Statistics For Business and Economics: Describing Data: Graphical

Statistics for
Business and Economics

6th Edition
Chapter 2
Describing Data: Graphical
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 2-1
Chapter Goals
After completing this chapter, you should be able to:
 Identify types of data and levels of measurement
 Create and interpret graphs to describe categorical variables:
 frequency distribution, bar chart, pie chart, Pareto diagram
 Create a line chart to describe time-series data
 Create and interpret graphs to describe numerical variables:
 frequency distribution, histogram, ogive, stem-and-leaf display
 Construct and interpret graphs to describe relationships between

variables:
 Scatter plot, cross table
 Describe appropriate and inappropriate ways to display data

graphically
Types of Data
Data
Categorical Numerical
Examples:
 Marital Status
 Are you registered to Discrete Continuous
vote?
 Eye Color Examples: Examples:
(Defined categories or  Number of Children  Weight
groups)  Defects per hour  Voltage
(Counted items) (Measured characteristics)
Measurement Levels
Differences between
measurements, true Ratio Data
zero exists
Quantitative Data
Differences between
measurements but no Interval Data
true zero
Ordered Categories
(rankings, order, or Ordinal Data
scaling)
Qualitative Data
Categories (no
ordering or direction) Nominal Data
Exercise.
A number of questions were posed to a random sample of visitors to a London
tourist information center. For each question below, describe the type of data
obtained.
a. Are you staying overnight in London?

b. How many times have you visited London
previously?
c. Which of the following attractions have you visited?

- Tower of London
- Buckingham Palace
- Big Ben
- Covent Garden
- Westminster Abbey
d. How likely are you to visit London again in

the next 12 months: (1) unlikely, (2) likely,
(3) very likely?
Graphical
Presentation of Data
 Data in raw form are usually not easy to use
for decision making
 Some type of organization is needed
 Table
 Graph
 The type of graph to use depends on the

variable being summarized
Graphical
Presentation of Data
(continued)
 Techniques reviewed in this chapter:
Variables Variables
• Frequency distribution • Line chart

• Bar chart • Frequency distribution
• Pie chart • Histogram and ogive
• Pareto diagram • Stem-and-leaf display
• Scatter plot
Tables and Graphs for
Categorical Variables
Categorical
Data
Tabulating Data Graphing Data
Frequency
Distribution Bar Pie Pareto
Table Chart Chart Diagram
The Frequency
Distribution Table
Summarize data by category
Example: Hospital Patients by Unit

Hospital Unit Number of Patients
Cardiac Care 1,052

Emergency 2,245
Intensive Care 340
Maternity 552
Surgery 4,630
(Variables are
categorical)
Bar and Pie Charts
 Bar charts and Pie charts are often used

for qualitative (category) data
 Height of bar or size of pie slice shows

the frequency or percentage for each
category
Bar Chart Example
Hospital Number
Unit of Patients
Cardiac Care 1,052

Hospital Patients by Unit
Emergency 2,245
5000
Intensive Care 340
4000
patients per year
Maternity 552 Number of
Surgery 4,630 3000
2000
1000
0
Cardiac
Emergency
Intensive
Maternity
Surgery
Care
Care
Pie Chart Example
Hospital Number % of
Unit of Patients Total Hospital Patients by Unit
Cardiac Care 1,052 11.93
Cardiac Care
Emergency 2,245 25.46 12%
Intensive Care 340 3.86
Maternity 552 6.26
Surgery 4,630 52.50
Emergency
Surgery 25%
53%
Intensive Care
(Percentages 4%
are rounded to Maternity
the nearest 6%
percent)
Pareto Diagram
 Used to portray categorical data

 A bar chart, where categories are shown in
descending order of frequency
 A cumulative polygon is often shown in the
same graph
 Used to separate the “vital few” from the “trivial
many”
Pareto Diagram Example
Example: 400 defective items are examined
for cause of defect:
Source of
Manufacturing Error Number of defects
Bad Weld 34
Poor Alignment 223
Missing Part 25
Paint Flaw 78
Electrical Short 19
Cracked case 21
Total 400
(continued)
Step 1: Sort by defect cause, in descending order

Step 2: Determine % in each category
Source of
Manufacturing Error Number of defects % of Total Defects
Poor Alignment 223 55.75
Paint Flaw 78 19.50
Bad Weld 34 8.50
Missing Part 25 6.25
Cracked case 21 5.25
Electrical Short 19 4.75
Total 400 100%
(continued)
Step 3: Show results graphically
Pareto Diagram: Cause of Manufacturing Defect
60% 100%
% of defects in each category
90%
cumulative % (line graph)

50%
80%
70%
(bar graph)
40%
60%
30% 50%
40%
20%
30%
20%
10%
10%
0% 0%
Poor Alignment Paint Flaw Bad Weld Missing Part Cracked case Electrical Short
Graphs for Time-Series Data
 A line chart (time-series plot) is used to show

the values of a variable over time
 Time is measured on the horizontal axis
 The variable of interest is measured on the

vertical axis
Line Chart Example
Magazine Subscriptions by Year
350
300
Thousands of subscribers
250
200
150
100
50
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Graphs to Describe
Numerical Variables
Numerical Data
Frequency Distributions Stem-and-Leaf

and Display
Cumulative Distributions
Histogram Ogive
Frequency Distributions
What is a Frequency Distribution?

 A frequency distribution is a list or a table …
 containing class groupings (categories or
ranges within which the data fall) ...
 and the corresponding frequencies with which
data fall within each class or category
Why Use Frequency Distributions?
 A frequency distribution is a way to

summarize data
 The distribution condenses the raw data
into a more useful form...
 and allows for a quick visual interpretation
of the data
Class Intervals
and Class Boundaries
 Each class grouping has the same width

 Determine the width of each interval by
largest number  smallest number
w  interval width 
number of desired intervals
 Use at least 5 but no more than 15-20 intervals

 Intervals never overlap
 Round up the interval width to get desirable
interval endpoints
Frequency Distribution Example
Example: A manufacturer of insulation randomly

selects 20 winter days and records the daily
high temperature
24, 35, 17, 21, 24, 37, 26, 46, 58, 30,
32, 13, 12, 38, 41, 43, 44, 27, 53, 27
(continued)
 Sort raw data in ascending order:

12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
 Find range: 58 - 12 = 46
 Select number of classes: 5 (usually between 5 and 15)
 Compute interval width: 10 (46/5 then round up)
 Determine interval boundaries: 10 but less than 20, 20 but
less than 30, . . . , 60 but less than 70
 Count observations & assign to classes
(continued)
Data in ordered array:
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Relative
Interval Frequency Percentage
Frequency
10 but less than 20 3 .15 15
20 but less than 30 6 .30 30
30 but less than 40 5 .25 25
40 but less than 50 4 .20 20

50 but less than 60 2 .10 10
Histogram
 A graph of the data in a frequency distribution

is called a histogram
 The interval endpoints are shown on the
horizontal axis
 the vertical axis is either frequency, relative
frequency, or percentage
 Bars of the appropriate heights are used to
represent the number of observations within
each class
Graphs to describe Numerical Variables
Larger data sets require more classes; smaller data sets require fewer classes.
If we select too few classes, the patterns and various characteristics of the data may be
hidden. If we select too many classes, we will discover that some of our intervals may
contain no observations or have a very small frequency.
Histogram Example
Interval Frequency
His togram : Daily High Te m pe rature
10 but less than 20 3
20 but less than 30 6 7 6
6 5
50 but less than 60 2 5 4
Frequency
4 3
3 2
2
1 0 0
(No gaps 0
between 0 0 10 10 2020 30 30 40 40 50 50 60 60
bars) 70 Temperature in Degrees
Questions for Grouping Data
into Intervals
 1. How wide should each interval be?

(How many classes should be used?)
 2. How should the endpoints of the
intervals be determined?
 Often answered by trial and error, subject to
user judgment
 The goal is to create a distribution that is
neither too "jagged" nor too "blocky”
 Goal is to appropriately show the pattern of
variation in the data
How Many Class Intervals?
 Many (Narrow class intervals) 3.5

3
 may yield a very jagged distribution 2.5
Frequency
with gaps from empty classes 2
1.5
 Can give a poor indication of how 1
0.5
frequency varies across classes 0
4
8
12
16
20
24
28
32
36
40
44
48
52
56
60
More
Temperature
 Few (Wide class intervals) 12
10
 may compress variation too much and 8
Frequency
yield a blocky distribution 6
4
 can obscure important patterns of 2
variation. 0
0 30 60 More
Temperature
(X axis labels are upper class endpoints)
The Cumulative
Frequency Distribuiton
12, 13, 17, 21, 24, 24, 26, 27, 27, 30, 32, 35, 37, 38, 41, 43, 44, 46, 53, 58
Cumulative Cumulative
Class Frequency Percentage
Frequency Percentage
10 but less than 20 3 15 3 15

20 but less than 30 6 30 9 45
30 but less than 40 5 25 14 70
40 but less than 50 4 20 18 90
50 but less than 60 2 10 20 100
Total 20 100
The Ogive
Graphing Cumulative Frequencies
Upper
interval Cumulative
Interval endpoint Percentage
Less than 10 10 0
10 but less than 20 20 15
20 but less than 30 30 45 Ogive: Daily High Temperature
40 but less than 50 50 90 100
Cumulative Percentage 80
60
40
20
0
10 20 30 40 50 60
Interval endpoints
Distribution Shape
 The shape of the distribution is said to be
symmetric if the observations are balanced,
or evenly distributed, about the center.
Symmetric Distribution
10
9
8
7
Frequency
6
5
4
3
2
1
0
1 2 3 4 5 6 7 8 9
Distribution Shape
(continued)
 The shape of the distribution is said to be
skewed if the observations are not
symmetrically distributed around the center.
Positively Skewed Distribution
A positively skewed distribution 12
(skewed to the right) has a tail that

10
Frequency
extends to the right in the direction of 6
positive values.
4
0
1 2 3 4 5 6 7 8 9
Negatively Skewed Distribution

A negatively skewed distribution 12
(skewed to the left) has a tail that 10
extends to the left in the direction of 8

Frequency
6
negative values. 4
0
1 2 3 4 5 6 7 8 9
Stem-and-Leaf Diagram
 A simple way to see distribution details in a

data set
METHOD: Separate the sorted data series

into leading digits (the stem) and
the trailing digits (the leaves)
Example
21, 24, 24, 26, 27, 27, 30, 32, 38, 41
 Here, use the 10’s digit for the stem unit:

Stem Leaf
 21 is shown as 2 1
 38 is shown as 3 8
Example
(continued)
21, 24, 24, 26, 27, 27, 30, 32, 38, 41
 Completed stem-and-leaf diagram:

Stem Leaves
2 1 4 4 6 7 7
3 0 2 8
4 1
Using other stem units
 Using the 100’s digit as the stem:
 Round off the 10’s digit to form the leaves
Stem Leaf
 613 would become 6 1
 776 would become 7 8
 ...
 1224 becomes 12 2
Using other stem units
(continued)
 Using the 100’s digit as the stem:

 The completed stem-and-leaf display:
Data:
Stem Leaves
613, 632, 658, 717, 6 136
722, 750, 776, 827, 7 2258
841, 859, 863, 891, 8 346699
894, 906, 928, 933,
9 13368
955, 982, 1034,
1047,1056, 1140, 10 356
1169, 1224 11 47
12 2
Relationships Between Variables
 Graphs illustrated so far have involved only a

single variable
 When two variables exist other techniques are
used:
(Qualitative) (Quantitative)
Variables Variables
Cross tables Scatter plots
Scatter Diagrams
 Scatter Diagrams are used for paired

observations taken from two
numerical variables
 The Scatter Diagram:

 one variable is measured on the vertical
axis and the other variable is measured

on the horizontal axis
Scatter Diagram Example
Volume Cost per

Cost per Day vs. Production Volume
per day day
23 125 250
26 140 200
29 146
Cost per Day
150
33 160
38 167 100
42 170 50
50 188 0
55 195 0 10 20 30 40 50 60 70
60 200
Volume per Day
Cross Tables
 Cross Tables (or contingency tables) list the

number of observations for every combination
of values for two categorical or ordinal
variables
 If there are r categories for the first variable

(rows) and c categories for the second
variable (columns), the table is called an r x c
cross table
Cross Table Example
 4 x 3 Cross Table for Investment Choices by Investor
(values in $1000’s)
Investment Investor A Investor B Investor C Total
Category
Stocks 46.5 55 27.5 129

Bonds 32.0 44 19.0 95
CD 15.5 20 13.5 49
Savings 16.0 28 7.0 51
Total 110.0 147 67.0 324
Graphing
Multivariate Categorical Data
(continued)
 Side by side bar charts

Comparing Investors
S avings
CD
B onds
S toc k s
0 10 20 30 40 50 60
Inves tor A Inves tor B Inves tor C
Side-by-Side Chart Example
 Sales by quarter for three sales territories:
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East 20.4 27.4 59 20.4
W est 30.6 38.6 34.6 31.6
North 45.9 46.9 45 43.9
60
50
40
East
30 West
North
20
10
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Data Presentation Errors
Goals for effective data presentation:

 Present data to display essential information
 Communicate complex ideas clearly and
accurately
 Avoid distortion that might convey the wrong
message
Data Presentation Errors
(continued)
 Unequal histogram interval widths

 Compressing or distorting the
vertical axis
 Providing no zero point on the
vertical axis
 Failing to provide a relative basis
in comparing data between
groups
Data presentation Errors. Misleading Histograms
Chapter Summary
 Reviewed types of data and measurement levels
 Data in raw form are usually not easy to use for decision
making -- Some type of organization is needed:
 Table  Graph
 Techniques reviewed in this chapter:

 Frequency distribution  Line chart
 Bar chart
 Frequency distribution
 Histogram and ogive
 Pie chart
 Stem-and-leaf display
 Pareto diagram
 Scatter plot
 Cross tables and
side-by-side bar charts

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Statistics for

Business and Economics

Describing Data: Graphical

 Construct and interpret graphs to describe relationships between

 Describe appropriate and inappropriate ways to display data

a. Are you staying overnight in London?

c. Which of the following attractions have you visited?

d. How likely are you to visit London again in

 The type of graph to use depends on the

• Frequency distribution • Line chart

Tabulating Data Graphing Data

Example: Hospital Patients by Unit

Cardiac Care 1,052

 Bar charts and Pie charts are often used

 Height of bar or size of pie slice shows

Cardiac Care 1,052

Surgery 4,630 3000

 Used to portray categorical data

Step 1: Sort by defect cause, in descending order

cumulative % (line graph)

 A line chart (time-series plot) is used to show

 Time is measured on the horizontal axis

 The variable of interest is measured on the

Magazine Subscriptions by Year

Frequency Distributions Stem-and-Leaf

What is a Frequency Distribution?

 A frequency distribution is a way to

 Each class grouping has the same width

 Use at least 5 but no more than 15-20 intervals

Example: A manufacturer of insulation randomly

 Sort raw data in ascending order:

40 but less than 50 4 .20 20

 A graph of the data in a frequency distribution

 1. How wide should each interval be?

 Many (Narrow class intervals) 3.5

 Few (Wide class intervals) 12

10 but less than 20 3 15 3 15

A positively skewed distribution 12

(skewed to the right) has a tail that

Negatively Skewed Distribution

extends to the left in the direction of 8

 A simple way to see distribution details in a

METHOD: Separate the sorted data series

 Here, use the 10’s digit for the stem unit:

 Completed stem-and-leaf diagram:

 Using the 100’s digit as the stem:

 Graphs illustrated so far have involved only a

Cross tables Scatter plots

 Scatter Diagrams are used for paired

 The Scatter Diagram:

axis and the other variable is measured

Volume Cost per

 Cross Tables (or contingency tables) list the

 If there are r categories for the first variable

Stocks 46.5 55 27.5 129

 Side by side bar charts

Inves tor A Inves tor B Inves tor C

Goals for effective data presentation:

 Unequal histogram interval widths