The pratice of statistics for business and economics 3rd by moore

Each NEW copy of The Practice of Statistics for Business and Economics, 3e provides you with access to the Electronic Encyclopedia of Statistical Exercises and Examples EESEE and CrunchI

CD-ROM Instructions (Windows and Macintosh)

To use the CD-ROM for The Practice of

Statis-tics for Business and Economics, 3e, insert the disk

into your CD-ROM drive The main navigation page

should appear If it does not appear, open the file

titled “PSBE3e.htm” If the file does not open in a

browser (e.g Internet Explorer or Firefox), refer to

the README file on the CD for instructions For

ad-ditional updates, please visit The Practice of Statistics

for Business and Economics, 3e companion Web site

at www.whfreeman.com/psbe3e.

Each NEW copy of The Practice of Statistics for Business and Economics, 3e provides you with

access to the Electronic Encyclopedia of Statistical

Exercises and Examples (EESEE) and CrunchIt! 2.0

statistical software To access these resources:

1. Go to the companion Web site, www.

whfreeman.com/psbe3e and click on either EESEE

or CrunchIt! 2.0 Register using the activation code provided behind the CD on this page.

2. Alternatively, you can click on the EESEE/ CrunchIt! 2.0 link from the CD and register using the activation code behind the CD on this page.

Please note: Activation codes are only included

in new copies of The Practice of Statistics for ness and Economics, 3e, and may only be used once.

Busi-If you need assistance locating these resources, please contact our technical support via email,

techsupport@bfwpub.com or call (800)936-6899.

This page was intentionally left blank

THE PRACTICE OF STATISTICS

FOR BUSINESS AND ECONOMICS

THE PRACTICE OF STATISTICS

FOR BUSINESS AND ECONOMICS

Publisher: Ruth Baruth Acquisitions Editor: Karen Carson Senior Developmental Editor: Bruce Kaplan Associate Editor: Katrina Wilhelm Media Editor: Laura Capuano Assistant Media Editor: Catriona Kaplan Executive Marketing Manager: Jennifer Somerville Head of Strategic Market Development: Steven Rigolosi

Editorial Assistant: Lauren Kimmich Photo Editor: Cecilia Varas Senior Project Editor: Mary Louise Byrd Design Manager: Vicki Tomaselli Cover Designer: Brian Sheridan Text Designer: Cambraia Fernandes Production Coordinator: Paul W Rohloff Composition: MPS Limited, a Macmillan Company Printing and Binding: RR Donnelley

T1-83 TM screens are used with permission of the publisher: © 1996, Texas Instruments Incorporated T1-83 TM Graphics Calculator is a registered trademark of Texas Instruments Incorporated.

Minitab is a registered trademark of Minitab, Inc.

SAS © is a registered trademark of SAS Institute, Inc.

Microsoft © and Windows © are registered trademarks of the Microsoft Corporation

in the USA and other countries.

Excel screen shots reprinted with permission from the Microsoft Corporation.

Library of Congress Control Number: 2010928451

ISBN-13: 978-1-4292-3281-4 ISBN-10: 1-4292-3281-1

© 2011 by W H Freeman and Company

All rights reserved.

Printed in the United States of America

First printing

W H Freeman and Company

41 Madison Avenue, New York, NY 10010 Houndmills, Basingstoke RG21 6XS, England

www.whfreeman.com

THE PRACTICE OF STATISTICS

FOR BUSINESS AND ECONOMICS

THE PRACTICE OF STATISTICS FOR BUSINESS AND ECONOMICS

This page was intentionally left blank

BRIEF TABLE OF CONTENTS

The Core book includes Chapters 1–14 Chapters 15–17 are individual optional Companion Chapters and can be found on the CD-ROM that accompanies this text

or on the companion Web site (www.whfreeman.com/psbe3e).

v

This page was intentionally left blank

TABLE OF CONTENTS

Categorical variables: bar graphs and pie charts 7

Interpreting histograms and stemplots 17

The five-number summary and boxplots 32Measuring spread: the standard deviation 34Choosing measures of center and spread 36

Normal distributions 45

Adding categorical variables to scatterplots 87

Facts about least-squares regression 105

TABLE OF CONTENTS ix

BEYOND THE BASICS: Capture-Recapture Sampling 163

Randomized comparative experiments 172

The logic of randomized comparative experiments 175

3.3 Toward Statistical Inference 186

Sampling variability, sampling distributions 187

CHAPTER 4 Probability and Sampling Distributions 217

TABLE OF CONTENTS xi

Statistical estimation and the law of large numbers 263Thinking about the law of large numbers 265

BEYOND THE BASICS: More Laws of Large Numbers 266

The mean and the standard deviation of x 268

Independence and the multiplication rule 286Independence versus disjoint: avoid the confusion 288

Conditional probability and independence 298

Careful with notation interpretation 308Finding binomial probabilities: tables 310

Binomial mean and standard deviation 311The Normal approximation to binomial distributions 313

BEYOND THE BASICS: More Distribution Approximations 322

Confidence interval for a population mean 339

The reasoning of significance tests 351

Two-sided significance tests and confidence intervals 364

TABLE OF CONTENTS xiii

Statistical significance and practical significance 372Statistical inference is not valid for all sets of data 373Beware of searching for significance 373

The one-sample t confidence interval 397

Inference for non-Normal populations 410

The two-sample t significance test 420

The two-sample t confidence interval 422Robustness of the two-sample procedures 424

Inference for small samples 425Satterthwaite approximation for the degrees of freedom 426

The pooled two-sample t procedures 429

The power of the two-sample t test 443

Large-sample confidence interval for a single proportion 459Plus four confidence interval for a single proportion 461Significance test for a single proportion 462

Large-sample confidence intervals for a difference in proportions 474

Plus four confidence intervals for a difference in proportions 476

TABLE OF CONTENTS xv

Case 9.1 Exclusive Territories and the Success

Describing relations in two-way tables 496

The chi-square test and the z test 502

Statistical model for simple linear regression 526

Estimating the regression parameters 532Conditions for regression inference 536Confidence intervals and significance tests 537

10.2 Using the Regression Line 550

BEYOND THE BASICS: Nonlinear Regression 555

Preliminary data analysis for multiple regression 578Estimating the multiple regression coefficients 581

Estimating the parameters of the model 592Inference about the regression coefficients 593

ANOVA table for multiple regression 597

Inference for a collection of regression coefficients 599

TABLE OF CONTENTS xvii

Models with categorical explanatory variables 610

BEYOND THE BASICS: Multiple Logistic Regression 620

CHAPTER 12 Statistics for Quality:

Systematic approach to process improvement 635

Control charts for sample proportions 669

Control charts for counts per unit of measure 675

CHAPTER 13 Time Series Forecasting 685

TABLE OF CONTENTS xix

Estimates of population parameters 749Testing hypotheses in one-way ANOVA 751

CHAPTER 15 Two-Way Analysis of Variance

Introduction

15.1 The Two-Way ANOVA Model

Advantages of two-way ANOVAThe two-way ANOVA modelMain effects and interactions

Section 15.1 Summary

15.2 Inference for Two-Way ANOVA

The ANOVA table for two-way ANOVACarrying out a two-way ANOVA

Case 15.1 Discounts and Expected Prices

Case 15.2 Expected Prices, Continued

Section 15.2 Summary

Statistics in Summary Chapter 15 Review Exercises Chapter 15 Case Study Exercises

CHAPTER 16 Nonparametric Tests

Ties

Case 16.2 Consumer Perceptions of Food Safety

Limitations of nonparametric tests

Section 16.1 Summary Section 16.1 Exercises

16.2 The Wilcoxon Signed Rank Test

The Normal approximationTies

Section 16.2 Summary Section 16.2 Exercises

16.3 The Kruskal-Wallis Test

Hypotheses and assumptionsThe Kruskal-Wallis test

Section 16.3 Summary Section 16.3 Exercises

Statistics in Summary Chapter 16 Review Exercises

CHAPTER 17 Logistic Regression

TABLE OF CONTENTS xxi

Model for logistic regressionFitting and interpreting the logistic regression model

Section 17.1 Summary

17.2 Inference for Logistic Regression

Examples of logistic regression analyses

Section 17.2 Summary

17.3 Multiple Logistic Regression

Section 17.3 Summary

Statistics in Summary Chapter 17 Review Exercises Chapter 17 Case Study Exercises

This page was intentionally left blank

TO INSTRUCTORS: ABOUT THIS BOOK

Statistics is the science of data The Practice of Statistics for Business and Economics

(PSBE) is an introduction to statistics for students of business and economics based on

this principle We present methods of basic statistics in a way that emphasizes working

with data and mastering statistical reasoning PSBE is elementary in mathematical level

but conceptually rich in statistical ideas After completing a course based on our text,students should be able to think objectively about conclusions drawn from data and usestatistical methods in their own work

In PSBE, we combine attention to basic statistical concepts with a comprehensive

presentation of the elementary statistical methods that students will find useful in their

work We believe that you will enjoy using PSBE for several reasons:

1 PSBE examines the nature of modern statistical practice at a level suitable for

beginners We focus on the production and analysis of data as well as the traditionaltopics of probability and inference

2 PSBE has a logical overall progression, so data production and data analysis are a

major focus, while inference is treated as a tool that helps us to draw conclusionsfrom data in an appropriate way

3 PSBE presents data analysis as more than a collection of techniques for exploring

data We emphasize systematic ways of thinking about data Simple principlesguide the analysis: always plot your data; look for overall patterns and deviationsfrom them; when looking at the overall pattern of a distribution for one variable,consider shape, center, and spread; for relations between two variables, considerform, direction, and strength; always ask whether a relationship between variables

is influenced by other variables lurking in the background We warn students aboutpitfalls in clear cautionary discussions

4 PSBE uses real examples and exercises from business and economics to illustrate

and enforce key ideas Students learn the technique of least-squares regressionand how to interpret the regression slope But they also learn the conceptual tiesbetween regression and correlation—the importance of looking for influentialobservations

5 PSBE is aware of current developments both in statistical science and in teaching

statistics Brief, optional “Beyond the Basics” sections give quick overviews oftopics such as density estimation, scatterplot smoothers, data mining, nonlinearregression, and meta-analysis

Themes of This Book

Look at your data is a consistent theme in PSBE Rushing to inference—often automated

by software—without first exploring the data is the most common source of statistical

errors that we see in working with users from many fields A second theme is that where the data come from matters When we do statistical inference, we are acting as if the data

come from properly randomized sample or experimental designs A basic understanding

of these designs helps students grasp how inference works The distinction between

xxiii

observational and experimental data helps students understand the truth of the mantrathat “association does not imply causation.” Moreover, managers need to understand theuse of sample surveys for market research and customer satisfaction and of statisticallydesigned experiments for product development, as in clinical trials of pharmaceuticals.

Another strand that runs through PSBE is that data lead to decisions in a specific setting A calculation or graph or “reject H0” is not the conclusion of an exercise in

statistics We encourage students to state a conclusion in the specific problem context,even though quite simple, and we hope that you will require them to do so

Finally, we think that a first course in any discipline should focus on the essentials

PSBE equips students to use statistics (and learn more statistics as needed) by presenting

the major concepts and most-used tools of the discipline Longer lists of procedures

“covered” tend to reduce student understanding and ability to use any procedures to dealwith real problems

What’s New in the Third Edition

• Title We have added economics to the title because of the number of examples and

applications that are economics-oriented and because the book can be used in the

statistics course for economics Hence, the title is now The Practice of Statistics for Business and Economics.

• New Co-author We are delighted to welcome Bruce Craig to the author team.

Bruce currently is professor of statistics and director of the Statistical Consulting

Service at Purdue University Bruce also is a co-author of Introduction to the Practice of Statistics, sixth edition.

• Structural changes There is no change in the chapter order, but the order of topics

in three chapters has been changed significantly: Chapter 5 on probability theory,Chapter 12 on quality control, and Chapter 13 on time series forecasting Thischange within chapters improves topic flow

• New cases and examples We have taken extra effort to bring in new or updated

cases and examples that make the material as interesting and business oriented aspossible Here are a few of them:

• Worldwide data on the time needed to start a business (Case 1.2)

• Predicting a movie’s U.S box office revenue based on opening weekend results(Case 11.2)

• Unemployment rates in the United States and Canada (Chapter 1)

• The business of the NFL (Chapter 5)

• Turnaround lab testing time from a hospital emergency room (Case 12.1)

• Exercises Over 25% of the exercises are new, and over 25% include updated data

sets, making over half of the exercises different from the previous edition We haveplaced additional emphasis on making the business or economics relevance of theexercises clear to the reader

• Increased emphasis on computing Software usage has been updated and given

additional emphasis For example, in Chapter 3, we now explain how to performrandomization for samples and experiments using spreadsheets rather than relyingexclusively on tables of random numbers

• Data file names The names of data files now suggest their content rather than

the example, exercise, or table where they are used The names are given with amarginal icon for examples and with highlighted text for exercises

TO INSTRUCTORS: ABOUT THIS BOOK xxv

Content and Style

PSBE adapts to the business and economics statistics setting the approach to

introduc-tory instruction that was inaugurated and proved successful in the best-selling general

statistics text Introduction to the Practice of Statistics (sixth edition, Freeman 2009) PSBE features the use of real data in examples and exercises and emphasizes statistical

thinking as well as mastery of techniques As the continuing revolution in computingautomates most tiresome details, an emphasis on statistical concepts and on insight fromdata becomes both more practical for students and teachers and more important for userswho must supply what is not automated

Chapters 1 and 2 present the methods and unifying ideas of data analysis Studentsappreciate the usefulness of data analysis, and that they can actually do it relieves a bit

of their anxiety about statistics We hope that they will grow accustomed to examiningdata and will continue to do so even when formal inference to answer a specific question

is the ultimate goal Note in particular that Chapter 2 gives an extended treatment ofcorrelation and regression as descriptive tools, with attention to issues such as influentialobservations and the dangers posed by lurking variables These ideas and tools havewider scope than an emphasis on inference (Chapters 10 and 11) allows We think that afull discussion of data analysis for both one and several variables before students meetinference in these settings both reflects statistical practice and is pedagogically helpful.Teachers will notice some nonstandard ideas in these chapters, particularly regard-ing the Normal distributions—we capitalize “Normal” to avoid suggesting that thesedistributions are “normal” in the usual sense of the word We introduce density curvesand Normal distributions in Chapter 1 as models for the overall pattern of some sets

of data Only later (Chapter 4) do we see that the same tools can describe probabilitydistributions Although unusual, this presentation reflects the historical origin of Normaldistributions and also helps break up the mass of probability that is so often a barrier thatstudents fail to surmount We use the notation N(μ, σ) rather than N(μ, σ2) for Normal

distributions The traditional notation is in fact indefensible other than as inherited tion The standard deviation, not the variance, is the natural measure of scale in Normaldistributions, visible on the density curve, used in standardization, and so on We wantstudents to think in terms of mean and standard deviation, so we talk in these terms

tradi-In Chapter 3, we discuss random sampling and randomized comparative ments The exposition pays attention to practical difficulties, such as nonresponse insample surveys, that can greatly reduce the value of data An understanding of suchbroader issues is particularly important for managers who must use data but do notthemselves produce data Discussion of statistics in practice alongside more technicalmaterial is part of our emphasis on data leading to practical decisions We include asection on data ethics, a topic of increasing importance for business managers

experi-Chapter 3 also uses the idea of random sampling to motivate the need for statisticalinference (sample results vary) and probability (patterns of random variation) as the foun-dation for inference Chapters 4 and 5 then present probability We have chosen an unusualapproach: Chapter 4 contains only the probability material that is needed to understandstatistical inference, and this material is presented quite informally Chapter 5 presentsadditional probability in a more traditional manner Chapter 4 is required to read the rest

of the book, but Chapter 5 is optional We suggest that you consider omitting Chapter 5unless your students are well prepared or have some need to know probability beyond

an understanding of basic statistics One reason is to maintain content balance—lesstime spent on formal probability allows full attention to data analysis without reducingcoverage of inference Pedagogical concerns are more compelling Experienced teach-ers recognize that students find probability difficult Research on learning confirms our

experience Even students who can do formally posed probability problems often have avery fragile conceptual grasp of probability ideas Formal probability does not help stu-dents master the ideas of inference (at least not as much as we teachers imagine), and it de-pletes reserves of mental energy that might better be applied to essentially statistical ideas.The remaining chapters present statistical inference, still encouraging students to askwhere the data come from and to look at the data rather than quickly choosing a statisticaltest from an Excel menu Chapter 6, which describes the reasoning of inference, is thecornerstone Chapters 7 and 8 discuss one-sample and two-sample procedures, whichalmost any first course will cover We take the opportunity in these core “statisticalpractice” chapters to discuss practical aspects of inference in the context of specificexamples Chapters 9, 10, and 11 present selected more advanced topics in inference:two-way tables and simple and multiple regression Chapters 12, 13, and 14 presentadditional advanced topics in inference: quality control, time series forecasting, and one-way analysis of variance Instructors who wish to customize a single-semester course or

to add a second semester will find a wide choice of additional topics in the Companion

Chapters that extend PSBE:

• Chapter 15 Two-Way Analysis of Variance

• Chapter 16 Nonparametric Tests

• Chapter 17 Logistic RegressionCompanion Chapters can be found on the book’s companion Web site: www.whfreeman.com/psbe3e

Accessible Technology

Any mention of the current state of statistical practice reminds us that quick, cheap,and easy computation has changed the field Procedures such as our recommended

two-sample t and logistic regression depend on software Even the mantra “look at

your data” depends in practice on software, as making multiple plots by hand is tootedious when quick decisions are required Also, automating calculations and graphsincreases students’ ability to complete problems, reduces their frustration, and helpsthem concentrate on ideas and problem recognition rather than mechanics

We therefore strongly recommend that a course based on PSBE be accompanied by software of your choice Instructors will find using software easier because all data sets for

PSBE can be found in several common formats both on the Web (www.whfreeman.com/psbe3e) and on the CD-ROM that accompanies each copy of the book

The Microsoft Excel spreadsheet is by far the most common program used forstatistical analysis in business Our displays of output therefore emphasize Excel, though

output from several other programs also appears PSBE is not tied to specific software.

However, appendices found at the end of most chapters provide general instructions fordoing statistical procedures in Excel and Minitab Even so, one of our emphases is that astudent who has mastered the basics of, say, regression can interpret and use regressionoutput from almost any software

We are well aware that Excel lacks many advanced statistical procedures Moreseriously, Excel’s statistical procedures have been found to be inaccurate, and theylack adequate warnings for users when they encounter data for which they may giveincorrect answers There is good reason for people whose profession requires continualuse of statistical analysis to avoid Excel But there are also good practical reasons whymanagers whose work is not purely statistical prefer a program that they regularly usefor other purposes Excel appears to be adequate for simpler analyses of the kind thatoccur most often in business applications

TO INSTRUCTORS: ABOUT THIS BOOK xxvii

Some statistical work, both in practice and in PSBE, can be done with a calculator

rather than software Students should have at least a two-variable statistics calculatorwith functions for correlation and the least-squares regression line as well as for themean and standard deviation Graphing calculators offer considerably more capability.Because students have calculators, the text doesn’t discuss “computing formulas” for thesample standard deviation or the least-squares regression line

Technology can be used to assist learning statistics as well as doing statistics The

design of good software for learning is often quite different from that of software for doing We want to call particular attention to the set of statistical applets available on the PSBE Web site (www.whfreeman.com/psbe3e) These interactive graphical programs

are by far the most effective way to help students grasp the sensitivity of correlation andregression to outliers, the idea of a confidence interval, the way ANOVA responds toboth within-group and among-group variation, and many other statistical fundamentals.Exercises using these applets appear throughout the text, marked by a distinctive icon

We urge you to assign some of these, and we suggest that if your classroom is suitably

APPLET

equipped, the applets are very helpful tools for classroom presentation as well

Carefully Structured Pedagogy

Few students find statistics easy An emphasis on real data and real problems helpsmaintain motivation, and there is no substitute for clear writing Beginning with dataanalysis builds confidence and gives students a chance to become familiar with yourchosen software before the statistical content becomes intimidating We have adoptedseveral structural devices to aid students Major settings that drive the exposition arepresented as cases with more background information than other examples (But weavoid the temptation to give so much information that the case obscures the statistics.)

A distinctive icon ties together examples and exercises based on a case

CASE

The exercises are structured with particular care Short “Apply Your Knowledge”

sections pose straightforward problems immediately after each major new idea Thesegive students stopping points (in itself a great help to beginners) and also tell them that

“you should be able to do these things right now.” Each numbered section in the textends with a substantial set of exercises, and more appear as review exercises at the end

of each chapter Finally, each chapter ends with a few Case Study Exercises that aresuitable for individual or group projects Case Study Exercises are more ambitious, offerless explicit guidance, and often use large data sets

Acknowledgments

We are grateful to the many colleagues and students who have provided helpful comments

about Introduction to the Practice of Statistics and The Basic Practice of Statistics They have contributed to improving PSBE as well In particular, we would like to thank the fol- lowing colleagues who, as reviewers, offered specific comments on PSBE, third edition:

Marlynne Beth Ingram,

The University of Iowa

Morgan Jones,

Kenan-Flagler Business School, UNC–Chapel Hill

Elias T Kirche,

Florida Gulf Coast University

Paul Daniel Martin,

Pasadena City College

Xiaofeng (Charlie) Shi,

Diablo Valley College

Alexandre Borges Sugiyama,

TO INSTRUCTORS: ABOUT THIS BOOK xxix

We also would like to thank the participants in an extremely useful focus group held atthe University of Tennessee, Knoxville, and offer a special note of thanks to WilliamSeaver for spearheading this focus group:

Kimberly Dawn Cooper,

Zhe George Zhang,

Western Washington University

The professionals at W H Freeman and Company, in particular Mary Louise Byrd,Bruce Kaplan, Terri Ward, Laura Capuano, Katrina Wilhelm, Catriona Kaplan, and Karen

Carson have contributed greatly to the success of PSBE Most of all, we are grateful to

the many people in varied disciplines and occupations with whom we have worked togain understanding from data They have provided both material for this book and theexperience that enabled us to write it What the eminent statistician John Tukey called

“the real problems experience and the real data experience” has shaped our view ofstatistics It has convinced us of the need for beginning instruction to focus on dataand concepts, building intellectual skills that transfer to more elaborate settings andremain essential when all details are automated We hope that users and potential users

of statistical techniques will find this emphasis helpful

MEDIA AND SUPPLEMENTS

For Students

www.yourstatsportal.com (Access code or online purchase required.) StatsPortal is the

digital gateway to The Practice of Statistics for Business and Economics, Third Edition,

designed to enrich the course and enhance students’ study skills through a collection

of Web-based tools StatsPortal integrates a rich suite of diagnostic, assessment,

tuto-rial, and enrichment features, enabling students to master statistics at their own pace

StatsPortal is organized around three main teaching and learning components:

• Interactive eBook integrates a complete and customizable online version of the

text, with all of its media resources Students can quickly search the text, and theycan personalize the eBook just as they would the print version, with highlighting,bookmarking, and note-taking features Instructors can add, hide, and reordercontent; integrate their own material; and highlight key text

• Resources for PSBE 3e are all organized into one location for ease of use These

resources include the following:

• NEW! Statistical Video Series consists of StatClips, StatClips Examples, and

Statistically Speaking “Snapshots.” Animated lecture videos, whiteboard lessons,and documentary-style footage illustrate key statistical concepts and helpstudents visualize statistics in real-world scenarios

• StatTutor Tutorials offer audio-multimedia tutorials, including videos, applets,

and animations

• Statistical Applets offer 17 interactive applets to help students master key

statistical concepts

• CrunchIt! 2.0® Statistical Software allows users to analyze data from any

Internet location Designed with the novice user in mind, the software is not onlyeasily accessible but also easy to use CrunchIt! 2.0® offers all the basic

statistical routines covered in introductory statistics courses and more

• Stats@Work Simulations put students in the role of consultants, helping them

better understand statistics within the context of real-life scenarios

• EESEE Case Studies, developed by The Ohio State University Statistics

Department, teach students to apply their statistical skills by exploring actualcase studies, using real data, and answering questions about the study

• Data sets are available in ASCII, Excel, JMP, Minitab, TI, SPSS†, and S-Plusformats

• Student Solutions to Odd-Numbered Exercises include explanations of crucial

concepts and detailed solutions to odd-numbered problems with step-by-stepmodels of important statistical techniques

• Statistical Software Manuals for Excel, TI-83/84, Minitab, JMP, and SPSS

provide instruction, examples, and exercises using specific statistical softwarepackages

†SPSS was acquired by IBM in October 2009.

xxxi

• Interactive Table Reader allows students to use statistical tables interactively to

seek the information they need

• Tables reproduce the statistical tables found at the back of the textbook.

• Companion Chapters: Chapter 15 – Two-Way Analysis of Variance, Chapter 16

– Nonparametric Tests, and Chapter 17 – Logistic Regression are available asdownloadable pdfs

Resources for Instructors only:

• Instructor’s Guide with Full Solutions includes worked-out solutions to all

exercises, teaching suggestions, and chapter comments

• Test Bank contains hundreds of multiple choice questions.

• Lecture PowerPoint slides offer a detailed lecture presentation of statistical

concepts covered in each chapter of PSBE 3e.

• NEW! SolutionMaster is a Web-based version of the solutions in the Instructor’s

Guide with Full Solutions This easy-to-use tool lets instructors generate

a solution file for any set of homework exercises Solutions can be downloaded

in PDF format for convenient printing and posting For more information

or a demonstration, contact your local W H Freeman sales representative

• Assignments organizes assignments and guides instructors through an

easy-to-create assignment process and provides access to questions from the TestBank, Web Quizzes, and Exercises from the text, including many algorithmicproblems

Online Study Center 2.0: www.whfreeman.com/osc/psbe3e (Access code or

on-line purchase required.) The Onon-line Study Center helps students identify content areasthat are particularly difficult so that they can focus their study time where it is most

needed The OSC offers all the resources available in StatsPortal, except the eBook and

Assignment Center

Companion Web Site: www.whfreeman.com/psbe3e For students, this site serves

as a FREE 24/7 electronic study guide, and it includes such features as statistical applets,data sets, and self-quizzes

Interactive Student CD-ROM Included with every new copy of PSBE 3e, the CD

con-tains access to all the content available on the Companion Web site CrunchIt! 2.0®Statistical Software and EESEE case studies are available via an access-code-protectedWeb site (Access code is included with every new text.)

NEW! Video Tool Kit www.whfreeman.com/statvtk (Access code or online purchase

required.) This new Statistical Video Series consists of three types of videos that illustratekey statistical concepts and help students visualize statistics in real-world scenarios:

• StatClips lecture videos, created and presented by Alan Dabney, PhD, Texas A&M

University, are innovative visual tutorials that illustrate key statistical concepts In3-5 minutes, each StatClips video combines dynamic animation, data sets, andinteresting scenarios to help students understand the concepts in an introductorystatistics course

• StatClips Examples, which are linked to the StatClips videos, are also created and

presented by Alan Dabney Each walks students through step-by-step examplesrelated to the StatClips lecture videos to reinforce the concepts through problemsolving

MEDIA AND SUPPLEMENTS xxxiii

• SnapShots videos are abbreviated, student-friendly versions of the Statistically

Speaking video series Against All Odds SnapShots present new and updated

documentary footage and interviews of real people using data analysis to makeimportant decisions in their careers and in their daily lives From business to

medicine, from the environment to understanding the Census, SnapShots focus on

why statistics is important for students’ careers and how statistics can be a powerfultool to understand their world

Printed Student Solutions Manual to Odd-Numbered Exercises This Solutions

Man-ual provides solutions to odd-numbered text exercises, along with summaries of the keyconcepts needed to solve the problems ISBN: 1-4292-4250-7

Software Manuals Software manuals covering Excel, Minitab, SPSS, TI-83/84, and

JMP are offered within StatsPortal and the Online Study Center These manuals areavailable in printed versions through custom publishing They serve as basic introductions

to popular statistical software options and guides for their use with PSBE 3e.

Special Software Packages Student versions of JMP, Minitab, S-PLUS, and SPSS are

available on a CD-ROM packaged with the textbook This software is not sold separatelyand must be packaged with the text Contact your W.H Freeman representative forinformation or visit www.whfreeman.com

For InstructorsThe Instructor’s Web site, www.whfreeman.com/psbe3e, requires user registration

as an instructor and features all of the student Web materials, plus:

• Instructor version of EESEE (Electronic Encyclopedia of Statistical Examples and

Exercises), with solutions to the exercises in the student version

• PowerPoint slides containing all textbook figures and tables.

• Lecture PowerPoint slides offering a detailed lecture presentation of statistical

concepts covered in each chapter of PSBE 3e.

Printed Instructor’s Guide with Solutions

This printed guide includes full solutions to all exercises and provides additional amples and data sets for class use, Internet resources, and sample examinations It also

ex-contains brief discussions of the PSBE approach for each chapter.

ISBN: 1-4292-4245-0

Test Bank

The test bank contains hundreds of multiple-choice questions to generate quizzes andtests This is available in print as well as electronically on CD-ROM (for Windowsand Mac), where questions can be downloaded, edited, and re-sequenced to suit eachinstructor’s needs

Printed Version, ISBN: 1-4292-4251-5Computerized (CD) Version, ISBN: 1-4292-4252-3

Enhanced Instructor's Resource CD-ROM: Allows instructors to search and export

(by key term or chapter) all the material from the student CD, plus:

• All text images and tables

• Instructor’s Guide with Full Solutions

• PowerPoint files and lecture slides

• Test bank filesISBN: 1-4292-4244-2

Course Management Systems W H Freeman and Company provides courses for

Blackboard, WebCT (Campus Edition and Vista), Angel, Desire2Learn, Moodle, andSakai course management systems They are completely integrated courses that you caneasily customize and adapt to meet your teaching goals and course objectives Contactyour local sales representative for more information

Developed for educators by educators, i-clicker is the easiest-to-use and most flexibleclassroom response system available

TO STUDENTS: WHAT IS STATISTICS?

Statistics is the science of collecting, organizing, and interpreting numerical facts, which

we call data We are bombarded by data in our everyday lives The news mentions

movie box-office sales, the latest poll of the president’s popularity, and the average hightemperature for today’s date Advertisements claim that data show the superiority of theadvertiser’s product All sides in public debates about economics, education, and socialpolicy argue from data A knowledge of statistics helps separate sense from nonsense inthis flood of data

The study and collection of data are also important in the work of many professions,

so training in the science of statistics is valuable preparation for a variety of careers.Each month, for example, government statistical offices release the latest numerical in-formation on unemployment and inflation Economists and financial advisors, as well

as policy makers in government and business, study these data to make informed cisions Doctors must understand the origin and trustworthiness of the data that appear

in medical journals Politicians rely on data from polls of public opinion Business cisions are based on market research data that reveal consumer tastes and preferences.Engineers gather data on the quality and reliability of manufactured products Most areas

de-of academic study make use de-of numbers and therefore also make use de-of the methods

of statistics This means it is extremely likely that your undergraduate research projectswill involve, at some level, the use of statistics

Learning from Data

The goal of statistics is learn from data To learn, we often perform calculations or make

graphs based on a set of numbers But to learn from data, we must do more than calculateand plot because data are not just numbers; they are numbers that have some context thathelps us learn from them

Two-thirds of Americans are overweight or obese according to the Center for DiseaseControl and Prevention (CDC) Web site (www.cdc.gov/nchs/nhanes.htm) Whatdoes it mean to be obese or to be overweight? To answer this question, we need to talkabout body mass index (BMI) Your weight in kilograms divided by the square of yourheight in meters is your BMI A person who is 6 feet tall (1.83 meters) and weighs

180 pounds (81.65 kilograms) will have a BMI of 81.65/(1.83)2 = 24.4 kg/m2 How

do we interpret this number? According to the CDC, a person is classified as overweight

or obese if their BMI is 25 kg/m2or greater, and as obese if their BMI is 30 kg/m2 ormore Therefore, two-thirds of Americans have a BMI of 25 kg/m2or more The personwho weighs 180 pounds and is 6 feet tall is not overweight or obese, but if he or shegains 5 pounds, the BMI would increase to 25.1, and he or she would be classified asoverweight What does this have to do with business and economics? Obesity in theUnited States costs about $147 billion per year in direct medical costs!

When you do statistical problems, even straightforward textbook problems, don’tjust graph or calculate Think about the context and state your conclusions in the specificsetting of the problem As you are learning how to do statistical calculations and graphs,remember that the goal of statistics is not calculation for its own sake but gaining under-standing from numbers The calculations and graphs can be automated by a calculator orsoftware, but you must supply the understanding This book presents only the most com-mon specific procedures for statistical analysis A thorough grasp of the principles of

xxxv

statistics will enable you to quickly learn more advanced methods as needed On theother hand, a fancy computer analysis carried out without attention to basic principleswill often produce elaborate nonsense As you read, seek to understand the principles aswell as the necessary details of methods and recipes.

The Rise of Statistics

Historically, the ideas and methods of statistics developed gradually as society grewinterested in collecting and using data for a variety of applications The earliest origins ofstatistics lie in the desire of rulers to count the number of inhabitants or measure the value

of taxable land in their domains As the physical sciences developed in the seventeenthand eighteenth centuries, the importance of careful measurements of weights, distances,and other physical quantities grew Astronomers and surveyors striving for exactnesshad to deal with variation in their measurements Numerous measurements should bebetter than a single measurement, even though they vary among themselves How can

we best combine many varying observations? Statistical methods that are still importantwere invented to analyze scientific measurements

By the nineteenth century, the agricultural, life, and behavioral sciences also began torely on data to answer fundamental questions How are the heights of parents and childrenrelated? Does a new variety of wheat produce higher yields than the old, and underwhat conditions of rainfall and fertilizer? Can a person’s mental ability and behavior bemeasured just as we measure height and reaction time? Effective methods for dealingwith such questions developed slowly and with much debate

As methods for producing and understanding data grew in number and tication, the new discipline of statistics took shape in the twentieth century Ideas andtechniques that originated in the collection of government data, in the study of astronom-ical or biological measurements, and in the attempt to understand heredity or intelligencecame together to form a unified “science of data.” That science of data—statistics—isthe topic of this text

sophis-The Organization of This Book

Part I of this book, “Data,” concerns data analysis and data production The first twochapters deal with statistical methods for organizing and describing data These chaptersprogress from simpler to more complex data Chapter 1 examines data on a singlevariable, Chapter 2 is devoted to relationships among two or more variables You willlearn both how to examine data produced by others and how to organize and summarizeyour own data These summaries will be first graphical, then numerical, and then, whenappropriate, in the form of a mathematical model that gives a compact description ofthe overall pattern of the data Chapter 3 outlines arrangements (called designs) forproducing data that answer specific questions The principles presented in this chapterwill help you design proper samples and experiments for your research projects and toevaluate other such investigations in your field of study

Part II, “Probability and Inference,” consisting of Chapters 4 to 8, introduces tical inference—formal methods for drawing conclusions from properly produced data.Statistical inference uses the language of probability to describe how reliable its con-clusions are, so some basic facts about probability are needed to understand inference.Probability is the subject of Chapters 4 and 5 Chapter 6, perhaps the most importantchapter in the text, introduces the reasoning of statistical inference Effective inference

statis-is based on good procedures for producing data (Chapter 3), careful examination of the