‘The Barrow exercises and online resources offer good scope for directing students to a great source of self study.’ Do you need to brush up on your statistical skills to truly excel in your economics or business course? If you want to increase your confidence in statistics then this is the perfect book for you The fifth edition of Statistics for Economics, Accounting and Business Studies continues to present a user-friendly and concise introduction to a variety of statistical tools and techniques Throughout the text, the author demonstrates how and why these techniques can be used to solve real-life problems, highlighting common mistakes and assuming no prior knowledge of the subject New to this fifth edition: • Chapter 11, Seasonal adjustment of time-series data is back by popular demand • New worked examples in every chapter and more real-life business examples – such as whether the level of general corruption in a country harms investment and whether boys or girls perform better at school – show how to apply an understanding of statistical techniques to wider business practice • New interactive online resource MathXL for Statistics See below for more details MathXL for Statistics A brand new online learning resource for this edition available to users of this book at www.pearsoned.co.uk/barrow This core textbook is aimed at undergraduate and MBA students taking an introductory statistics course on their economics, accounting or business studies degree • Interactive questions with randomised values allow you to practise the same concept as many times as you need until you master it • Guided solutions break down the question for you step-by-step • Audio animations talk you through key statistical techniques an imprint of CVR_BARR7942_05_SE_CVR.indd Michael Barrow is a Senior Lecturer in Economics at the University of Sussex He has acted as a consultant for major industrial, commercial and government bodies Front cover image: © Getty Images MICHAEL BARROW STATISTICS FOR ECONOMICS, ACCOUNTING AND BUSINESS STUDIES Fifth Edition BARROW An unrivalled online study and testing resource that generates a personalised study plan and provides extensive practice questions exactly where you need them STATISTICS FOR ECONOMICS, ‘There are thousands of intro stats books on the market, but few which are sufficiently orientated towards economics, and even fewer that treat topics with as much rigour as Barrow does.’ Andy Dickerson, University of Sheffield Fifth Edition ACCOUNTING AND BUSINESS STUDIES ‘An excellent reference book for the undergraduate student; filled with examples and applications – both practical (i.e computer-based) and traditional (i.e pen and paper problems); wide-ranging and sensibly ordered The book is written clearly, easy to follow yet not in the least patronising This is a particular strength.’ Christopher Gerry, UCL www.pearson-books.com 9/3/09 10:56:41 STFE_A01.qxd 26/02/2009 09:01 Page i Statistics for Economics, Accounting and Business Studies The Power of Practice With your purchase of a new copy of this textbook, you received a Student Access Kit for getting started with statistics using MathXL Follow the instructions on the card to register successfully and start making the most of the resources Don’t throw it away! The Power of Practice MathXL is an online study and testing resource that puts you in control of your study, providing extensive practice exactly where and when you need it MathXL gives you unrivalled resources: ● Sample tests for each chapter to see how much you have learned and where you still need practice ● A personalised study plan, which constantly adapts to your strengths and weaknesses, taking you to exercises you can practise over and over with different variables every time ● ‘Help me solve this’ provide guided solutions which break the problem into its component steps and guide you through with hints ● Audio animations guide you step-by-step through the key statistical techniques ● Click on the E-book textbook icon to read the relevant part of your textbook again See pages xiv–xv for more details To activate your registration go to www.pearsoned.co.uk/barrow and follow the instructions on-screen to register as a new user ➔ STFE_A01.qxd 26/02/2009 09:01 Page ii We work with leading authors to develop the strongest educational materials in Accounting, bringing cutting-edge thinking and best learning practice to a global market Under a range of well-known imprints, including Financial Times Prentice Hall, we craft high-quality print and electronic publications, which help readers to understand and apply their content, whether studying or at work To find out more about the complete range of our publishing, please visit us on the World Wide Web at: www.pearsoned.co.uk STFE_A01.qxd 26/02/2009 09:01 Page iii Statistics for Economics, Accounting and Business Studies Fifth Edition Michael Barrow University of Sussex STFE_A01.qxd 26/02/2009 09:01 Page iv Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsoned.co.uk First published 1988 Fifth edition published 2009 © Pearson Education Limited 1988, 2009 The right of Michael Barrow to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988 All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC1N 8TS All trademarks used herein are the property of their respective owners The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners ISBN 13: 978-0-273-71794-2 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Barrow, Michael Statistics for economics, accounting and business studies / Michael Barrow – 5th ed p com Includes bibliographical references and index ISBN 978-0-273-71794-2 (pbk : alk paper) Economics–Statistical methods Commercial statistics I Title HB137.B37 2009 519.5024′33–dc22 2009003125 10 13 12 11 10 09 Typeset in 9/12pt Stone Serif by 35 Printed and bound by Ashford Colour Press Ltd Gosport The publisher’s policy is to use paper manufactured from sustainable forests STFE_A01.qxd 26/02/2009 09:01 Page v For Patricia, Caroline and Nicolas STFE_A01.qxd 26/02/2009 09:01 Page vii Contents Guided tour of the book xii Getting started with statistics using MathXL xiv Preface to the fifth edition xvii Introduction Descriptive statistics Learning outcomes Introduction Summarising data using graphical techniques Looking at cross-section data: wealth in the UK in 2003 Summarising data using numerical techniques The box and whiskers diagram Time-series data: investment expenditures 1973–2005 Graphing bivariate data: the scatter diagram Data transformations Guidance to the student: how to measure your progress Summary Key terms and concepts Reference Problems Answers to exercises Appendix 1A: Σ notation Problems on Σ notation Appendix 1B: E and V operators Appendix 1C: Using logarithms Problems on logarithms Probability Learning outcomes Probability theory and statistical inference The definition of probability Probability theory: the building blocks Bayes’ theorem Decision analysis Summary Key terms and concepts Problems Answers to exercises 8 10 16 24 44 45 58 60 62 63 64 64 65 71 75 76 77 78 79 80 80 81 81 84 91 93 98 98 99 105 vii STFE_A01.qxd 26/02/2009 09:01 Page viii Contents Probability distributions Learning outcomes Introduction Random variables The Binomial distribution The Normal distribution The sample mean as a Normally distributed variable The relationship between the Binomial and Normal distributions The Poisson distribution Summary Key terms and concepts Problems Answers to exercises Estimation and confidence intervals Learning outcomes Introduction Point and interval estimation Rules and criteria for finding estimates Estimation with large samples Precisely what is a confidence interval? Estimation with small samples: the t distribution Summary Key terms and concepts Problems Answers to exercises Appendix: Derivations of sampling distributions Hypothesis testing Learning outcomes Introduction The concepts of hypothesis testing The Prob-value approach Significance, effect size and power Further hypothesis tests Hypothesis tests with small samples Are the test procedures valid? Hypothesis tests and confidence intervals Independent and dependent samples Discussion of hypothesis testing Summary Key terms and concepts Reference viii 108 108 109 110 111 117 125 131 132 135 136 137 142 144 144 145 145 146 149 153 160 165 165 166 169 170 172 172 173 173 180 181 183 187 189 190 191 194 195 196 196 STFE_A01.qxd 26/02/2009 09:01 Page ix Contents Problems Answers to exercises The χ and F distributions Learning outcomes Introduction The χ distribution The F distribution Analysis of variance Summary Key terms and concepts Problems Answers to exercises Appendix: Use of χ and F distribution tables Correlation and regression Learning outcomes Introduction What determines the birth rate in developing countries? Correlation Regression analysis Inference in the regression model Summary Key terms and concepts References Problems Answers to exercises Multiple regression Learning outcomes Introduction Principles of multiple regression What determines imports into the UK? Finding the right model Summary Key terms and concepts Reference Problems Answers to exercises Data collection and sampling methods Learning outcomes Introduction Using secondary data sources Using electronic sources of data 197 201 204 204 205 205 220 222 229 230 231 234 236 237 237 238 238 240 251 257 271 272 272 273 276 279 279 280 281 282 300 307 308 308 309 313 318 318 319 319 321 ix STFE_A01.qxd 26/02/2009 09:01 Page x Contents Collecting primary data The meaning of random sampling Calculating the required sample size Collecting the sample Case study: the UK Expenditure and Food Survey Summary Key terms and concepts References Problems 10 Index numbers Learning outcomes Introduction A simple index number A price index with more than one commodity Using expenditures as weights Quantity and expenditure indices The Retail Price Index Inequality indices The Lorenz curve The Gini coefficient Concentration ratios Summary Key terms and concepts References Problems Answers to exercises Appendix: Deriving the expenditure share form of the Laspeyres price index 11 Seasonal adjustment of time-series data 342 343 343 344 345 353 355 360 366 367 370 374 376 376 376 377 382 385 386 Learning outcomes Introduction The components of a time series Forecasting Further issues Summary Key terms and concepts Problems Answers to exercises 386 387 387 399 400 401 401 402 404 Important formulae used in this book 408 Appendix: Tables 412 412 414 Table A1 Table A2 x 323 324 333 335 338 339 340 340 341 Random number table The standard Normal distribution ... Statistics for Economics, Accounting and Business Studies The Power of Practice With your purchase of a new copy of this textbook, you received a Student Access Kit for getting started with statistics. .. between 16 and 19? 99 xiii STFE_A01.qxd 26/02/2009 09:01 Page xiv Getting started with statistics using MathXL This fifth edition of Statistics for Economics, Accounting and Business Studies comes... If you are teaching an introductory statistics course for economics and business students, you also teach an introductory mathematics course for economics and business students? If you do, you