Why Study Statistics?
Why Study Statistics?
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If you look through your university catalog, you will find that statistics is required for many college programs. Why is this so? What are the differences in the statistics courses taught in the Engineering College, the Psychology or Sociology Departments in the Liberal Arts College, and the College of Business? The biggest difference is the examples used. The course content is basically the same. In the College of Business we are interested in such things as profits, hours worked, and wages. Psychologists are interested in test scores, and engineers are interested in how many units are manufactured on a particular machine. However, all three are interested in what is a typical value and how much variation there is in the data. There may also be a difference in the level of mathematics required. An engineering statistics course usually requires calculus. Statistics courses in colleges of business and education usually teach the course at a more applied level. You should be able to handle the mathematics in this text if you have completed high school algebra.

So why is statistics required in so many majors? The first reason is that numerical information is everywhere. Look in the newspapers (USA Today), news magazines (Time, Newsweek, U.S. News and World Report), business magazines (BusinessWeek, Forbes), or general interest magazines (People), women’s magazines (Ladies Home Journal or Elle), or sports magazines (Sports Illustrated, ESPN The Magazine), and you will be bombarded with numerical information.

Examples of why we study statistics

Here are some examples:

• In 2003 the typical household income in the United States was \$43,318. For households in the Northeast the typical income was \$46,742, \$44,732 in the Midwest, \$39,823 in the South, and \$46,820 in the West. You can check the latest information by going to http://www.census.gov/hhes/income.

• In July 2005 Boeing reported that it had delivered 155 aircraft for the period from January 1, 2005, to June 30, 2005. There were a total of 113 737s delivered during the period, and Southwest Airlines was the largest purchaser, having bought 22 aircraft. You can see the latest information by going to the Boeing website at www.boeing.com, then in the search box type “orders and deliveries” and, from the list of potential websites, pick the one offering the latest information on orders and deliveries. On the lefthand side of this page is a listing of the Orders site map, from which you can select Current Year Deliveries.

• USA Today (www.usatoday.com) prints “Snapshots” that are the result of surveys conducted by various research organizations, foundations, and the federal government. For example, many believe that email is preferable to regular mail. However, the United States Postal Service reports from a recent survey that 67 percent of adults indicate regular mail is more personal than email, 56 percent indicate regular mail is a pleasure to receive, and 55 percent look forward to opening mail.

A second reason for taking a statistics course is that statistical techniques are used to make decisions that affect our daily lives. That is, they affect our personal welfare. Here are a few examples:

• Insurance companies use statistical analysis to set rates for home, automobile, life, and health insurance. Tables are available showing estimates that a 20-year-old female has 60.25 years of life remaining, an 87-year-old woman 4.56 years remaining, and a 50-year-old man 27.85 years remaining. Life insurance premiums are established based on these estimates of life expectancy. These tables are available at www.ssa.gov/OACT/STATS/table4cb.html. [This site is sensitive to capital letters.]

• The Environmental Protection Agency is interested in the water quality of Lake Erie as well as other lakes. They periodically take water samples to establish the level of contamination and maintain the level of quality.

• Medical researchers study the cure rates for diseases using different drugs and different forms of treatment. For example, what is the effect of treating a certain type of knee injury surgically or with physical therapy? If you take an aspirin each day, does that reduce your risk of a heart attack?

A third reason for taking a statistics course is that the knowledge of statistical methods will help you understand how decisions are made and give you a better understanding of how they affect you.

No matter what line of work you select, you will find yourself faced with decisions where an understanding of data analysis is helpful. In order to make an informed decision, you will need to be able to:

1. Determine whether the existing information is adequate or additional information is required.

2. Gather additional information, if it is needed, in such a way that it does not provide misleading results.

3. Summarize the information in a useful and informative manner.

4. Analyze the available information.

5. Draw conclusions and make inferences while assessing the risk of an incorrect conclusion.

The statistical methods presented in the text will provide you with a framework for the decision-making process.

In summary, there are at least three reasons for studying statistics: (1) data are everywhere, (2) statistical techniques are used to make many decisions that affect our lives, and (3) no matter what your career, you will make professional decisions that involve data. An understanding of statistical methods will help you make these decisions more effectively.

#### Statistics in Action

We call your attention to a feature title— Statistics in Action. Read each one carefully to get an appreciation of the wide application of statistics in management, economics, nursing, law enforcement, sports, and other disciplines.

• In 2005, Forbes published a list of the richest Americans. William Gates, founder of Microsoft Corporation, is the richest. His net worth is estimated at \$46.5 billion. (www.forbes.com)

• In 2005, the four largest American companies, ranked by revenue were ExxonMobil, General Motors, Ford, and Chevron. (www.Industryweek.com)

• In the United States, a typical high school graduate earns \$1.2 million in his or her lifetime, a typical college graduate with a bachelor’s degree earns \$2.1 million, and a typical college graduate with a master’s degree earns \$2.5 million. (usgovinfo.about.com/library/weekly/aa072602a.htm)

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