If you take a lot of exams in school, how do you measure your actual performance? How do you compare yourself to other students? Who is the best basketball/soccer/baseball/… player of all times? If you take a blood test and you have values that are higher than the average, should you be worried? All these things are based on descriptive statistics. It is the art of taking lots of information, down to one small number: either the average/median or standard deviation.
Let us take it to a next step. You are a store manager with only one good in your shop. You have monthly data on the sales and the price. If you increase the price, sales drop by X%. If you decrease the price, sales drop by X%. How wonderful would it be that you drew some sort of line (ps: it’s a regression line) that would fit the data well. Why? Because you get a more educated guess what will happen your sales if you change the price. You are in the area of regression models.
Let us take it (many steps) further. You have data on stock prices and other variables. Can you construct some sort of model that will give you an estimate/prediction of the stock price tomorrow, based on the values of certain variables today. Who wouldn’t want that? You can do this via several methods: predictive analysis, markov swithcing models, nonlinear regression models,… The list is endless and the possibilities are endless (although they are more advanced). It can also be interesting just to see how variables relate to one another (but this is not nearly as profitable as the first example).
Why is statistics important? It is based on two elements: inference and prediction. If you are interested in how variables are connected with each other and how the relations are, you have inference. If you want to predict future values, you are obviously in the area of prediction. That is the reason why one would estimate the function of some sort of data set.
How do you make a decision? We use our gut some, but ideally, we want it to be based on information. Data is important, because sometimes our gut is very very wrong. But also, the more you understand statistics, the better your gut feelings get.
First we have to learn how to gather information. If you gather the information incorrectly, it’s worthless.
Once you learn how to collect good data, how do we organize it? How do we summarize and describe it in a way that becomes meaningful and easier to deal with? How do we visualize it?
Now that we have our information and we’ve organized it, what conclusions can be drawn? A set of numbers can tell many different stories, how do you make it tell the truth? What are its limitations? What additional information do we need to make our decision?
Sure, there are areas where statistics is used more formally. Namely business, science, and engineering. But really any time there are decisions to be made, whether they’re personal decisions or professional ones, a solid understanding of statistics can ultimately help you make better ones.
The bottom line is that statistics education can be tailored to your unique path. The first step is simply enrolling in a statistics course, whether you’re a high school or college student, and then opening yourself to its power and potential.
So, welcome to this course on Statistics. We will guide you through all the concepts and make sure that you will in Statistics by the end of this course, along with thorough practice.
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