BES Tutorial Sample Solutions, S1/13

WEEK 2 TUTORIAL EXERCISES (To be discussed in the

week starting March 11)
1. What is meant by a variable in a statistical sense? Distinguish
between qualitative and quantitative statistical variables, and
between continuous and discrete variables. Give examples.
A variable in a statistical sense is just some characteristic of an
object. It may take different values.
Data on a quantitative variable can be expressed numerically in a
meaningful way (e.g. height of an individual, number of children in
a family. Data on qualitative variables cannot be expressed
numerically in a meaningful way; e.g. sex of an individual, hair
colour).
A discrete quantitative variable can assume only certain discrete
numerical values on the number line (can be a finite or infinite
number of these values). A continuous quantitative variable can
assume any value in a specific range or interval; e.g. length of a
pipe.

2. Distinguish between (a) a statistical population and a sample; (b)

a parameter and a statistic. Give examples.
A statistical population is the set of measurements or observations
of a characteristic of interest for all elementary units in a frame;
e.g the shoe sizes of all men in Australia. A statistical sample is a
subset of a population; e.g. the shoe sizes of all the men in the class

is a sample of the population represented by the shoe sizes of all

men in Australia.
A parameter is a numerical description of a population. For
example, the average shoe size of all Australian men is a
parameter (of the population of the shoe sizes of all Australian
men). A statistic is a numerical description of a sample. For
example, the average shoe size of all men in this class room is a
statistic (calculated from the sample of the shoe sizes of all men in
this class room).
3. In order to know the market better, the second-hand car
dealership, Anzac Garage, wants to analyze the age of secondhand cars being sold. A sample of 20 advertisements for
passenger cars is selected from the second-hand car
advertising/listing website www.drive.com.au The ages of the
vehicles at time of advertisement are listed below:
5, 5, 6, 14, 6, 2, 6, 4, 5, 9, 4, 10, 11, 2, 3, 7, 6, 6, 24, 11
(a) Calculate frequency, cumulative frequency and relative
frequency distributions for the age data using the following bin
classes:
More than 0 to less than or equal to 8 years
More than 8 to less than or equal to 16 years
More than 16 to less than or equal to 24 years.
Bin

Relative
Frequency

Frequency

Cumulative
Frequency

0.7

14

14

16

0.25

19

16

24

0.05

20

(b)Sketch a frequency histogram using the calculations in part (a).

What can you say about the distribution of the age of these
second-hand cars? Is there anything wrong with the frequency
table and histogram? Specifically, is the choice of bin classes
appropriate? What needs to be done?
Relative frequency histogram for Age
0.8
0.7

Frequency

0.6
0.5
0.4
0.3
0.2
0.1
0
8

16

24

Bin

From this graph (it was not necessary to use EXCEL although it is
good practice), the Age distribution appears to be skewed to the
right. 70% of observations have age between 0 and 8. However,
this histogram only provides limited information about the Age
distribution because there are too few bins and they are very wide.

(c) Halve the width of the bins (0 to 4, 4 to 8, etc) and recalculate

the frequency, cumulative frequency and relative frequency
distributions. Using the new distributions and histogram, what
can you now say about the distribution of the age of secondhand cars?
Bin
0

4 < Age 8
8 < Age 12
12 < Age 16
16 < Age 20
20 < Age 24

Cumulative
Relative
Frequency Frequency Frequency
0.25
5
5
0.45
9
14
0.2
4
18
0.05
1
19
0
0
19
0.05
1
20

Frequency

Figure 3.1: Revised histogram for age

of cars
10
9
8
7
6
5
4
3
2
1
0
2

10

14

18

22

Age

There still appears to be a skew to the right, but now we can also
see that there is an outlier in the 21~24 Age category. 5~8 are the
most frequently observed ages. A quite sizable proportion of the
second-hand cars are relatively new (25% being less or equal to 4
years old).

4. SIA: Health expenditure

A recent report by Access Economics provides a comparison of
Australian expenditures on health with that of comparable
OECD countries. Data from that report relating to 2005 have
been used to reproduce their Figure 2.2 (below denoted as
Figure 2.1).
(a) What are the key features of these data?
A strong positive association more per capita GDP implies
more Health Expenditure per capita.
There are (at least) 2 outliers, the observation with the largest
Health Expenditure (Luxembourg) and the observation with
the highest GDP (USA). Without these 2 the relationship is
approximately linear. With them, there is a suggestion of a
non-linear relationship.
An indication of more variability in health expenditures when
GDP is larger.
(b)While this is a bivariate scatter plot, there are three variables
involved: health expenditure, GDP and population. Why
account for population by expressing health expenditure and
GDP in per capita terms?
This is recognition that there may be factors other than GDP
associated with Health Expenditures and population size is one
obvious factor. Expressing everything in per capita terms is one
way to control for population variations and hence isolate the
GDP Health Expenditure relationship.

5. SIA: Australian private health insurance coverage

Australia has a mixed public/private system for delivering
hospital services. Medicare is publicly funded insurance that
provides free treatment in public hospitals for all its citizens.
In addition, Australians can purchase private health insurance
to provide extra benefits such as choice of doctor, improved
hospital accommodation and reduced waiting times. Figure
2.2 presents the changes over time in the proportion of the
population who have private health insurance covering
hospitalization.
(a) What are the key features of these data?
Over the entire period there has been a trend down in
percentage of Australians insured. In the early 70s nearly
80% of Austalians were covered but now its less than 50%.
Overall trend has been subject to some shocks notably in
the early 80s then again in 2000.
Since the last shock coverage has been relatively constant
compared to the variation beforehand.
(b) What happened in 2000 that is associated with one of
these key features?
A quick internet search will reveal that in response to the
downward trend in coverage, the Australian Government
introduced a new policy in 2000 called Lifetime Health
Coverage (LHC)
http://www.health.gov.au/internet/main/publishing.nsf/content/
private-1