance of an event [Link] people
are familiar with probability from observing or playing games of chance,such as card games, slot
machines, or lotteries. In addition to being used in games ofchance, probability theory is used in the
fields of insurance, investments, and weather forecastingand in various other areas. Finally, as stated
in Chapter 1, probability is the basisof inferential statistics. For example, predictions are based on
probability, and hypothesesare tested by using probability.

5.2 Definitions of Some Probability Terms

 Experiment: - Any process of observation or measurement or any process which generates well
defined outcome.

69
 Random experiment:- it is an experiment which can be repeated any number of times under
the same conditions, but does not give unique results. The result will be any one of several
possible outcomes, but for each trial, the result will not be known in advance. ARandom
experiment is also called a trial & the outcomes are called events.
 Sample space:- is the collection of all possible outcomes or sample points of a random
experiment.
 Event: - is a subset of a sample space i.e. an event is a collection of sample points.
 Impossible event:- this is an event which will never occur.

Example: In an experiment of tossing a coin three times, S = {HHH, HHT, HTH, HTT, THH,
THT, TTH, TTT}, each sample point is an equally likely outcome. It is possible to define many
events on this sample space as follows:

A = {HHH} - the event of getting only head.

B = {HHH, HHT} - the event of getting head on the first two tosses.

C = the event of getting number 9 is an impossible event.

 Mutually exclusive event: - two events A and B are said to be mutually exclusive if there is no
sample point which is common to A and B. i.e. A ∩ B = ∅
 Independent event: two or more events are said to be independent if the occurrence or non-
occurrence of an event does not affect the occurrence or non-occurrence of the other.
 Dependent Events: Two events are dependent if the first event affects the outcome or
occurrence of the second event in a way the probability is changed.
 Complement of an Event: the complement of an event A means nonoccurrence of A and is
denoted by A', or Ac contains those points of the sample space which don’t belong to A.
 Equally likely outcomes: if each outcome in a sample space has the same chance to be occurred.

5.3 Counting Rules

In order to calculate probabilities, we have to know
 The number of elements of an event
 The number of elements of the sample space.

70
 That is in order to judge what is probable, we have to know what is possible.
In order to determine the number of outcomes one can use several rules of counting:
1. Addition rule
2. Multiplication rule
3. Permutation rule
4. Combination rule.
To list the outcomes of the sequence of events, a useful device called tree diagram is used.

Example:A student goes to the nearest cafe to have a breakfast. He can take tea, coffee, or milk with
bread, cake and sandwich. How many possibilities does he have?
Solutions:
Tea Bread
Cake
Sandwich

Coffee Bread
Cake
Sandwich
Milk Bread
Cake
Sandwich
Therefore, there are nine possibilities.

1. The Addition Rule

Suppose that a procedure, designated by 1, can be done in n1 ways. Assume that a second procedure
designated by 2, can be done in n2 ways. Suppose furthermore, that it is not possible that both 1 and
2 done together. Then, the number of ways in which we can do1 or 2 is 𝑛1 + 𝑛2 ways.
Example:Suppose we are planning a trip to some place. If there are 3 bus routes& two train routs
that we can take, then there are 3+2=5 different routes that we can take.

2. Multiplication Rule:

71
 If a choice consists of k steps of which the first can be made in n1 ways, the second can be made in n2 ways,

…, the kth can be made in nk ways, then the whole choice can be made in (n1 * n2 * ........* nk ) ways.

Example1: The digits 0, 1, 2, 3, and 4 are to be used in 4 digit identification card. How many
different cards are possible if
a) Repetitions are permitted?
b) Repetitions are not permitted.
Solutions:
a)
1st digit 2nd digit 3rd digit 4th digit
5 5 5 5
There are four steps
1. Selecting the 1st digit, this can be made in 5 ways.
2. Selecting the 2nd digit, this can be made in 5 ways.
3. Selecting the 3rd digit, this can be made in 5 ways.
4. Selecting the 4th digit, this can be made in 5 ways.

 5 * 5 * 5 * 5  625 differentcards are possible.

b)
1st digit 2nd digit 3rd digit 4th digit
5 4 3 2

There are four steps

1. Selecting the 1st digit, this can be made in 5 ways.
2. Selecting the 2nd digit, this can be made in 4 ways.
3. Selecting the 3rd digit, this can be made in 3 ways.
4. Selecting the 4th digit, this can be made in 2 ways.

 5 * 4 * 3 * 2  120 differentcards are possible.

72
3. Permutation
An arrangement of n objects in a specified order is called permutation of the objects. The number of
n!
permutation of n different objects taken r at a time is obtained by: n Pr  for r  0, 1, 2,  , n
(n  r )!
Permutation Rules:
1. The number of permutations of n distinct objects taken all together is n!
Where n! n * (n  1) * (n  2) * ..... * 3 * 2 *1
Note: By definition 0! = 1.
2. The arrangement of n objects in a specified order using r objects at a time is called the

permutation of n objects taken r objects at a time. It is written as n Pr and the formula is

n!
n Pr 
(n  r )!
3. The number of permutations of n objects in which k1 are alike k2 are alike etc is
n!

k1!*k2 * ... * kn
Examples:
1. Suppose we have a letters A,B, C, D
a) How many permutations are there taking all the four?
b) How many permutations are there if two letters are used at a time?
2. How many different permutations can be made from the letters in the word
“CORRECTION”?
Solutions:
1. a)
Here n  4, there are four disnict object
 There are 4! 24 permutations.

b)
Here n  4, r  2
4! 24
 There are 4 P2    12 permutations.
(4  2)! 2
2.

73
 Here n  10
Of which 2 are C , 2 are O, 2 are R ,1E ,1T ,1I ,1N
 K1  2, k 2  2, k 3  2, k 4  k 5  k 6  k 7  1
U sin g the 3 rd rule of permutation , thereare
10!
 453600 permutations.
2!*2!*2!*1!*1!*1!*1!

EXERCISES 5.1
1. Six different statistics books, seven different physics books, and 3 different Economics books
are arranged on a shelf. How many different arrangements are possible if;
i. The books in each particular subject must all stand together
ii. Only the statistics books must stand together

4. Combination
A selection of objects without regard to order is called combination.

Example 1: Given the letters A, B, C, and D list the permutation and combination for selecting two
letters.
Solutions:
PermutationCombination

AB BA CA DA AB BC
AC BC CB DB AC BD
AD BD CD DC AD DC
Note that in permutation AB is different from
BA. But in combination AB is the same as BA.
Combination Rule
n
The number of combinations of r objects selected from n objects is denoted by n Cr or   and is
r
given by the formula:

 n n!
  
 r  (n  r )!*r!

74
Examples:
1. In how many ways a committee of 5 people is chosen out of 9 people?
Solutions:
n9, r 5
n n! 9!
     126 ways
 r  (n  r )!*r! 4!*5!
2. Among 15 clocks there are two defectives .In how many ways can an inspector chose three of
the clocks for inspection so that:
a) There is no restriction.
b) None of the defective clock is included.
c) Only one of the defective clocks is included.
d) Two of the defective clock is included.
Solutions:n=15 of which 2 are defective and 13 are non-defective; and r=3

a) If there is no restriction select three clocks from 15 clocks and this can be done in :
n  15 , r  3
n n! 15!
     455 ways
 r  (n  r )!*r! 12!*3!

b) None of the defective clocks is included.

This is equivalent to zero defective and three non defective, which can be done
in:
 2  13
  *    286 ways.
 0  3 
c) Only one of the defective clocks is included.
This is equivalent to one defective and two non defective, which can be done in:
 2  13
  *    156 ways.
1  2 
d) Two of the defective clock is included.
This is equivalent to two defective and one non defective, which can be done in:
 2  13
  *    13 ways.
 2  3 

75
 EXERCISES: 5.2
1. Out of 5 Mathematician and 7 Statistician a committee consisting of 2 Mathematician and 3
Statistician is to be formed. In how many ways this can be done if
a. There is no restriction
b. One particular Statistician should be included
c. Two particular Mathematicians cannot be included on the committee.
2. If 3 books are picked at random from a shelf containing 5 novels, 3 books of poems, and a
dictionary, in how many ways this can be done if
a. There is no restriction.
b. The dictionary is selected?
c. 2 novels and 1 book of poems are selected?

5.4 Approaches to Measuring Probability

There are four different conceptual approaches to the study of probability theory. These are:
 The classical approach.
 The frequentist approach.
 The axiomatic approach.
 The subjective approach.

1. The classical approach

This approach is used when:
- All outcomes are equally likely.
- Total number of outcome is finite, say N.

Definition: If a random experiment with N equally likely outcomes is conducted and out of these
NA outcomes are favorable to the event A, then the probability that event A occur denoted P ( A) is
defined as:
N A No. of outcomes favourableto A n( A)
P( A)   
N Total numberof outcomes n(S )

Examples:
1. A fair die is tossed once. What is the probability of getting

76
 a) Number 4?
b) An odd number?
c) An even number?
d) Number 8?

Solutions:
First identify the sample space, say S

S  1, 2, 3, 4, 5, 6
 N  n( S )  6
a) Let A be the event of number 4 c) Let A be the event of even numbers
A  4 A  2,4,6
 N A  n( A)  1  N A  n( A)  3
n( A) n( A)
P( A)  1 6 P( A)   3 6  0.5
n( S ) n( S )
b) Let A be the event of odd numbers d) Let A be the event of number 8
A  1,3,5 A  {}
 N A  n( A)  3  N A  n( A)  0
n( A) n( A)
P( A)   3 6  0.5 P( A)  0 60
n( S ) n( S )
2. A box of 80 candles consists of 30 defective and 50 non defective candles. If 10 of this candles
are selected at random, what is the probability that
a) All will be defective.
b) 6 will be non defective
c) All will be non defective
Solutions:

 80 
Total selection     N  n( S )
10 
a) Let A be the event that all will be defective.

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  30   50 
Total way in which A occur    *    N A  n( A)
 10   0 
 30   50 
 * 
n( A)  10   0 
 P( A)    0.00001825
n( S )  80 
 
 10 
b) Let A be the event that 6 will be non defective.
 30   50 
Total way in which A occur    *    N A  n( A)
4 6
 30   50 
 * 
n( A)  4   6 
 P( A)    0.265
n( S )  80 
 
 10 
c) Let A be the event that all will be non defective.

 30   50 
Total way in which A occur    *    N A  n( A)
 0   10 
 30   50 
 * 
n( A)  0   10 
 P( A)    0.00624
n( S )  80 
 
 10 

EXERCISES 5.3
1. Two dice are rolled. Find the probabilityof getting
a. A sum of 5, 6, or 7
b. Doubles or a sum of 6 or 8
c. A sum greater than 8 or less than 3
d. Based on the answers to parts a, b, and c, which is least likely to occur? Explain why.
2. If 3 books are picked at random from a shelf containing 5 novels, 3 books of poems, and a
dictionary, what is the probability that
a. The dictionary is selected?
b. 2 novels and 1 book of poems are selected?

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  Short coming of the classical approach:
This approach is not applicable when:
 The total number of outcomes is infinite.
 Outcomes are not equally likely.
2. The Frequentist Approach
This approach to probability is based on relative frequencies.
Definition: Suppose we do again and again a certain experiment n times and let A be an event of
the experiment and let k be the number of times that event A occurs. Therefore the probability
of the event A happening in the long run is given by:

𝑁𝑢𝑚𝑏𝑒𝑟𝑜𝑓𝑡𝑖𝑚𝑒𝑠𝑒𝑣𝑒𝑛𝑡𝐴ℎ𝑎𝑠𝑜𝑐𝑐𝑢𝑟𝑒𝑑 𝑘
P(A) = =
𝑇𝑜𝑡𝑎𝑙𝑛𝑢𝑚𝑏𝑒𝑟𝑜𝑓𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠 𝑛

In other words given a frequency distribution, the probability of an event (A) being in a given class
is
𝐹𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦𝑜𝑓𝑐𝑙𝑎𝑠𝑠𝐴
P(A) =
𝑇𝑜𝑡𝑎𝑙𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦𝑖𝑛𝑡ℎ𝑒𝑑𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛
This is based on the relative frequencies of outcomes belonging to an event.

Example1: If records show that 60 out of 100,000 bulbs produced are defective. What is the
probability of a newly produced bulb to be defective?
Solution: Let A be the event that the newly produced bulb is defective.
NA 60
P( A)  lim   0.0006
N  N 100,000
Example2:Distribution of Blood Types
In a sample of 50 people, 21 had type O blood, 22 had type A blood, 5 had type Bblood, and 2 had
type AB blood. Set up a frequency distribution and find the followingprobabilities.
a. A person has type O blood.
b. A person has type A or type B blood.
c. A person has neither type A nor type O blood.
d. A person does not have type AB blood.

Solutions:

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 i. P(O) =f/n=21/50
ii. P(A or B)=22/50+5/50 =27/50
(Add the frequencies of the two classes.)
iii. P(neither A nor O)=5/50+2/50=7/50
(Neither A nor O means that a person has either type B or type AB blood.)

iv. P(not AB)= 1- P(AB)=1-2/50=48/50

(Find the probability of not AB by subtracting the probability of type AB from 1.)

Exercise 5.4
1. Hospital Stays for Maternity Patients: Hospital records indicated that maternity patients
stayed in the hospital for the number of days shown in the distribution.
Number of days stayed Frequency
3 15
4 32
5 56
6 19
7 5
Find these probabilities:
a. A patient stayed exactly 5 days.
b. A patient stayed at most 4 days.
c. A patient stayed less than 6 days.
d. A patient stayed at least 5 days.

3. Axiomatic Approach
Let E be a random experiment and S be a sample space associated with E. With each event A a real
number called the probability of A satisfies the following properties called axioms of probability or
postulates of probability.
1. P( A)  0
2. P( S )  1, S is the sure event.
3. If A and B are mutually exclusive events, the probability that one or the other occur equals the
sum of the two probabilities. i.e. P ( A  B )  P ( A)  P ( B )

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4. If A and B are independent events, the probability that both will occur is the product of the two
probabilities. i.e. P(A ∩ B) = P(A)*P(B)
5. P( A' )  1  P( A)
6. 0  P ( A)  1
7. P(ø) =0, ø is the impossible event.

Remark: Venn-diagrams can be used to solve probability problems.

A
AUB A∩B
In general p ( A  B)  p ( A)  p ( B )  p ( A  B)

4. Subjective Probability
The fourth type of probability is called subjective [Link] probability usesa
probability value based on an educated guess or estimate, employing opinions and
inexactinformation. In subjective probability, a person or group makes an educated guess at the
chancethat an event will occur. This guess is based on the person’s experience and evaluation ofa
solution. For example, a sportswriter may say that there is a 70% probability that the Pirates will win
the pennant next year. A physician might say that, on the basis of herdiagnosis, there is a 30% chance
the patient will need an operation. A seismologist mightsay there is an 80% probability that an
earthquake will occur in a certain area. These areonly a few examples of how subjective probability
is used in everyday life. All four types of probability (classical, empirical, axiomatic and subjective)
are used to solvea variety of problems in business, engineering, and other fields.

5.5 Conditional Probability and Independency

5.5.1 Conditional Events:
If the occurrence of one event has an effect on the next occurrence of the other event then the two
events are conditional or dependent events.
Examples: Suppose we have two red and three white balls in a bag
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 1. Draw a ball with replacement
Since the first drawn ball is replaced for a second draw it doesn’t affect the second draw. For
this reason A and B are independent. Then if we let
2
A= the event that the first draw is red p ( A) 
5
2
B= the event that the second draw is red  p ( B ) 
5
2. Draw a ball without replacement
This is conditional b/c the first drawn ball is not to be replaced for a second draw
in that it does affect the second draw. If we let
2
A= the event that the first draw is red p ( A) 
5
B= the event that the second draw is red  p ( B )  ?
Let B= the event that the second draw is red given that the first draw is red P(B) = 1/4

5.5.2 Conditional Probability of an Event

The conditional probability of an event A given that B has already occurred, denoted by p( A B) is
p( A  B)
p( A B) = , p( B)  0
p( B)
Remark: (1) p( A' B)  1  p( A B)

(2) p( B ' A)  1  p( B A)
Examples:
1. For a student enrolling at freshman at certain university the probability is 0.25 that he/she
will get scholarship and 0.75 that he/she will graduate. If the probability is 0.2 that he/she
will get scholarship and will also graduate. What is the probability that a student who get a
scholarship graduate?
Solution: Let A= the event that a student will get a scholarship
B= the event that a student will graduate

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 given p( A)  0.25, p( B)  0.75, p A  B   0.20
Re quired pB A
p A  B  0.20
p  B A    0.80
p  A 0.25
2. If the probability that a research project will be well planned is 0.60 and the probability that
it will be well planned and well executed is 0.54, what is the probability that it will be well
executed given that it is well planned?

Solution; Let A= the event that a research project will be well

Planned
B= the event that a research project will be well
Executed
given p( A)  0.60, p A  B   0.54
Re quired pB A
p A  B  0.54
p  B A    0.90
p  A 0.60

EXERCISE 5.5
1. A lot consists of 20 defective and 80 non-defective items from which two items are chosen
without replacement. Events A & B are defined as A = the first item chosen is defective, B =
the second item chosen is defective
a) What is the probability that both items are defective?
b) What is the probability that the second item is defective?
2. A box contains black chips and white chips. A person selects two chips without replacement. If
the probability of selecting a black chip and a white chip is 15/56, and the probability of selecting
a black chip on the first draw is 3/8, find the probability of selecting the white chip on the second
draw, given that the first chip selected was a black chip.

Note: for any two events A and B the following relation holds.
   
pB   pB A. p A  p B A' . p A'

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5.6.3 Probability of Independent Events
Two events A and B are independent if and only if p A  B  p A. pB

Here p A B  p A, PB A  pB

Example; A box contains four black and six white balls. What is the probability of getting two black
balls in drawing one after the other under the following conditions?
a. The first ball drawn is not replaced
b. The first ball drawn is replaced
Solution; Let A= first drawn ball is black
B= second drawn is black
Required p A  B 

a. p A  B  pB A. p A  3 / 94 10  2 15

b. p A  B   p A. pB   4 104 10  4 25

Review Exercise on Chapter Five

1. Why would anyone study probability?
2. A newly married couple is planning to have three children. List the elements of the sample
space
a. using B for male and G for female
b. if the sample points in the sample space represents the number of females
3. Four married couples have bought 8 seats in a row for a show. In how many different ways
can they be seated
a. If each couple is to sit together?
b. If all the women sit together?
c. If all the women sit together to the right of all the men?
a. In how many ways can the customers be arranged at the counter?
b. In how many ways can they be arranged at the counter if all the women are to be seated?
c. In how many ways can they be arranged at the counter if all the women are to be seated and if
men occupy the first and last stool?
d. If customers take seats at random, what is the probability that all of the men are seated and
that a woman occupies the middle stool?

84
4. In how many ways can a committee of three be chosen from 4 married couples if
a. All are equally eligible?
b. One particular man must be on the committee?
c. Husband and wife cannot serve in the same committee?
5. Let A and B be two events associated with an experiment and suppose that P(A)=0.4 while
P(AUB)=0.7. Let P(B)=P
a. For what choice of P are A and B mutually exclusive?
b. For what choice of P are A and B independent?
6. The personnel department of a company has records which show the following analysis of its
200 accountants.
Age Bachelor’s degree only Master’s degree
Under 30 90 10
30 to 40 20 30
Over 40 40 10
If one accountant is selected at random from the company, find
i) The probability he has only a bachelor’s degree
ii) The probability he has a master’s degree, given that he is over 40
iii) The probability he is under 30, given that he has a bachelor’s degree

85
 CHAPTER SIX
6. RANDOM VARIABLES AND PROBABILITY DISTRIBUTIONS

Objectives:
After completing this chapter, you should be able to
 define the term random variable
 understand discrete and continuous random variables
 Construct a probability distribution for a random variable.
 Find the mean, variance and expected value for a discrete random variable.
 Find the exact probability for X successes in n trials of a binomial experiment.
 Find probabilities for outcomes of variables, using the Poisson and normal distributions.
 Find the mean, variance, and standard deviation for the variable of a binomial,Poisson and
normal distributions

Introduction
Before probability distribution is defined formally, the definition of a variable is reviewed. In
Chapter one, a variablewas defined as a characteristic or attribute that can assume different values.
Various letters of the alphabet, such as X, Y, or Z, are used to represent variables. Since the variables
in this chapter are associated with probability, they are called random variables.

For example, if a die is rolled, a letter such as X can be used to represent the outcomes. Then the
value that X can assume is 1, 2, 3, 4, 5, or 6, corresponding to the outcomes of rolling a single die.
If two coins are tossed, a letter, says Y, can be used to represent the number of heads, in this case 0,
1, or 2. As another example, if the temperature at 8:00 A.M. is 43o and at noon it is 530, then the
values T that the temperature assumes are said to be random, since they are due to various
atmospheric conditions at the time the temperature was taken.

6.1 Random Variable

Definition: A random variable is a numerical description of the outcomes of the experiment or a
numerical valued function defined on sample space, usually denoted by capital letters.

86
 Example:If X is a random variable, then it is a function from the elements of the sample space
to the set of real numbers. i.e. X is a function X: S  R

A random variable takes a possible outcome and assigns a number to it.

Example: Flip a coin three times, let X be the number of heads in three tosses.
 S  HHH , HHT , HTH , HTT , THH , THT , TTH , TTT 
 X HHH   3,
X HHT   X HTH   X THH   2,
X HTT   X THT   X TTH   1
X TTT   0

X = {0, 1, 2, 3}
X assumes a specific number of values with some probabilities.
Random variables are of two types:
1. Discrete random variable: are variables which can assume only a specific number of values. They
have values that can be counted
Examples:
 Toss coin n times and count the number of heads.
 Number of children in a family.
 Number of car accidents per week.
 Number of defective items in a given company.
 Number of bacteria per two cubic centimeter of water.
2. Continuous random variable: are variables that can assume all values between any two give
values.
Examples:
 Height of students at certain college.
 Mark of a student.
 Life time of light bulbs.
 Length of time required to complete a given training.

87
 6.2 Probability Distribution
Definition:A probability distribution shows the possible outcomes of an experiment and the
probability of each of these outcomes. That is, probability distribution is a complete list of all
possible of values of a random variable and their corresponding probabilities.

A formula giving the probability of the different values of the random variable X for:
 Discrete variable is the probability massy function (pmf) and is usually denoted by p(x). If X is
a discrete random variable taking at most a countable infinite number of values x1, x2, …, then
P (xi) = P(X = xi): i= 1, 2 …is called the probability mass function of random variable X. The
set of ordered pairs {xi, P (xi)} i= 1, 2 … gives the probability distribution of the random variable
X.
 Continuous variable is the probability density function(pdf) and is usually denoted by f(x). A
random variable X, is said to be a continuous random variable if there is a non–negative function,
f,
𝑥
F(x) = ∫𝑡=−∞ 𝑓 (𝑡)𝑑 𝑡
Example: Consider the experiment of tossing a coin three times. Let X is the number of heads.
Construct the probability distribution of X.

Solution:

 First identify the possible value that X can assume.

 Calculate the probability of each possible distinct value of X and express X in the form of
frequency distribution.

X x 0 1 2 3
P X  x  18 38 38 18

Note: Probability distribution is denoted by P for discrete and by f for continuous random variable.
Properties of Probability Distribution:
1.
P( x)  0, if X is discrete.
f ( x)  0, if X is continuous.
2.

88
  P X  x 
x
 1 , if X is discrete.

 f ( x)dx
x
 1 , if is continuous.

Note:
1. If X is a continuous random variable then
b
P(a  X  b)   f ( x)dx
a

2. Probability of a fixed value of a continuous random variable is zero.

 P ( a  X  b)  P ( a  X  b)  P ( a  X  b)  P ( a  X  b)
3. If X is discrete random variable then
b 1
P ( a  X  b)   P ( x)
x  a 1
b 1
P ( a  X  b)   p ( x )
xa
b
P ( a  X  b)   P ( x)
x  a 1
b
P ( a  X  b)   P ( x )
xa

4. Probability means area for continuous random variable.

Exercise 6.1:
1. Baseball World Series: the baseball World Series is played by the winner of the National
League and the American League. The first team to win four games wins the World Series. In other
words, the series will consist of four to seven games, depending on the individual victories. The data
shown consist of the number of games played in the World Series from 1965 through 2005. (There
was no World Series in 1994). The number of games played is represented by the variable X. Find
the probability P(X) for each X, construct a probability distribution, and draw a graph for the data.

X Number of games played

4 8
5 7
6 9
7 16
2. Determine whether each distribution is a probability distribution.

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 a. X 0 5 10 15 20
P(X) 1/5 1/5 1/5 1/5 1/5
b. X 1 2 3 4
P(X) 1/4 1/8 1/16 9/16
c. X 0 2 4 6
P(X) -1 1.5 0.3 0.2
d. X 2 3 7
P(X) 0.5 0.3 0.4

6.3 Introduction to Expectation

Definition:
1. Let a discrete random variable X assume the values X1, X2, ….,Xn with the probabilities P(X1),
P(X2), ….,P(Xn) respectively. Then the expected value of X, denoted as E(X) is defined as:
E ( X )  X 1 P( X 1 )  X 2 P( X 2 )  ....  X n P( X n )
n
  X i P( X i )
i 1

2. Let X be a continuous random variable assuming the values in the interval (a, b) such that
b b
 f ( x)dx  1,then E ( X )   x f ( x)dx
a a

Examples:
1. What is the expected value of a random variable X obtained by tossing a coin three times where
X is the number of heads?
Solution:First construct the probability distribution of X
X x 0 1 2 3

P X  x  18 38 38 18

 E ( X )  X 1 P( X 1 )  X 2 P( X 2 )  ....  X n P( X n )
 0 *1 8  1 * 3 8  .....  2 *1 8
 1.5

2. Suppose a charity organization is mailing printed return-address stickers to over one million
homes in Ethiopia. Each recipient is asked to donate either $1, $2, $5, $10, $15, or $20. Based on

90
 past experience, the amount a person donates is believed to follow the following probability
distribution:

X x $1 $2 $5 $10 $15 $20

P X  x  0.1 0.2 0.3 0.2 0.15 0.05

What is expected that an average donor to contribute?

Solution:
X x $1 $2 $5 $10 $15 $20 Total
P X  x  0.1 0.2 0.3 0.2 0.15 0.05 1

xP( X  x) 0.1 0.4 1.5 2 2.25 1 7.25

6
 E ( X )   xi P( X  xi )  $7.25
i 1

Mean and Variance of a random variable

Let X is given random variable.
1. The expected value of X is its mean
 Mean of X  E ( X )
2. The variance of X is given by:
Varianceof X  var( X )  E ( X 2 )  [ E ( X )]2
Where:
n
E ( X 2 )   xi P( X  xi ) , if X is discrete
2

i 1

  x 2 f ( x)dx , if X is continuous.
x

Examples:
1. Find the mean and the variance of a random variable X in example 2 above.
Solution:
X x $1 $2 $5 $10 $15 $20 Total
P X  x  0.1 0.2 0.3 0.2 0.15 0.05 1

xP( X  x) 0.1 0.4 1.5 2 2.25 1 7.25

x 2 P( X  x) 0.1 0.8 7.5 20 33.75 20 82.15

91
 E ( X )  7.25
Var( X )  E ( X 2 )  [ E ( X )]2  82.15  7.252  29.59

Exercise 6.2
1. Two dice are rolled. Let X is a random variable denoting the sum of the numbers on the two dice.
a. Give the probability distribution of X
b. Compute the expected value of X and its variance

 There are some general rules for mathematical expectation.

Let X and Y are random variables and k is a constant.
RULE 1: E (k )  k

RULE 2: Var (k )  0
RULE 3: E (kX )  kE( X )

RULE 4: Var (kX )  k 2Var ( X )

RULE 5: E ( X  Y )  E ( X )  E (Y )

6.4Common Discrete Probability Distributions

1. Binomial Distribution

A binomial experiment is a probability experiment that satisfies the following four requirements
called assumptions of a binomial distribution.

1. The experiment consists of n identical trials.

2. Each trial has only one of the two possible mutually exclusive outcomes, success or a failure.

3. The probability of each outcome does not change from trial to trial, and

4. The trials are independent, thus we must sample with replacement.

Examples of binomial experiments

 Tossing a coin 20 times to see how many tails occur.

 Asking 200 people if they watch BBC news.

 Registering a newly produced product as defective or non defective.

Definition: The outcomes of the binomial experiment and the corresponding probabilities of these
outcomes are called Binomial Distribution.

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 Let P  the probability of success q  1  p  the probability of failureon any given trial

Then the probability of getting x successes in n trials becomes:

 n
P( X  x)    p x q n x , x  0,1,2,...., n
 x

And this is sometimes written as: X ~ Bin(n, p)

When using the binomial formula to solve problems, we have to identify three things:
1. The number of trials ( n )
2. The probability of a success on any one trial ( p ) and
3. The number of successes desired ( X ).
Examples:
1. What is the probability of getting three heads by tossing a fair con four times?
Solution:Let X be the number of heads in tossing a fair coin four times. X ~ Bin(n  4, p  0.50)

n
 P( X  x)    p x q n x , x  0,1,2,3,4
 x
 4
  0.5 x0.54 x
 x
 4
  0.54
 x
 4
 P( X  3)   0.54  0.25
 3
2. Suppose that an examination consists of six true and false questions, and assume that a student
has no knowledge of the subject matter. The probability that the student will guess the correct
answer to the first question is 30%. Likewise, the probability of guessing each of the remaining
questions correctly is also 30%.
a) What is the probability of getting more than three correct answers?
b) What is the probability of getting at least two correct answers?
c) What is the probability of getting at most three correct answers?
d) What is the probability of getting less than five correct answers?

Solution: Let X = the number of correct answers that the student gets. X ~ Bin(n  6, p  0.30)

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a) P ( X  3)  ?

n
 P( X  x)    p x q n x , x  0,1,2,..6
 x
6
  0.3 x 0.7 6 x
 x

 P( X  3)  P( X  4)  P( X  5)  P( X  6)
 0.060  0.010  0.001
 0.071
Thus, we may conclude that if 30% of the exam questions are answered by guessing, the probability
is 0.071 (or 7.1%) that more than four of the questions are answered correctly by the student.
b) P( X  2)  ?

P( X  2)  P( X  2)  P( X  3)  P( X  4)  P( X  5)  P( X  6)
 0.324  0.185  0.060  0.010  0.001
 0.58

c) P( X  3)  ?

P( X  3)  P( X  0)  P( X  1)  P( X  2)  P( X  3)
 0.118  0.303  0.324  0.185
 0.93

d) P ( X  5)  ?

P( X  5)  1  P( X  5)
 1  {P( X  5)  P( X  6)}
 1  (0.010  0.001)
 0.989

Exercises 6.3

94
1. Suppose that 4% of all TVs made by A&B Company in 2000 are defective. If eight of these TVs
are randomly selected from across the country and tested, what is the probability that exactly three
of them are defective? Assume that each TV is made independently of the others.
2. An allergist claims that 45% of the patients she tests are allergic to some type of weed. What is
the probability that
a) Exactly 3 of her next 4 patients are allergic to weeds?
b) None of her next 4 patients are allergic to weeds?
3. Explain why the following experiments are not Binomial
a) Asking 20 people how old they are.
b) Drawing 5 cards from a deck for a poker hand.
Remark: If X is a binomial random variable with parameters n and p then

E ( X )  np , Var ( X )  npq

2. Poisson Distribution
A random variable X is said to have a Poisson distribution if its probability distribution is given by:
x e 
P( X  x)  , x  0,1,2,......
x!
Where   the averagenumber.
The Poisson distribution depends only on the average number of occurrences per unit time of space.
The Poisson distribution is used as a distribution of rare events, such as: Arrivals, Accidents, Number
of misprints, Hereditary, Natural disasters like earth quake, etc.
The process that gives rise to such events is called Poisson process.
Example: If 1.6 accidents can be expected an intersection on any given day, what is the probability
that there will be 3 accidents on any given day?

Solution:Let X =the number of accidents,   1.6

1.6 x e 1.6
X  poisson1.6  p X  x  
x!
3 1.6
p X  3 
1.6 e
 0.1380
3!

Exercise 6.4

95
 1. On the average, five smokers pass a certain street corners every ten minutes, what is the
probability that during a given 10 minutes the number of smokers passing will be
a) 6 or fewer
b) 7 or more
c) Exactly 8…….
If X is a Poisson random variable with parameter  then

E (X )   , Var ( X )  

Note: The Poisson probability distribution provides a close approximation to the binomial
probability distribution when n is large and p is quite small or quite large with   np .
(np) x e  ( np )
P( X  x)  , x  0,1,2,......
x!
Where   np  the averagenumber.

Usually we use this approximation if np  5 . In other words, if n  20 and np  5 n(1  p )  5

], then we may use Poisson distribution as an approximation to binomial distribution.
Example: Find the binomial probability P(X=3) by using the Poisson distribution if p  0.01
and n  200. Solution:
U sin g Poisson ,   np  0.01 * 200  2
23 e  2
 P ( X  3)   0.1804
3!
U sin g Binomial , n  200, p  0.01
 200 
 P ( X  3)   (0.01)3 (0.99)99  0.1814
 3 

6.5 Common Continuous Probability Distributions

1. Normal Distribution

96
 A random variable X is said to have a normal distribution if its probability density function is
1  x  2
1   
f ( x)  e 2  
,    x  ,      ,   0
 2
Where   E ( X ),  2  Variance( X )
 and  2 are the Parametersof the Normal Distribution.

Properties of Normal Distribution:

1. It is bell shaped and is symmetrical about its mean and it is mesokurtic. The maximum ordinate

is at x   and is given by f ( x) 
1
 2

2. It is asymptotic to the axis, i.e., it extends indefinitely in either direction from the mean.

3. It is a continuous distribution.

4. It is a family of curves, i.e., every unique pair of mean and standard deviation defines a
different normal distribution. Thus, the normal distribution is completely described by two
parameters: mean and standard deviation.

5. Total area under the curve sums to 1, i.e., the area of the distribution on each side of the mean

is 0.5.   f ( x)dx  1


6. It is unimodal, i.e., values mound up only in the center of the curve.

7. Mean  Median  mod e  
8. The probability that a random variable will have a value between any two points is equal to
the area under the curve between those points.
Note: To facilitate the use of normal distribution, the following distribution known as the standard
normal distribution was derived by using the transformation

X 
1
1  2 z2
Z  f ( z)  e
 2
Properties of the Standard Normal Distribution:
Same as a normal distribution, but also
 mean is zero,
 variance is one,
97
  standard Deviation is one

Areas under the standard normal distribution curve have been tabulated in various ways. The most

common ones are the areas between Z  0 and a positive value of Z .

Given normal distributed random variable X with mean  and s tan dard deviation 

a X  b
P ( a  X  b)  P (   )
  

 P ( a  X  b)  P ( a    Z  b   )
 
Note:

P ( a  X  b)  P ( a  X  b)
 P ( a  X  b)
 P ( a  X  b)
Examples:
1. Find the area under the standard normal distribution which lies
a) Between Z  0 and Z  0.96
Solution:
Area  P (0  Z  0.96)  0.3315
Between Z  1.45 and Z  0

Solution:
Area  P(1.45  Z  0)
 P(0  Z  1.45)
 0.4265

b) To the right of Z  0.35

Solution:

98
 Area  P( Z  0.35)
 P(0.35  Z  0)  P( Z  0)
 P(0  Z  0.35)  P( Z  0)
 0.1368  0.50  0.6368

c) To the left of Z  0.35

Solution:
Area  P( Z  0.35)
 1  P( Z  0.35)
 1  0.6368  0.3632

d) Between Z  0.67 and Z  0.75

Solution:
Area  P (0.67  Z  0.75)
 P (0.67  Z  0)  P(0  Z  0.75)
 P (0  Z  0.67)  P(0  Z  0.75)
 0.2486  0.2734  0.5220

e) Between Z  0.25 and Z  1.25

Solution:
Area  P(0.25  Z  1.25)
 P(0  Z  1.25)  P(0  Z  0.25)
 0.3934  0.0987  0.2957
2. Find the value of Z if
a) The normal curve area between 0 and z(positive) is 0.4726
Solution:
P(0  Z  z )  0.4726 and from table
P(0  Z  1.92)  0.4726
 z  1.92.....uniquenessof Areea.
b) The area to the left of z is 0.9868
Solution:

99
P( Z  z )  0.9868
 P( Z  0)  P(0  Z  z )
 0.50  P(0  Z  z )
 P(0  Z  z )  0.9868  0.50  0.4868
and from table
P(0  Z  2.2)  0.4868
 z  2.2

3. A random variable X has a normal distribution with mean 80 and standard deviation 4.8. What
is the probability that it will take a value

a) Less than 87.2

b) Greater than 76.4

c) Between 81.2 and 86.0

Solution:

X is normal with mean,   80, s tan dard deviation ,   4.8

a)
X  87.2  
P( X  87.2)  P(  )
 
87.2  80
 P( Z  )
4.8
 P( Z  1.5)
 P( Z  0)  P(0  Z  1.5)
 0.50  0.4332  0.9332

b)
X  76.4  
P( X  76.4)  P(  )
 
76.4  80
 P( Z  )
4.8
 P( Z  0.75)
 P( Z  0)  P(0  Z  0.75)
 0.50  0.2734  0.7734

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 c)

81.2   X  86.0  
P(81.2  X  86.0)  P(   )
  
81.2  80 86.0  80
 P( Z )
4.8 4.8
 P(0.25  Z  1.25)
 P(0  Z  1.25)  P(0  Z  1.25)
 0.3934  0.0987  0.2957

4. A random variable has a normal distribution with   5 .Find its mean if the probability that
the random variable will assume a value less than 52.5 is 0.6915.

Solution:
52.5  
P( Z  z )  P( Z  )  0.6915
5
 P(0  Z  z )  0.6915  0.50  0.1915.
But from the table
 P(0  Z  0.5)  0.1915
52.5  
z  0.5
5
   50

Review Exercise on Chapter Six

1. The probability that a freshman entering AAU (Science Faculty) will survive first semester is
0.92. (From 1993/94 academic year statistics). Assuming this pattern remain unchanged over the
subsequent years, what is the probability that among 100 randomly selected freshmen in first
semester,
a. None will survive?
b. Exactly 97 will survive?
c. At least three will survive?
2. A secretary makes 2 errors per page on the average. What is the probability that on the next page
she makes (Assignment )
a) 4 or more errors?

101
b) No errors?
3. In a study of suicides, the monthly distribution of adolescent suicides in an area for ten years
interval closely followed a Poisson distribution with parameterλ = 2.75. Find the probability that
a randomly selected month will be one in which three adolescent suicides occurred.
4. The number of calories in a salad on the lunch menu is normally distributed with mean μ = 200
and standard deviation σ= 5. Find the probability that the salad you select will contain:
(Assignment)
(a) More than 208 calories.
(b) Between 190 and 200 calories.
5. Of a large group of men, 5% are less than 60 inches in height and 40% are between 60 & 65
inches. Assuming a normal distribution, find the mean and standard deviation of
heights.(Assignment)
6. Suppose that X N (165, 9), where X = the breaking strength of cotton fabric. A sample is
defective if X<162. Find the probability that a randomly chosen fabric will be defective?

102
 CHAPTER SEVEN
7. SAMPLING AND SAMPLING DISTRIBUTION

Objectives:
After completing this chapter, you should be able to

 Describe the basic concepts of sampling.

 Explain why a sample is often the only feasible way to learn something about apopulation
 Describe methods to select a sample
 Define and construct a sampling distribution of the sample mean
 Explain the central limit theorem
 Use the central limit theorem to find probabilities of selecting possible sample means from a
specified population

7.1 Introduction
Given a variable X, if we arrange its values in ascending order and assign probability to each of the
values or if we present Xi in a form of relative frequency distribution the result is called Sampling
Distribution of X.

7.2Definitionsof Some Basic Terms in Sampling

Sample Survey:A study that asks questions of a sample drawn from some population.
Census:Complete count of population is called census. The observations on all the sampling units
in the population are collected in a census. For example, in Ethiopia, the census is conducted at every
tenth year in which observations on all the persons staying in Ethiopia is collected.
Sample:One or more sampling units are selected from the population according to some specified
procedure. A sample consists only of a portion of the population units.
Samplingis the process of selecting a number of study units from a defined study population. By
studying this part (sample), we try to generalize findings of the sample to the population.
Sampling unit:An element or a group of elements on which observations can be taken is called a
sampling unit. The objective of the survey helps in determining the definition of sampling unit.
For example,

103
  If the objective is to determine the total income of all the persons in the household, then the
sampling unit is the household.
 If the objective is to determine the income of any particular person in the household, then the
sampling unit is the income of the particular person in the household.
So the definition of sampling unit depends and varies as per the objective of the survey.
 Similarly, in another example, if the objective is to study the blood sugar level, then the
sampling unit is the value of blood sugar level of a person.
 On the other hand, if the objective is to study the health conditions, then the sampling unit is
the person on whom the readings on the blood sugar level, blood pressure and other
factors will be obtained. These values will together classify the person as healthy or
unhealthy.
Sampling frame:List of all the units of the population to be surveyed constitutes the sampling frame.
All the sampling units in the sampling frame have identification particulars.
For example,
 All the students in a particular university listed along with their roll numbers constitute the
sampling frame.
 Similarly, the list of households with the name of head of family or house address constitutes
the sampling frame.
 In another example, the residents of a city area may be listed in more than one frame - as per
automobile registration as well as the listing in the telephone directory.

Errors in sample survey: When we take a sample, our results will not exactly equal the results for
the whole population. That is, our results will be subjects to errors.
There are two types of errors
a) Sampling error:
- It is the discrepancy between the population value and sample value.
- May arise due to inappropriate sampling techniques applied
- Sampling error can be minimized by increasing the size of the sample.
- When n ~ N, sampling ~ error=0

104
 b) Non sampling errors:It is a type of systematic error in the design or conducts of a sampling
procedure which results in distortion of the sample, so that it is no longer representative of the
reference population.

 It could be introduced during:

 Measurement or counting (i.e. observational error).
 Respondent or non-respondent error.
 Lack of preciseness of definition.
 Errors in editing and tabulation of data, and
 Selection bias (e.g. accessibility bias, volunteer bias, etc).

- We can eliminate or reduce non sampling error (bias) by careful design of the
sampling procedure & not by increasing the sample size.

Advantage of sampling as compared to complete enumeration

Reduced cost and enlarged scope

 Sampling involves the collection of data on smaller number of units in comparison to
complete enumeration, so the cost involved in the collection of information is reduced.
Further, additional information can be obtained at little cost in comparison to conducting
another survey. For example, when an interviewer is collecting information on health
conditions, then he/she can also ask some questions on health practices. This will provide
additional information on health practices and the cost involved will be much less than
conducting an entirely new survey on health practices.

Organization of work
 It is easier to manage the organization of collection of smaller number of units than all the
units in a census. For example, in order to draw a representative sample from a state, it is
easier to manage to draw small samples from every city than drawing the sample from the
whole state at a time. This ultimately results in more accuracy in the statistical inferences
because better organization provides better data and in turn, improved statistical inferences
are obtained.

105
 Greater accuracy
 The persons involved in the collection of data are trained personals. They can collect the data
more accurately if they have to collect smaller number of units than large number of unites in
a given time.
Greater speedy (Urgent information required)
 For the same reason, the data can be collected and summarized more quickly with a sample
than with a complete count. This is a vital consideration when the information is urgently
needed.
 For example, the forecasting of the crop production can be done quickly on the basis of a
sample of data than collecting first all the observations.
Feasibility

 Conducting the experiment on smaller number of units, particularly when the units are
destroyed, is more feasible.
 For example, in determining the life of bulbs, it is more feasible to fuse minimum number of
bulbs. Similarly, in any medical experiment, it is more feasible to use less number of animals.

7.3Sampling Techniques
The technique of selecting a sample is important in sampling theory and usually it depends upon the
nature of the investigation.
 There are two basic types of sampling.
A) Random Sampling or Probability Sampling: Is a method of sampling in which all elements
in the population have a pre-assigned non-zero probability to be included in to the sample.
Probability sampling methods are characterized by:
 A sampling frame exists or can be complied
 Involve random selection procedures
 All units of the population should have an equal or at least a known chance of being
included in the sample.
 Generalization is possible

 Types of probability sampling:

i. Simple random sampling

106
 ii. Stratified random sampling
iii. Cluster sampling
iv. Systematic sampling

i. Simple Random Sampling:

Simple random sampling (SRS) is a method of selection of a sample comprising of n number of
sampling units out of the population having N number of sampling units such that every sampling
unit has an equal chance of being chosen.
In this case the samples can be drawn in two possible ways.
 The sampling units are chosen without replacement in the sense that the units once chosen
are not placed back in the population.
 The sampling units are chosen with replacement in the sense that the chosen units are placed
back in the population.

Under SRS, you have two methods that can be used in order to ensure the randomness of the
selection-Lottery methods and table of random numbers.

Lottery method:may be possible to use the “lottery” method for a small population. All items of
the population are numbered or named on separate slips of paper of identical size, color and shape.
These slips are then folded and mixed up in a container or drum. A blindfold selection is then made
of the number of slips required to constitute the desired size of sample. As the size of the population
is greater, the lottery method becomes cumbersome. Thus, the alternative method is using table of
random numbers.

Table of Random Numbers: Table of random numbers are tables of the digits 0, 1, 2… 9, each
digit having an equal chance of selection at any draw (in row, column and/or diagonal). If there are
many units, however, the above technique soon becomes laborious. Selection of the units is greatly
facilitated and made more accurate by using a set of random numbers in which a large number of
digits is set out in random order.

Steps to Select a Sample Using Table of Random Numbers

107
  Determine how many digits is needed random number to be constructed based on the total
number of units in the population.
 Choose the starting place and direction (right, left, diagonal, up or down) in which we will
read the numbers from the table.
 In the direction we chose, read the number of digits required. Numbers that are not within
the range needed (greater than the population size) are discarded and continue reading the
numbers in the chosen direction until all random numbers have been selected.

For instance, you have a population of N= 528 students and you want to draw a sample of n=10
students. In this case, you may start by assigning a three digit number to each member of the
population so that each member is known as 001, 002, …, 528. Select three columns from table 2.1,
say columns 25 to 27. Go dawn the three columns, selecting the first 10 distinct numbers between
001 and 528. These are 36, 509, 364, 417, 348, 127, 149, 186, 290, and 162. For the last two numbers
we jumped to columns 30 to 32. In repeated selections it is advisable to vary the starting point in the
table. This means thatif you get any three digit number(s) which is/are greater than 528, you should
drop and go to the next [Link] your sample consists of student36, 509, 364, 417, 348, 127,
149, 186, 290, and 162.

108
 ii. Stratified Random Sampling:
When the population is heterogeneous with respect to the study variable it would not be desirable
to use simple random sampling. In such cases stratified random sampling would be appropriate.
In Stratified Random Sampling the population is first divided into homogenous groups called
strata and a simple random sample is then taken from each strata. Stratified random sampling is
typically used when the experimenter wants all sub-populations to be represented in the sample. This
type of sampling procedure can be expensive to [Link] number of units to be selected from
each stratum can be determined by one of the following allocation methods. Proportional
allocation: If the same sampling fraction is used for each stratum.
Non-proportional allocation: if a different sampling fraction is used for each stratum or if the strata
are unequal in size and a fixed number of units is selected from each stratum.

109
Some of the criteria for dividing in to strata could be: Sex (Male, Female), Age (under 18, 18 to 28,
29 to 39,); Occupation (blue-collar, professional), Species of plants or animals, age etc. Note that
stratification results in greater representativeness of the sample and hence adds accuracy.

Example: In order to find the average height of the students in a school of class 1 to class 12, the
height varies a lot as the students in class 1 are of age around 6 years and students in class 10 are of
age around 16 years. So one can divide all the students into different subpopulations or strata such
as Students of class 1, 2 and 3: Stratum 1
- Students of class 4, 5 and 6: Stratum 2
- Students of class 7, 8 and 9: Stratum 3
- Students of class 10, 11 and 12: Stratum 4
- Now draw the samples by SRS from each of the strata 1, 2, 3 and 4. All the drawn samples
combined together will constitute the final stratified sample for further analysis.

Advantages
a. If a correct stratification has been made even a small number of units will form a representative
sample.
b. Achieves different degree of accuracy for different segments of the population.
Disadvantages
a. It is a very difficult task to divide the universe into homogeneous strata.
b. If the strata are overlapping, unsuitable or disproportionate, the selection of the sample may
not be representative.

iii. Cluster Sampling:

Cluster samples are obtained when the population is divided into groups called clusters (the widely
used criteria for forming clusters is geographical proximity). When a cluster is taken as a sampling
unit the procedure of sampling is called cluster sampling.
In cluster sampling, we follow the following steps:
1. Divide population into clusters (usually along geographic boundaries).
2. Randomly sample clusters.

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 3. Measure all units within sampled clusters.

Conditions under which the cluster sampling is used:

Cluster sampling is preferred when
i) No reliable listing of elements is available and it is expensive to prepare it.
ii) Even if the list of elements is available, the location or identification of the units may be
difficult.
iii) A necessary condition for the validity of this procedure is that every unit of the population
under study must correspond to one and only one unit of the cluster so that the total number
of sampling units in the frame may cover all the units of the population under study without
any omission or duplication. When this condition is not satisfied, bias is introduced.
Advantages

1. Significant cost gain.

2. Easier and more practical method which facilitates the field work.
Disadvantages

1. Probability and the representativeness of the sample are sometimes affected, if the number
of the cluster is very large.
2. The results obtained are likely to be less accurate if the number of sampling units in each
cluster is not approximately the same.

iv. Systematic Sampling:

This is a convenient method of sampling when a complete list of the sampling units (sampling
frame) is readily available.

The steps you need to follow are:

 The procedure starts in determining the first element to be included in the sample.
 Then the technique is to take the kth item from the sampling frame.
N
 Let, N  populationsize, n  sample size, k   sampling int erval.
n

 Chose any number between 1 and k . Suppose it is j (1  j  k) .

 The j th unit is selected at first and then ( j  k )th , ( j  2k )th ,....etc until the required
sample size is reached.

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Advantages
a. It is easy to apply in some situations where no easier way to do random sampling.
b. Randomness and probability features are present in this model which makes sample
representative.
Disadvantages
a) It works well only if the complete and up-to-date frame is available and if the units are
randomly arranged.
b) Any hidden periodicity in the list will adversely affect the representativeness of the sample.

Example: Let N =50 and n = 5. So k =10. Suppose first selected number between 1 and 10 is 3.
Then systematic sample consists of units with following serial number 3, 13, 23, 33, 43.

v. Multi-stage Sampling
Multistage sampling combines the simple methods described earlier in a variety of useful ways.
Multi-stage sampling is appropriate when the reference population is large and widely scattered.
Selection is done in stages until the final sampling units are selected. In Multi-stage sampling,
the population is divided in to first stage units called primary sampling units (PSU). Then a
random sample of PSU is made in the first stage; and in the second stage a random sample of
secondary sampling units (SSU) is made from the selected primary sampling units and so on.
The process can be continued for a number of stages.
Advantages
1. It is more flexible in comparison to other methods of sampling.
2. It is of great significant in surveys of underdeveloped areas where an up-to-date and accurate
frame is not generally available for subdivision of the material into reasonably small
sampling units.
Disadvantages
1. Errors are likely to be large in comparison to others.
2. It involves considerable amount of listing of first stage units, second stage units etc.

B. Non Random Sampling or non-probability sampling

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 A sampling method in which a sample is selected on a basis other than probability consideration
such judgment; convenience; prior knowledge etc is called Non-probability sampling. The difference
between non-probability and probability sampling is that non-probability sampling does not involve
randomselection and probability sampling does. In general, researchers prefer probabilistic or
random sampling methods over non-probabilistic ones, and consider them to be more accurate and
rigorous.
In case of non-probability sampling method:
 The probability of inclusion of any units (of population) in a sample is not known.
 The selection of units within a sample involves human judgment rather than pure chance.

The most common types of non probability sampling are:

i) Judgment sampling.
ii) Convenience sampling or haphazard sampling
iii) Quota Sampling.
iv) Volunteer sampling
i. Judgment Sampling - In this case, the person taking the sample has direct or indirect control
over which items are selected for the sample.
 This approach is used when a sample is taken based on certain judgment about the overall
population.
 The underlying assumption is that the investigator will select units that are characteristics of
the population.
 The critical issue here is objectivity: how much can judgment be relied upon to arrive at a
typical sample?
 Judgment sampling is subject to the researcher’s biases & is perhaps even more biased than
haphazard sampling.
 Since any preconceptions the researcher may have are reflected in the sample, large biases
can be introduced if theses preconceptions are in accurate.
 Statisticians often use this method in exploratory studies like pre-testing of questionnaires &
focus groups.

113
  They also prefer to use this method in laboratory settings where the choice of experimental
subjects (i.e. animal, human, vegetables) reflects the investigator’s pre-existing beliefs about
the population.
 One advantage of judgment sampling is the reduced cost& time involved in acquiring the
sample.
ii. Convenience Sampling - In this method, the decision maker selects a sample from the
population in a manner that is relatively easy and [Link] is not normally representative of
the target population b/c sample units are only selected if they can be accessed easily &
conveniently.
 A food critic, for example, may try several appetizers or entrees to judge the quality & the
variety of a menu.
 And television reporters often seek so-called ‘people-on-the street interviewers’ to find out
how people view an issue.
iii. Quota Sampling - In this method, the decision maker requires the sample to contain a certain
number of items with a given characteristic. Many political polls are, in part, quota sampling.
 One of the most common forms of non-probability sampling.
 Sampling is done until a specific number of units (quotas) for various sub-populations
have been selected.
 Since there are no rules as to how these quotas are to be filled, quota sampling is really a
means for satisfying sample size objectives for certain sub-populations.
 The quotas may be based on populations.
 For example, if there are 100 men& 100 women in a population & a sample of 20
are to be drawn to participate in a cola taste challenge, you may want to divide
the sample evenly between the sexes 10 men& 10 women.
 Quota sampling can be considered preferable to other forms of non probability
sampling (judgment sampling) because it forces the inclusion of members of
different sub-populations.

iv. Volunteer sampling: As the term implies, this type of sampling occurs when people volunteer
their services for the study. In psychological experiments or pharmaceutical trials (drug testing),
for example, it would be difficult & unethical to enlist random participants from the general

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 public. In these instances, the sample is taken from a group of volunteers. Sometimes, the
research offers payment to entice responders. In exchange, the volunteers accept the possibility
of the lengthy, demanding or sometimes unpleasant process.
Note: let N  population size, n  sample size.
1. Suppose simple random sampling is used
 We have N n possible samples if sampling is with replacement.
N
 We have   possible samples if sampling is without replacement.
n
2. After this onwards, we consider that samples are drawn from a given population using
simple random sampling.

7.3 Sampling Distribution

Statistical inference draws conclusions about population on the basis of [Link] data are
summarized by statistics such as the sample mean and the sample standard deviation. When the data
are produced by random sampling or randomized experimentation, a statistic is a random variable
that obeys the laws of probability theory. The link between probability and data is formed by the
sampling distributions of statistics. A sampling distribution shows how a statistic would vary in
repeated data production.
Definition: A sampling distribution is a probability distribution that determines probabilities of the
possible values of a sample statistic.
Each statistic has a sampling distribution. A sampling distribution is simply a type of probability
distribution. Unlike the distributions studied so far, a sampling distribution refers not to individual
observations but to the values of statistic computed from those observations, in sample after sample.
Sampling distributions reflect the sampling variability that occurs in collecting data and using
sample statistics to estimate parameters. A sampling distribution of statistic based on n observations
is the probability distribution for that statistic resulting from repeatedly taking samples of size n,
each time calculating the statistic value. The form of sampling distribution is often known
theoretically. We can then make probabilistic statements about the value of statistic for one sample
of some fixed size n.

115
7.3.1 Sampling Distribution of the Sample Mean
 Sampling distribution of the sample mean is a theoretical probability distribution that shows
the functional relationship between the possible values of a given sample mean based on
samples of size n and the probability associated with each value, for all possible samples of
size n drawn from that particular population.
 There are commonly three properties of interest of a given sampling distribution.
 Its Mean
 Its Variance
 Its Functional form
Steps for the construction of Sampling Distribution of the mean
1. From a finite population of size N , randomly draw all possible samples of size n.
2. Calculate the mean for each sample.
3. Summarize the mean obtained in step 2 in terms of frequency distribution or relative
frequency distribution.

Example: Suppose we have a population of size N  5 , consisting of the age of five children: 6,
8, 10, 12, and 14. Take samples of size 2 with replacement and construct sampling distribution of
the sample mean.
Solution: N  5, n  2
 We have N n  52  25 possible samples since sampling is with replacement.
Step 1: Draw all possible samples:

6 8 10 12 14
6 (6, 6) (6, 8) (6, 10) (6, 12) (6, 14)
8 (8,6) (8,8) (8,10) (8,12) (8,14)
10 (10,6) (10,8) (10,10) (10,12) (10,14)
12 (12,6) (12,8) (12,10) (12,12) (12,14)
14 (14,6) (14,8) (14,10) (14,12) (14,14)

Step 2: Calculate the mean for each sample:

116
 6 8 10 12 14
6 6 7 8 9 10
8 7 8 9 10 11
10 8 9 10 11 12
12 9 10 11 12 13
14 10 11 12 13 14

Step 3: Summarize the mean obtained in step 2 in terms of frequency distribution.

X Frequency
6 1
7 2
8 3
9 4
10 5
11 4
12 3
13 2
14 1

a) Find the mean of X , say  X

X  X f i i

250
 10  
f i 25

b) Find the variance of X , say  X 2

, X
2

(X  
i X
)2 fi

100
 4 2
f i 25

Remark:
1. In general if sampling is with replacement

2
X 2

n
2. If sampling is without replacement
2  N n
X2   
n  N 1 
3. In any case the sample mean is unbiased estimator of the population mean. i.e.
 X    E(X )   (Show!)

117
  Sampling may be from a normally distributed population or from a non-normally distributed
population.

 When sampling is from a normally distributed population, the distribution of X will possess
the following property.

1. The distribution of X will be normal

2. The mean of X is equal to the population mean , i.e.  X 

3. The variance of X is equal to the population variance divided by the sample size, i.e.
2
 X ~ N ( , )
2 n
X 
2

n X 
Z  ~ N (0,1)
 n

Exercise 7.3
1. Suppose we have a population of size N  5 , consisting of the age of five children: 6, 8, 10,
12, and 14. Take samples of size 2 without replacement and construct sampling distribution of the
sample mean.

7.4 The Central Limit Theorem

Given a population of any functional form with mean  and finite variance  , the sampling
2

distribution of X , computed from samples of size n from the population will be approximately
normalwhen the sample size n is [Link] is, when n is large, then

2
X ApproximatelyNormal (  , )
n
In practice, the normal approximation for X is usually adequate when n isgreater than 30. The
central limit theorem allows us to use normal probabilitycalculations to answer questions about
sample means from many observationseven when the population distribution is not normal.

Example 1: The mean weight of 500 male students at a certain university is 151 pounds (lb) and the
standard deviation is 15 lb. Assuming that the weights are normally distributed. Suppose that a

118
sample of 64 students is taken, what is the probability that the weight in the sample is more than
154.75 lb?
Solution: As we have taken a large (n=64) sample we can use the Central Limit Theorem. This says
that the mean weight of the sample can be approximated by a normal random variable with a mean
of 151 and a variance of 225. If we let X be the mean weight of the students, it is required to find

P( X >154.75) = X  N 151,225/ 64

154.75  151
P( X >154.75) = p( X   > ) = P (Z>2.00) = 0.5 – 0.4772 = 0.0228.
/ n 15 / 8
Case-III: When sampling is from normally distributed population with unknown population
variance,

a) If the sample size is large, Z  X    N (0, 1), where S is an estimate of  .

S/ n

b) If the sample size is small (n<30), t  X   t(n-1). t has t-distribution with (n-1) degree of freedom,
S/ n

where S is an estimate of  .

Review Exercises on Chapter Seven

1. Describe briefly the difference between
a) Census and sample survey
b) Sampling and non sampling error
c) Sampling frame and sampling units
2. Why do researchers usually select sample elements from a given population?
3. Mention some of the disadvantage of sampling
4. In each of the following statements identify whether the sampling used are: random, systematic,
stratified, cluster or convenience
a) An instructor wants to select a random sample of 20 students from a population of 180 students
using a table of random numbers.
b) An economist surveys all households from each of the six “kebeles” of the city.
c) A telephone company selects every 20th pager from the assembly line.
d) A news reporter of ETV gets opinion about “GEMENA” drama by interviewing people as they
pass “THE CHURCHIL ROAD”.

119
e) A lawyer asks a pickpocket man to now other robbers.
5. Consider a normal population with mean μ = 82 and standard deviation σ = 12.
a) If a random sample of size 64 is selected, what is the probability that the sample mean 𝑋̅will lie
between 80.8 and 83.2?
b) With a random sample of size 100, what is the probability that the sample mean 𝑋̅will lie between
80.8 and 83.2?
6. Describe how to obtain a systematic random sample of 24 VISA user customers from a
population of 360 customers in Dashen bank.

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 CHAPTER EIGHT
8. ESTIMATION AND HYPOTHESIS TESTING

Objectives:
After completing this chapter, you should be able to
 Define a point estimate and interval estimate.
 Find the confidence interval for the meanwhen σ is known.
 Find the confidence interval for the meanwhen σ is unknown.
 Understand the definitions used in hypothesis testing.
 State the null and alternative hypotheses.
 Find critical values for the z test
 State the five steps used in hypothesis testing.
 Test means when σ is known, using the z test.
 Test means when σ is unknown, using the t test.
 Explain the relationship between type I and type II errors and the power of a test.

8.1 Introduction
Inference is the process of making interpretations or conclusions from sample data for the totality
of the [Link] is only the sample data that is ready for inference.
In statistics there are two ways though which inference can be made.
 Statistical estimation
 Statistical hypothesis testing.

121
 Population
Inference Analyzed

Numerical
Sample data

Data analysis is the process of extracting relevant information from the summarized data.

8.2 Statistical Estimation

It is the procedure of using a sample statistic to estimate a population parameter. This is one wayof
making inference about the population parameter where the investigator does not have any prior
notion about values or characteristics of the population parameter.

Statistical estimation is divided into two main categories:

i. Point Estimation
ii. Interval Estimation.

8.2.1 Point Estimation

When we use a single value of a statistic to estimate the corresponding parameter of a population, it
is called point estimation.

The object of point estimation is to calculate, from the sample data, a single number that is likely to
be close to the unknown value of the population parameter. The available information is assumed to
be in the form of a random sample X1,X2, . . . ,Xnof size n taken from the population. The object is
to formulate a statistic such that its value computed from the sample data would reflect the value of
the population parameter as closely as possible.

122
Definition8.1. A point estimator of a unknown population parameter is a statistic that estimates the
value of that parameter. A point estimate of a parameter is the value of a statistic that is used to
estimate the parameter. (Agresti & Finlay, 1997 and Weiss, 1999)
For instance, to estimate a population means μ, perhaps the most intuitivepoint estimator is the
sample mean:
𝑋1 + 𝑋2 + ⋯ + 𝑋𝑛
𝑋̅ =
𝑛
Once the observed values x1, x2, . . . , xnof the random variables Xiare available, we can actually
calculate the observed value of the sample mean𝑥̅ , which is called a point estimate of μ.

Suppose a college president wishes to estimate the average age of students attending classes this
semester. The president could select a random sample of 100 students and find the average age of
∑ 100
𝑥𝑖
these students say, 𝑋̅ = 𝑖=1 is an estimator for the population mean and 𝑋̅= 22.3 yearsis an
𝑛

estimate, which is one of the possible value of𝑋̅.From the sample mean, the president could infer
that the average age of all the students is 22.3 years. This type of estimate is called a point estimate.

Properties of a Good Estimator

Let 𝜃̂ be an estimator of θ.
1. The estimator should be an unbiased estimator. That is, the expected value or the mean of the
estimates obtained from samples of a given size is equal to the parameter being estimated. i.e.
E(𝜃̂) = θ.
2. The estimator should be consistent. For a consistent estimator, as sample size increases, the
value of the estimator approaches the value of the parameter estimated. i.e. 𝜃̂ gets closer to θ as
the sample size increases.
3. The estimator should be a relatively efficient estimator. That is, of all the statistics that can be
used to estimate a parameter, the relatively efficient estimator has the smallest variance.

123
8.2.1.1Point estimators of the population mean and standard deviation
The sample mean 𝑋̅is the obvious point estimator of a population mean μ. In fact, 𝑋̅is unbiased, and
it is relatively efficient for most population distributions. It is the point estimator, denoted by µ̂, used
in this text:
𝑋1 + 𝑋2 + ⋯ + 𝑋𝑛
µ̂ = 𝑋̅ =
𝑛
Moreover, the sample standard deviation s is the most popular point estimate of the population
standard deviation σ. That is,

∑𝑛𝑖=1(𝑥𝑖 − 𝑥̅ )2
𝜎̂ = 𝑠 = √
𝑛−1
8.2.2 Interval Estimation
For point estimation, a single number lies in the forefront even though a standard error is attached.
Instead, it is often more desirable to produce an interval of values that is likely to contain the true
value of the unknown parameter.
A confidence interval estimate of a parameter consists of an interval of numbers obtained from a
point estimate of the parameter together with a percentage that specifies how confident we are that
the parameter lies in the interval. The confidence percentage is called the confidence level.
It deals with identifying the upper and lower limits of a parameter. The limits by themselves are
random variable.

Estimate ± critical value × Standard error of the estimator

[Link] Confidence interval estimation of the population mean

Although X possesses nearly all the qualities of a good estimator, because of sampling error, we
know that it's not likely that our sample statistic will be equal to the population parameter, but instead
will fall into an interval of values. We will have to be satisfied knowing that the statistic is "close
to" the parameter. That leads to the obvious question, what is "close"?
We can phrase the latter question differently: How confident can we be that the value of the statistic
falls within a certain "distance" of the parameter? Or, what is the probability that the parameter's
value is within a certain range of the statistic's value? This range is the confidence interval.

124
The confidence levelis the probability that the value of the parameter falls within the range specified
by the confidence interval surrounding the statistic.

There are different cases to be considered to construct confidence intervals.

Case 1:If sample size is large or if the population is normal with known variance.

Recall the Central Limit Theorem, which applies to the sampling distribution of the mean of a
sample. Consider samples of size n drawn from a population, whose mean is  and standard
deviation is  with replacement and order important. The population can have any frequency

distribution. The sampling distribution of X will have a mean  x   and a standard deviation

x  , and approaches a normal distribution as n gets large. This allows us to use the normal
n
distribution curve for computing confidence intervals.
X 
Z  has a normal distribution with mean  0 and var iance  1
 n

   X  Z n
 X , where  is a measure of error.
  Z n
 For the interval estimator to be good the error should be small. How it be small?
 By making n large
 Small variability
 Taking Z small
 To obtain the value of Z, we have to attach this to a theory of chance. That is, there is an area
of size 1   such that
P( Z  2  Z  Z  2 )  1  
Where   is the probability that the parameterlies outsidethe int erval
Z  2  s tan ds for the s tan dard normal var iableto the right of which
 2 probability lies, i.e P( Z  Z  2 )   2

For 𝑋̅, we then have

125
 X 
 P ( Z 2   Z 2 )  1  
 n
 P ( X  Z 2  n    X  Z 2  n)  1

Hence the above probability statement

 ( X  Z 2  n , X  Z 2  n ) is a1001   % conifidenc e int erval for 

But usually 
2
is not known, in that case we estimate by its point estimator S2

 ( X  Z 2 S n , X  Z 2 S n ) is a1001   % conifidenc e int erval for 

Here are the Z values corresponding to the most commonly used confidence levels.
100(1   )   2 Z 2
%
90 0.10 0.05 1.645
95 0.05 0.025 1.96
99 0.01 0.005 2.58

Case 2: If sample size is small and the population variance,  is not known.
2

X 
t has t distributi on with n  1 deg rees of freedom.
S n

 ( X  t 2 S n , X  t 2 S n ) is a1001   % conifidenc e int erval for 

The unit of measurement of the confidence interval is the standard error. This is just the standard
deviation of the sampling distribution of the statistic.
Examples:
1. From a normal sample of size 25 a mean of 32 was found .Given that the population standard
deviation is 4.2. Find
a) A 95% confidence interval for the population mean.
b) A 99% confidence interval for the population mean.

126
 Solution:

X  32,   4.2, 1    0.95    0.05,  2  0.025

 Z 2  1.96 from table.
a)  The required int erval will be X  Z 2  n
 32  1.96 * 4.2 25
 32  1.65
 (30.35, 33.65)

X  32,   4.2, 1    0.99    0.01,  2  0.005

 Z 2  2.58 from table.
 The required int erval will be X  Z 2  n
 32  2.58 * 4.2 25
 32  2.17
 (29.83, 34.17)

2. A drug company is testing a new drug which is supposed to reduce blood pressure. From the six
people who are used as subjects, it is found that the average drop in blood pressure is 2.28 points,
with a standard deviation of .95 points. What is the 95% confidence interval for the mean change
in pressure?

Solution:

X  2.28, S  0.95, 1    0.95    0.05,  2  0.025

 t 2  2.571 with df  5 from table.
 The required int erval will be X  t 2 S n
 2.28  2.571 * 0.95 6
 2.28  1.008
 (1.28, 3.28)

That is, we can be 95% confident that the mean decrease in blood pressure is between 1.28 and
3.28 points.

127
 Exercises: 8.1
1. An electrical firm manufactures light bulbs that have a length of life that is approximately
normally distributed with a standard deviation of 40 hours. If a random sample of 30 bulbs has an
average life of 780 hours, find a 99% confidence interval for the population mean of all bulbs
produced by this firm.
2. A random sample of 400 households was drawn from a town and a survey generated data on
weekly earning. The mean in the sample was Birr 250 with a standard deviation Birr 80. Construct
a 95% confidence interval for the population mean earning.

3. A major truck has kept extensive records on various transactions with its customers. If a random
sample of 16 of these records shows average sales of 290 liters of diesel fuel with a standard
deviation of 12 liters, construct a 95% confidence interval for the mean of the population sampled.

8.2 Hypothesis Testing

This is also one way of making inference about population parameter, where the investigator has
prior notion about the value of the parameter.
`Definitions:
 Statistical hypothesis: is an assertion or statement about the population whose plausibility is to
be evaluated on the basis of the sample data.
 Test statistic: is a statistics whose value serves to determine whether to reject or accept the
hypothesis to be tested. It is a random variable.
 Statistic test: is a test or procedure used to evaluate a statistical hypothesis and its value depends
on sample data.

There are two types of hypothesis:

Null hypothesis:
 It is the hypothesis to be tested.
 It is the hypothesis of equality or the hypothesis of no difference.
 Usually denoted by H0.

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 Alternative hypothesis:

 It is the hypothesis available when the null hypothesis has to be rejected.

 It is the hypothesis of difference.
 Usually denoted by H1 or Ha.
General steps in hypothesis testing:

1. Specify the null hypothesis (H0) and the alternative hypothesis (H1).
2. Specify the significance level, 
3. Identify the sampling distribution (if it is Z or t) of the estimator.
4. Identify the critical region.
5. Calculate a statistic analogous to the parameter specified by the null hypothesis.
6. Making decision.
7. Summarization of the result.

8..2.1 Hypothesis testing about the population mean,  :

Suppose the assumed or hypothesized value of  is denoted by  0 , then one can formulate two
sided (1) and one sided (2 and 3) hypothesis as follows:
1. H 0 :   0 vs H1 :    0
2. H 0 :   0 vs H1 :   0
3. H 0 :   0 vs H1 :   0
Case 1: When sampling is from a normal distribution with  2 known
[Link] relevant test statistic is
X  0
Z cal 
 n
[Link] specifying  we have the following regions (critical and acceptance) on the standard
normal distribution corresponding to the above three hypothesis.

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 Summary table for decision rule:

H0 Reject H0 if Accept H0 if Inconclusive if

  0 Z cal  Z 2 Z cal  Z 2
Z cal  Z 2 or Z cal  Z 2

  0 Z cal  Z Z cal  Z Z cal  Z

  0 Z cal  Z Z cal  Z Z cal  Z

Case 2: When sampling is from a normal distribution with  2 unknown and small sample size
[Link] relevant test statistic is
X  0
t cal  ~ t with n  1 deg rees of freedom.
S n
[Link] specifying  we have the following regions on the student t-distribution corresponding to
the above three hypothesis.
H0 Reject H0 if Accept H0 if Inconclusive if

  0 tcal  t 2 tcal  t 2
tcal  t 2 or tcal  t 2

  0 tcal  t tcal  t tcal  t

  0 tcal  t tcal  t tcal  t

Case 3: When sampling is from a non- normally distributed population or a population whose
functional form is unknown.
[Link] a sample size is large one can perform a test hypothesis about the mean by using:
X  0
Z cal  , if  2 is known.
 n
X  0
 , if  2 is unknown.
S n
[Link] decision rule is the same as case I.
Examples:

130
 [Link] the hypotheses that the average height content of containers of certain lubricant is 10 liters if
the contents of a random sample of 10 containers are 10.2, 9.7, 10.1, 10.3, 10.1, 9.8, 9.9, 10.4,
10.3, and 9.8 liters. Use the 0.01 level of significance and assume that the distribution of contents
is normal.
Solution:
Let   Population mean. ,  0  10
Step 1: Identify the appropriate hypothesis

H 0 :   10 vs H1 :   10
Step 2: select the level of significance,   0.01( given)
Step 3: Select an appropriate test statistics
t- Statistic is appropriate because population variance is not known and the sample size is also
small.
Step 4: identify the critical region.
Here we have two critical regions since we have two tailed hypothesis
The critical region is tcal  t0.005 (9)  3.2498
 (3.2498, 3.2498) is accep tan ce region.
Step 5: Computations:

X  10.06, S  0.25

X   0 10.06  10
 t cal    0.76
S n 0.25 10
Step 6: Decision

Accept H0 , since tcal is in the acceptance region.

Step 7: Conclusion

At 1% level of significance, we have no evidence to say that the average height content of
containers of the given lubricant is different from 10 litters, based on the given sample data.
[Link] mean life time of a sample of 16 fluorescent light bulbs produced by a company is computed
to be 1570 hours. The population standard deviation is 120 hours. Suppose the hypothesized value

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 for the population mean is 1600 hours. Can we conclude that the life time of light bulbs is
decreasing?
(Use   0.05 and assume the normality of the population)
Solution:
Let   Population mean. , 0  1600
Step 1: Identify the appropriate hypothesis

H 0 :   1600 vs H1 :   1600

Step 2: select the level of significance,   0.05 ( given)

Step 3: Select an appropriate test statistics

Z- Statistic is appropriate because population variance is known.

Step 4: identify the critical region.

The critical region is Z cal  Z 0.05  1.645

 (1.645, ) is accep tan ce region.

Step 5: Computations:

X  0 1570  1600
Z cal    1.0
 n 120 16

Step 6: Decision

Accept H0, since Zcal is in the acceptance region.

Step 7: Conclusion

At 5% level of significance, we have no evidence to say that that the life time of light bulbs is
decreasing, based on the given sample data.

Exercise 8.2
[Link] is known in a pharmacological experiment that rats fed with a particular diet over a certain
period gain an average of 40 gms in weight. A new diet was tried on a sample of 20 rats yielding
a weight gain of 43 gms with variance 7 gms. Test the hypothesis that the new diet is an
improvement assuming normality.

132
 8.3 Types and Size of Errors
 Testing hypothesis is based on sample data which may involve sampling and non sampling
errors.
 The following table gives a summary of possible results of any hypothesis test:
Decision

Reject H0 Don't reject H0

H0 Type I Error Right Decision

Truth
H1 Right Decision Type II Error

 Type I error: Rejecting the null hypothesis when it is true.

 Type II error: Failing to reject the null hypothesis when it is false.
NOTE:

2. There are errors that are prevalent in any two choice decision making problems.
3. There is always a possibility of committing one or the other errors.
4. Type I error (  ) and type II error (  ) have inverse relationship and therefore, can not be
minimized at the same time.
 In practice we set  at some value and design a test that minimize  . This is because a type I error
is often considered to be more serious, and therefore more important to avoid, than a type II error.

8.4 Test of Association

Suppose we have a population consisting of observations having two attributes or qualitative
characteristics say A and B. If the attributes are independent then the probability of possessing
both A and B is PA*PB.
Where: PA is the probability that a number has attribute A. PB is the probability that a number
has attribute B.
- Suppose A has r mutually exclusive and exhaustive classes.B has c mutually exclusive and
exhaustive classes. The entire set of data can be represented using r *c contingency table.

133
 B
A B1 B2 . . Bj . Bc Total
A1 O11 O12 O1j O1c R1
A2 O21 O22 O2j O2c R2
.
.
Ai Oi1 Oi2 Oij Oic Ri
.
.
Ar Or1 Or2 Orj Orc
Total C1 C2 Cj n

- The chi-square procedure test is used to test the hypothesis of independency of two attributes For
instance we may be interested
 Whether the presence or absence of hypertension is independent of smoking habit or not.
 Whether the size of the family is independent of the level of education attained by the
mothers.
 Whether there is association between father and son regarding boldness.
 Whether there is association between stability of marriage and period of acquaintance ship
prior to marriage.

- The  2 statistic is given by:

 (Oij  eij ) 2 
 ~  ( r 1)( c 1)
r c
 2 cal   
2

i 1 j 1 
 eij 

Where Oij  the number of units that belongto categoryi of A and j of B.

eij  Expected frequencythat belongto categoryi of A and j of B.

- The eij is given by :

Where Ri  the i th row total.
Ri * C j
eij  C j  the j th column total.
n
n  total number of oservations

r c r c
Remark: n   Oij   eij
i 1 j 1 i 1 j 1

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- The null and alternative hypothesis may be stated as:
H 0 : Thereis no association between A and B.
H1 : not H 0 ( Thereis association between A and B).

Decision Rule: Reject H0 for independency at  level of significance if the calculated value of 2
exceeds the tabulated value with degree of freedom equal to (r  1)(c  1) .

 (Oij  eij ) 2 
r c
 Reject H 0 if  cal   
2
  2( r 1)( c 1) at 

i 1 j 1  eij 
Examples:

1. A geneticist took a random sample of 300 men to study whether there is association between
father and son regarding boldness. He obtained the following results.
Son

Father Bold Not

Bold 85 59

Not 65 91

Using   5% , test whether there is association between father and son regarding boldness.
Solution:
H 0 : Thereis no association between Father and Son regardingboldness.
H1 : not H 0

- First calculate the row and column totals

R1  144, R2  156, C1  150, C2  150

- Then calculate the expected frequencies( eij’s)

Ri * C j
eij 
n

 e11  R1 * C1  144 *150  72 e12  R1 * C2 

144 * 150
 72
n 300 n 300

135
 R2 * C1 156 * 150 R * C2 156 * 150
e21    78 e22  2   78
n 300 n 300

- Obtain the calculated value of the chi-square.

2 2 (Oij  eij ) 2 
 cal   
2


i 1 j 1  eij 
(85  72) 2 (59  72) 2 (65  78) 2 (91  78) 2
     9.028
72 72 78 78

- Obtain the tabulated value of chi-square

  0.05
Degreesof freedom (r  1)(c  1)  1*1  1
 02.05 (1)  3.841 from table.

- The decision is to reject H0 since  2 cal   02.05 (1)

Conclusion: At 5% level of significance we have evidence to say there is association between
father and son regarding boldness, based on this sample data.

2. Random samples of 200 men, all retired were classified according to education and number
of children is as shown below
3.

Education Number of children

level
0-1 2-3 Over 3

Elementary 14 37 32

Secondary 31 59 27
and above

Test the hypothesis that the size of the family is independent of the level of education
attained by fathers. (Use 5% level of significance)
Solution:
H 0 : There is no association between the size of the family and the level of
educationattained by fathers.
H1 : not H 0 .

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 - First calculate the row and column totals
R1  83, R2  117, C1  45, C2  96, C3  59

- Then calculate the expected frequencies( eij’s)

Ri * C j  e11  18.675, e12  39.84, e13  24.485
eij 
n e21  26.325, e22  56.16, e23  34.515

- Obtain the calculated value of the chi-square.

2 3  (Oij  eij ) 2 
 2 cal    
i 1 
j 1  eij 
(14  18.675) 2 (37  39.84) 2 (27  34.515) 2
   ...   6.3
18.675 39.84 34.515
- Obtain the tabulated value of chi-square
  0.05
Degreesof freedom  (r  1)(c  1)  1 * 2  2
 02.05 (2)  5.99 from table.

- The decision is to reject H0 since  2 cal   02.05 (2)

Conclusion: At 5% level of significance we have evidence to say there is association between the
size of the family and the level of education attained by fathers, based on this sample data.

Review exercise on chapter eight

1. A survey of 30 adults found that the mean age of a person’s primary vehicle is 5.6 years.
Assuming the standard deviation of the population is 0.8 year, find the best point estimate of
the population mean and the 99% confidence interval of the population mean.
2. Ten randomly selected people were asked how long they slept at night. The mean time was
7.1 hours, and the standard deviation was 0.78 hour. Find the 95% confidence interval of the
mean time. Assume the variable is normally distributed.
3. A researcher reports that the average salary of assistant professors is more than $42,000. A
sample of 30 assistant professors has a mean salary of $43,260. At a =0.05, test the claim
that assistant professors earn more than $42,000 per year. The standard deviation of the
population is $5230.
4. The Medical Rehabilitation Education Foundation reports that the average cost
ofrehabilitation for stroke victims is $24,672. To see if the average cost of rehabilitationis
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different at a particular hospital, a researcher selects a random sample of 35 strokevictims at
the hospital and finds that the average cost of their rehabilitation is $25,[Link] standard
deviation of the population is $3251. At a =0.01, can it be concludedthat the average cost of
stroke rehabilitation at a particular hospital is different from $24,672?

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 CHAPTER NINE
9. SIMPLE LINEAR REGRESSION AND CORRELATION

Objectives:
After completing the topic, the students will be able to:
 Determine the relationship between variables.
 Find the fitted regression line of the two variables.
 Draw and describe scatter diagram.
 Interpret the slope and intercept of the fitted regression line.
 Calculate and interpret the correlation coefficient.
 Find and interpret the coefficient of determination.
 Calculate and Interpret explained and unexplained variations.
 Calculate and interpret the spearman’s correlation coefficient.

9.1 Introduction
In Chapter 8, two areas of inferential statistics—confidence intervals and hypothesis testing—were
explained. Another area of inferential statistics involves determining whether a relationship exists
between two or more numerical or quantitative variables. For example, a businessperson may want
to know whether the volume of sales for a given month is related to the amount of advertising the
firm does that month. Educators are interested in determining whether the number of hours a student
studies is related to the student’s score on a particular exam. Medical researchers are interested in
questions such as,
Is caffeine related to heart damage? Or is there a relationship between a person’s age and his or her
blood pressure? A zoologist may want to know whether the birth weight of a certain animal is related
to its life span. These are only a few of the many questions that can be answered by using the
techniques of correlation and regression analysis. Linear regression and correlation is studying and
measuring the linear relationship among two or more variables. When only two variables are
involved, the analysis is referred to as simple correlation and simple linear regression analysis, and
when there are more than two variables the term multiple regression and partial correlation is used.

139
Correlation is a statistical method used to determine whether a relationship between variables
exists.
Regression is a statistical method used to describe the nature of the relationship between variables,
that is, positive or negative, linear or nonlinear.

9.2 Simple Linear Regression

Simple linear regression refers to the linear relationship between two variables. We usually denote
the dependent variable by Y and the independent variable by X.A simple regression line is the line
fitted to the points plotted in the scatter diagram, which would describe the average relationship
between the two variables. Therefore, to see the type of relationship, it is advisable to prepare scatter
plot before fitting the model.
Suppose we have one independent variable X  ( X 1 , X 2 ,... X n ) and the dependent Y  (Y1 , Y2 ,...Yn )
a simple linear regression model Y on X is given as

Model: Y = α + βX + ε, where
 Y is the response variable (also called dependent variable)
 X is the predictor (also called independent or explanatory variable)
 αand 𝛽are respectively the intercept of the regression line on the Y axis when X = 0 and the
slope of the regression line.
 ε is the error, residual (also called random deviation).

To estimate the parameters (  and  ) we have several methods:

 The free hand method
 The semi-average method
 The least square method
 The maximum likelihood method
 The method of moments
 Bayesian estimation technique.

140
The above model is estimated by: 𝑌̂𝑖 = 𝛼̂ + 𝛽̂ Xi.
𝛼̂and 𝛽̂ are found by minimizing SSE    2   (Yi  Yˆi ) 2
Where: Yi  observedvalue
Yˆ  estimatedvalue  a  bX
i i

And this method is known as OLS (ordinary least square)

To minimize this function, first we take the partial derivatives of ∑ 𝜀 2 with respect to 𝛼̂ 𝑎𝑛𝑑 𝛽̂
[Link] the partial derivatives are equated to zero separately and result in the following
normal equations respectively.
𝑛 𝑛

∑ 𝑌𝑖 = 𝑛𝛼̂ + 𝛽̂ ∑ 𝑋𝑖
𝑖=1 𝑖=1
𝑛 𝑛 𝑛

∑ 𝑋𝑖 𝑌𝑖 = 𝛼̂ ∑ 𝑋𝑖 + 𝛽̂ ∑ 𝑋𝑖2
𝑖=1 𝑖=1 𝑖=1
Solving these normal equations simultaneously (i.e. Minimizing SSE    2 ) gives

𝛽̂   i
( X  X )(Yi  Y )

 XY  nXY
(X 2
i  X)  X 2  nX 2
(∑ 𝑥2 ) (∑ 𝑦) − (∑ 𝑥)(∑ 𝑥𝑦) ̅ − 𝑏𝑋
̅
𝛼̂ = 2
=𝑌
𝑛(∑ 𝑥2 ) − (∑ 𝑥)
The estimated (fitted) regression line isgiven by
𝑌̂𝑖 = 𝛼̂ + 𝛽̂ Xi
Before estimating the regression coefficients, it would be wise to plot the observed data on a graph
known as a scatter diagram. Scatter diagram is a plot of all ordered pairs (xi ,yi )on the coordinate
plane which helps to observe relationship between two variables. This diagram gives a preliminary
idea on the type of relationship the two variables have.
Regression analysis is useful in predicting the value of one variable from the given value of
another variable, 𝑌̂𝑖 = 𝛼̂ + 𝛽̂ Xi.

Example 1: The following data shows the score of 12 students for Accounting and Statistics
examinations.
a) Calculate a simple correlation coefficient
141
 b) Fit a regression equation of Statistics on Accounting using least square estimates.
c) Predict the score of Statistics if the score of accounting is 85.

Accounting Statistics
X2 Y2 XY
X Y
1 74.00 81.00 5476.00 6561.00 5994.00
2 93.00 86.00 8649.00 7396.00 7998.00
3 55.00 67.00 3025.00 4489.00 3685.00
4 41.00 35.00 1681.00 1225.00 1435.00
5 23.00 30.00 529.00 900.00 690.00
6 92.00 100.00 8464.00 10000.00 9200.00
7 64.00 55.00 4096.00 3025.00 3520.00
8 40.00 52.00 1600.00 2704.00 2080.00
9 71.00 76.00 5041.00 5776.00 5396.00
10 33.00 24.00 1089.00 576.00 792.00
11 30.00 48.00 900.00 2304.00 1440.00
12 71.00 87.00 5041.00 7569.00 6177.00
Total 687.00 741.00 45591.00 52525.00 48407.00
Mean 57.25 61.75

a)

The Coefficient of Correlation (r) has a value of 0.92. This indicates that the two variables are
positively correlated (Y increases as X increases).

b)

142
  Yˆ  7.0194  0.9560X is the estimated regressionline.
c) Insert X=85 in the estimated regression line.

Yˆ  7.0194  0.9560X
 7.0194  0.9560(85)  88.28

Exercise 9.1
1. A car rental agency is interested in studying the relationship between the distance driven in
kilometer (Y) and the maintenance cost for their cars (X in birr). The following summarized
information is given based on samples of size 5. (Assignment )

  147,000,000 i 1 Yi  314 i 1 X i  23,000 , i 1Yi  36 ,

5 2 5 2 5 5
i 1
Xi


5
i 1
X i Yi  212, 000

a. Find the least squares regression equation of Y on X

b. Compute the correlation coefficient and interpret it.
c. Estimate the maintenance cost of a car which has been driven for 6 km

143
 9.3Simple Correlationand Coefficient of Determination
9.3.1 Simple correlation (r)
Suppose we have two variables X  ( X 1 , X 2 ,... X n ) and Y  (Y1 , Y2 ,...Yn ) .We may want to describe
the type & strength of relationship between the independent variable X and the dependent variable
Y. We can give these two by applying an index called simple correlation coefficient. The population
correlation coefficient is represented by 𝜌 and its estimator by r. The correlation coefficient r is also
called Pearson’s correlation coefficient since it was developed by Karl Pearson.
The correlation coefficient between X and Y denoted by r is given by

r
 ( X  X )(Y  Y )
i i
and the short cut formula is
 ( X  X )  (Y  Y )
i
2
i
2

n XY  ( X )( Y )
r
[ n  X 2  ( X ) 2 ] [ n  Y 2  ( Y ) 2

r
 XY  nXY
[ X  nX ] [ Y
2 2 2
 nY 2 ]

Possible Relationships between Variables

 When higher values of X are associated with higher values of Y and lower values of X are
associated with lower values of Y, then the correlation is said to be positive or direct.
Examples:
 Income and expenditure
 Number of hours spent in studying and the score obtained
 Height and weight
 Distance covered and fuel consumed by car.
 When higher values of X are associated with lower values of Y and lower values of X are
associated with higher values of Y, then the correlation is said to be negative or inverse.

144
Examples:
 Demand and supply
 Income and the proportion of income spent on food.
The correlation between X and Y may be one of the following
1. Perfect positive (slope=1)
2. Positive (slope between 0 and 1)
3. No correlation (slope=0)
4. Negative (slope between -1 and 0)
5. Perfect negative (slope=-1)

Remark: Always this r lies between -1 and 1 inclusively and it is also symmetric.
Interpretation of r :
[Link] positive linear relationship ( if r  1)

[Link] Positive linear relationship ( if r is between 0 and 1)

[Link] linear relationship ( if r  0)

[Link] Negative linear relationship ( if r is between -1 and 0)

[Link] negative linear relationship ( if r  1)

Example:Calculate the simple correlation between mid semester and final exam scores of
10 students (both out of 50)
Student Mid Exam(X) Final Exam(Y)
1 31 31
2 23 29
3 41 34
4 32 35
5 29 25
6 33 35
7 28 33
8 31 42
9 31 31
10 33 34

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Solution:
n  10, X  31.2, Y  32.9, X 2  973.4, Y 2  1082.4
 XY  10331, X 2
 9920, Y 2
 11003

r
 XY  nXY
[ X 2  nX 2 ] [ Y 2  nY 2 ]
10331  10(31.2)(32.9)

(9920  10(973.4)) (11003  10(1082.4))
66.2
  0.363
182.5
This means mid semester exam and final exam scores have a slightly positive correlation.
Exercise 9.2
1. The following data were collected from a certain household on the monthly income (X) and
consumption (Y) for the past 10 months. Compute the simple correlation coefficient.
X: 650 654 720 456 536 853 735 650 536 666
Y: 450 523 235 398 500 632 500 635 450 360

9.3.2Coefficient of Determination (r2)

The square of the correlation coefficient, r2, is called the coefficient of determination. It measures
the variation in the dependent Y explained by the simple linear regression of Y on X.

i.e r 2 
 (Yˆ  Y ) 2

 (Y  Y ) 2

Where r  the simple correlation coefficient.

 r 2 measuresthe proportion of the variation in Y explained by the regression of Y on X.

 1  r 2 measures the unexplained proportion and is called coefficient of indetermination.

Example: If r = 0.9, then r2 = 0.81 and 1- r2 =0.19. Approximately 81% of the variation in the
dependent variable, Y, is explained by the simple linear regression of Y on X fitted on sample data.
The remaining, 1-r2, 19 % of the variation in Y is unexplained by the simple linear regression of Y
on X fitted on sample data.

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 EXERCISES 9.3
1. The research director of the Saving and Loan Bank collected 25 observation of montage interest
rates X and number of house sales Y at each interest rate. The director computed that,
∑ 𝑥𝑖 = 125, ∑ 𝑦𝑖 = 100, ∑ 𝑥𝑖 𝑦𝑖 = 520 , ∑ 𝑥𝑖2 = 650 , ∑ 𝑦𝑖2 = 436.
Compute and Interpret:
a. Coefficient of correlation.
b. The coefficient of determination.

9.4Spearman’s Rank Correlation Coefficient

The simple correlation coefficient (r) cannot be used when we are dealing with a qualitative data
such as judgment about beauty, efficiency, honesty, etc. In such cases, the rank correlation
coefficient is used to explain the correlation or if there is an agreement in ranking. It is denoted by

rs and is defined as follows:

Definition: The coefficient of rank correlation, rs ,given by Spearman for n pairs, is

6 d 2
rs  1  , where d is the difference between the rank of x and the corresponding y.
n(n 2  1)
To calculate rs , we first rank xs among themselves from least to best or from best to least; then

we rank the y' s in the same way, find the sum of the squares of the differences, d, between the ranks
of the x's and the y's. When there are ties in rank, we assign to each of the tied observations (having
equal value) the mean of their ranks.

Example: Assume that ten girls in a beauty contest for Miss Ethiopia were ranked by two judges as
follows:

Girl Number 1 2 3 4 5 6 7 8 9 10

Judge A 4 8 6 7 1 3 2 5 10 9

Judge B 3 9 6 5 1 2 4 7 8 10

Calculate rs and interpret it.

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 Solution: Since the ranks are given, we need to find only the difference in ranks for each girl and
the square of these differences.

Girl Number 1 2 3 4 5 6 7 8 9 10 Total

D 1 -1 0 2 0 1 -2 -2 2 -1 0
d2 1 1 0 4 0 1 4 4 4 1 20

For these n = 10 pairs, d 2

 20 , and rs = 1  6(20)
10(100  1)
 0.88 , which is positive and close

to 1, showing that there is a very good agreement (or concordance) between the two judges
regarding the beauty of the girls.

Like the values of r, the values of rs also lie between -1 and +1, inclusive, and the
interpretations of its size and sign are analogous to those of r.
rs  1  Perfect positive agreement,

rs  1  Complete disagreement, where the two rankings go completely in opposite

direction.

Review Exercise on Chapter Nine

1. Stopping Distances: In a study on speed control, it was found that the main reasons for regulations were
to make traffic flow more efficient and to minimize the risk of danger. An area that was focused on in the
study was the distance required to completely stop a vehicle at various speeds. Use the following table to
answer the questions.(Assignment )
MPH Braking distance (feet)
20 20
30 45
40 81
50 133
60 205
80 411
Assume MPH is going to be used to predict stopping distance.
a. Which of the two variables is the independent variable?
b. Which is the dependent variable?
c. What type of variable is the independent variable?
d. What type of variable is the dependent variable?
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e. Construct a scatter plot for the data.
f. Is there a linear relationship between the two variables?
g. Redraw the scatter plot, and change the distances between the independent-variable numbers. Does the
relationship look different?
h. Is the relationship positive or negative?
i. Can braking distance be accurately predicted from MPH?
j. List some other variables that affect braking distance.
k. Compute the correlation coefficient and coefficient of determination, and give an interpretation.
l. Find the linear regression equation.
m. What does the slope tell you about MPH and the braking distance? How about the y intercept?
n. Find the braking distance when MPH =100.
o. Comment on predicting beyond the given data values.
2. The following table shows the heights to the nearest inch (in) and the weights to the nearest pound (lb)
of a sample or 12 male students drawn at random from the first year students at a university.
Height x (in) 70 63 72 60 66 70 74 65 62 67 65 68

Weight y (lb) 155 150 180 135 156 168 178 160 132 145 139 152

a. Plot a scatter diagram of the data

b. Fit the least square equation
c. Estimate the weight of a student whose height is 63 inches.
3. It has been observed that the amount of soil eroded (in Kg) per day (Y) is determined by the wind velocity
(X) in that day (Km/Hr). Data obtained from the ministry of agriculture for a certain area gave the ff summary

statistics. Y  80.9 X2= 117,123.86 Y 2  412.81

Regression line: Y = -4.54 + 0.1123 X

a. What change in amount of soil erosion would be associated with 1 Km/Hr change in wind velocity?
b. What amount of soil erosion would you predict for a wind velocity of 90 Km/Hr?

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 APPENDIX A
Appendix: Table-A: Area between z=0 and Z=z OR area between Z= 0 and Z≤z):

Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0190 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2157 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2969 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3513 0.3554 0.3577 0.3529 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4215 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4492 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990

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3.1 0.4990 0.4991 0.4991 0.4991 0.4992 0.4992 0.4992 0.4992 0.4993 0.4993
3.2 0.4993 0.4993 0.4994 0.4994 0.4994 0.4994 0.4994 0.4995 0.4995 0.4995
3.3 0.4995 0.4995 0.4995 0.4996 0.4996 0.4996 0.4996 0.4996 0.4996 0.4997
3.4 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4997 0.4998
Table B. t- table with right tail probabilities

t α=p 0.1 0.05 0.025 0.01 0.005 0.0025 0.001 0.0005

df = 1 3.078 6.314 12.706 31.821 63.656 127.321 318.289 636.578
2 1.886 2.920 4.303 6.965 9.925 14.089 22.328 31.600
3 1.638 2.353 3.182 4.541 5.841 7.453 10.214 12.924
4 1.533 2.132 2.776 3.747 4.604 5.598 7.173 8.610
5 1.476 2.015 2.571 3.365 4.032 4.773 5.894 6.869
6 1.440 1.943 2.447 3.143 3.707 4.317 5.208 5.959
7 1.415 1.895 2.365 2.998 3.499 4.029 4.785 5.408
8 1.397 1.860 2.306 2.896 3.355 3.833 4.501 5.041
9 1.383 1.833 2.262 2.821 3.250 3.690 4.297 4.781
10 1.372 1.812 2.228 2.764 3.169 3.581 4.144 4.587
11 1.363 1.796 2.201 2.718 3.106 3.497 4.025 4.437
12 1.356 1.782 2.179 2.681 3.055 3.428 3.930 4.318
13 1.350 1.771 2.160 2.650 3.012 3.372 3.852 4.221
14 1.345 1.761 2.145 2.624 2.977 3.326 3.787 4.140
15 1.341 1.753 2.131 2.602 2.947 3.286 3.733 4.073
16 1.337 1.746 2.120 2.583 2.921 3.252 3.686 4.015
17 1.333 1.740 2.110 2.567 2.898 3.222 3.646 3.965
18 1.330 1.734 2.101 2.552 2.878 3.197 3.610 3.922
19 1.328 1.729 2.093 2.539 2.861 3.174 3.579 3.883
20 1.325 1.725 2.086 2.528 2.845 3.153 3.552 3.850
21 1.323 1.721 2.080 2.518 2.831 3.135 3.527 3.819
22 1.321 1.717 2.074 2.508 2.819 3.119 3.505 3.792
23 1.319 1.714 2.069 2.500 2.807 3.104 3.485 3.768
24 1.318 1.711 2.064 2.492 2.797 3.091 3.467 3.745
25 1.316 1.708 2.060 2.485 2.787 3.078 3.450 3.725
26 1.315 1.706 2.056 2.479 2.779 3.067 3.435 3.707
27 1.314 1.703 2.052 2.473 2.771 3.057 3.421 3.689
28 1.313 1.701 2.048 2.467 2.763 3.047 3.408 3.674
29 1.311 1.699 2.045 2.462 2.756 3.038 3.396 3.660
30 1.310 1.697 2.042 2.457 2.750 3.030 3.385 3.646
40 1.303 1.684 2.021 2.423 2.704 2.971 3.307 3.551

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 50 1.299 1.676 2.009 2.403 2.678 2.937 3.261 3.496
60 1.296 1.671 2.000 2.390 2.660 2.915 3.232 3.460
Infinity 1.282 1.645 1.960 2.326 2.576 2.807 3.090 3.290

Table C. Right tail areas for the Chi-square Distribution

df\area 0.995 0.99 0.975 0.95 0.9 0.25 0.1 0.05 0.025 0.01 0.005
1 0.000 0.000 0.001 0.004 0.016 1.323 2.706 3.841 5.024 6.635 7.879
2 0.010 0.020 0.051 0.103 0.211 2.773 4.605 5.991 7.378 9.210 10.597
3 0.072 0.115 0.216 0.352 0.584 4.108 6.251 7.815 9.348 11.345 12.838
4 0.207 0.297 0.484 0.711 1.064 5.385 7.779 9.488 11.143 13.277 14.860
5 0.412 0.554 0.831 1.145 1.610 6.626 9.236 11.071 12.833 15.086 16.750
6 0.676 0.872 1.237 1.635 2.204 7.841 10.645 12.592 14.449 16.812 18.548
7 0.989 1.239 1.690 2.167 2.833 9.037 12.017 14.067 16.013 18.475 20.278
8 1.344 1.647 2.180 2.733 3.490 10.219 13.362 15.507 17.535 20.090 21.955
9 1.735 2.088 2.700 3.325 4.168 11.389 14.684 16.919 19.023 21.666 23.589
10 2.156 2.558 3.247 3.940 4.865 12.549 15.987 18.307 20.483 23.209 25.188
11 2.603 3.053 3.816 4.575 5.578 13.701 17.275 19.675 21.920 24.725 26.757
12 3.074 3.571 4.404 5.226 6.304 14.845 18.549 21.026 23.337 26.217 28.300
13 3.565 4.107 5.009 5.892 7.042 15.984 19.812 22.362 24.736 27.688 29.819
14 4.075 4.660 5.629 6.571 7.790 17.117 21.064 23.685 26.119 29.141 31.319
15 4.601 5.229 6.262 7.261 8.547 18.245 22.307 24.996 27.488 30.578 32.801
16 5.142 5.812 6.908 7.962 9.312 19.369 23.542 26.296 28.845 32.000 34.267
17 5.697 6.408 7.564 8.672 10.085 20.489 24.769 27.587 30.191 33.409 35.718
18 6.265 7.015 8.231 9.390 10.865 21.605 25.989 28.869 31.526 34.805 37.156
19 6.844 7.633 8.907 10.117 11.651 22.718 27.204 30.144 32.852 36.191 38.582
20 7.434 8.260 9.591 10.851 12.443 23.828 28.412 31.410 34.170 37.566 39.997
21 8.034 8.897 10.283 11.591 13.240 24.935 29.615 32.671 35.479 38.932 41.401
22 8.643 9.542 10.982 12.338 14.041 26.039 30.813 33.924 36.781 40.289 42.796
23 9.260 10.196 11.689 13.091 14.848 27.141 32.007 35.172 38.076 41.638 44.181
24 9.886 10.856 12.401 13.848 15.659 28.241 33.196 36.415 39.364 42.980 45.559
25 10.520 11.524 13.120 14.611 16.473 29.339 34.382 37.652 40.646 44.314 46.928

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 26 11.160 12.198 13.844 15.379 17.292 30.435 35.563 38.885 41.923 45.642 48.290
27 11.808 12.879 14.573 16.151 18.114 31.528 36.741 40.113 43.195 46.963 49.645
28 12.461 13.565 15.308 16.928 18.939 32.620 37.916 41.337 44.461 48.278 50.993
29 13.121 14.256 16.047 17.708 19.768 33.711 39.087 42.557 45.722 49.588 52.336
30 13.787 14.953 16.791 18.493 20.599 34.800 40.256 43.773 46.979 50.892 53.672

References
1. Eshetu Wencheko, Introduction to Statistics. April 2000, Addis Ababa University.
2. Gupta S.P., Gupta M.P., Business Statistics, 2001, Sultan chand & sons, New Delhi.
3. Monga G.S., Mathematics and Statistics for Economics(second revised edition),
2007.
[Link] M.B.K., Subramani K. &Santha A. Probability and Statistics, Dec. 2007,
Scitechpublications (India) pvt. Ltd.
5. Pal Nabendu, Sarkar Sahadeb, Statistics concepts and applications, 2006, New Delhi.
6. Spiegel Murry R. & Stephen Larry J.. Statistics-schaum’s outline, 1999,
ATAMCGraw-Hill edition, 3rd edition, New Delhi.
7. Sullivan Michael, iii, Statistics: informed decision using data: 2004, New Jersey.

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