Statistics and business data analysis

Increasingly, decisions once based on management intuition and experience now rely on empirical evidence drawn from statistical data.

Statistics and business data analysis

Retrieve Value Given a set of specific cases, find attributes of those cases. What is the value of aggregation function F over a given set S of data cases?

What is the sorted order of a set S of data cases according to their value of attribute A? What is the range of values of attribute A in a set S of data cases?

What is the distribution of values of attribute A in a set S of data cases? What is the correlation between attributes X and Y over a given set S of data cases?

Which data cases in a set S of data cases are relevant to the current users' context? Barriers to effective analysis[ edit ] Barriers to effective analysis may exist among the analysts performing the data analysis or among the audience.

Distinguishing fact from opinion, cognitive biases, and innumeracy are all challenges to sound data analysis. Confusing fact and opinion[ edit ] You are entitled to your own opinion, but you are not entitled to your own facts. Daniel Patrick Moynihan Effective analysis requires obtaining relevant facts to answer questions, support a conclusion or formal opinionor test hypotheses.

Facts by definition are irrefutable, meaning that any person involved in the analysis should be able to agree upon them. This makes it a fact.

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Whether persons agree or disagree with the CBO is their own opinion. As another example, the auditor of a public company must arrive at a formal opinion on whether financial statements of publicly traded corporations are "fairly stated, in all material respects.

When making the leap from facts to opinions, there is always the possibility that the opinion is erroneous. Cognitive biases[ edit ] There are a variety of cognitive biases that can adversely affect analysis.

Statistics and business data analysis

For example, confirmation bias is the tendency to search for or interpret information in a way that confirms one's preconceptions.

In addition, individuals may discredit information that does not support their views. Analysts may be trained specifically to be aware of these biases and how to overcome them.

In his book Psychology of Intelligence Analysis, retired CIA analyst Richards Heuer wrote that analysts should clearly delineate their assumptions and chains of inference and specify the degree and source of the uncertainty involved in the conclusions.

He emphasized procedures to help surface and debate alternative points of view. However, audiences may not have such literacy with numbers or numeracy ; they are said to be innumerate. Persons communicating the data may also be attempting to mislead or misinform, deliberately using bad numerical techniques.

More important may be the number relative to another number, such as the size of government revenue or spending relative to the size of the economy GDP or the amount of cost relative to revenue in corporate financial statements.

This numerical technique is referred to as normalization [7] or common-sizing. There are many such techniques employed by analysts, whether adjusting for inflation i.

Statistics and business data analysis

Analysts apply a variety of techniques to address the various quantitative messages described in the section above. Analysts may also analyze data under different assumptions or scenarios.

For example, when analysts perform financial statement analysisthey will often recast the financial statements under different assumptions to help arrive at an estimate of future cash flow, which they then discount to present value based on some interest rate, to determine the valuation of the company or its stock.

Similarly, the CBO analyzes the effects of various policy options on the government's revenue, outlays and deficits, creating alternative future scenarios for key measures. Smart buildings[ edit ] A data analytics approach can be used in order to predict energy consumption in buildings.

Analytics and business intelligence[ edit ] Main article: Analytics Analytics is the "extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions. Initial data analysis[ edit ] The most important distinction between the initial data analysis phase and the main analysis phase, is that during initial data analysis one refrains from any analysis that is aimed at answering the original research question.

The initial data analysis phase is guided by the following four questions: Data quality can be assessed in several ways, using different types of analysis: Test for common-method variance. The choice of analyses to assess the data quality during the initial data analysis phase depends on the analyses that will be conducted in the main analysis phase.

One should check whether structure of measurement instruments corresponds to structure reported in the literature. There are two ways to assess measurement: If the study did not need or use a randomization procedure, one should check the success of the non-random sampling, for instance by checking whether all subgroups of the population of interest are represented in sample.

Other possible data distortions that should be checked are: It is especially important to exactly determine the structure of the sample and specifically the size of the subgroups when subgroup analyses will be performed during the main analysis phase.Data analysis is the collecting and organizing of data so that a researcher can come to a conclusion.

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Ethics in Statistics - Avoid Mispresentation of Data in Research