Non-sampling errors, Applied Statistics

Statistics Can Lead to Errors

The use of statistics can often lead to wrong conclusions or wrong estimates. For example, we may want to find out the average savings by individual investors in 1994-95. Hence, we would have to question every investor in our population or some sample of such investors. In either case, the average savings calculated may not be the true average savings for the population. This is basically due to the occurrence of errors. Errors may be classified into two categories.

NON-SAMPLING ERRORS

Such errors are caused by deficiencies in the collection and editing of data. Three reasons for such errors include Procedural Bias, Biased Observations and Non-Response Bias. Such errors may occur in a sample or in a census.

Procedural Bias

Procedural bias is the distortion of the representativeness of the data due to the procedure adopted in collecting the data.

For instance in our retailers example, Procedural Bias may creep in, if the retailer excludes all customers making purchases under Rs.2,000. In effect she will then study only high value customers, not all customers.

Suppose data is being collected about the rent levels in a city. The question “How much rent do you pay for accommodation?” can introduce a Procedural Bias because the rent may be for accommodation without furniture, etc. or for accommodation with furniture. In some cases the rent may include charges of the co-operative housing society for maintenance, etc. In other cases it may be a composite rent including even electricity and water charges. Hence, the above question must necessarily be supplemented by questions about what is included and excluded from the rent.

Unless questions are correctly framed, a procedural bias can creep into the investigation.

Non-Response Bias

Absence of response can lead to Non-Response Bias.

In the retailers case, she may ask the customers for their suggestions for better products and services. The customers would require some time for thinking about this and may not be able to give an immediate answer. But, once they leave the shop they may forget all about responding. It is not possible to conclude that the customers do not have any suggestion for improving the service.

For another example, investors may be asked “How much do you expect to invest in shares in 1998 if the Sensex rises to 6000 by the end of the year?” If a significant proportion, say 60% of the investors, do not reply then there will be significant Non-Response Bias. It cannot be assumed that those who did not respond will not invest in shares in 1998. Nor can it be assumed that those who did not respond will invest in the same way as those who responded.

Biased Observation

Here the observations do not correctly reflect the characteristics of the population being studied. The retailer may exclude important information like the quantity and type of equipment purchased, etc. and only concentrate on the bill amount. Hence, a purchaser of a number of low value items would be treated on the same footing as a purchaser of a single high value item. This may be unjustified as the two purchasers are likely to have distinctly different needs.

For another example, a study may be conducted to find out the annual earnings of various types of finance executives as compared with their qualifications. In such a case if all CFAs and CAs are grouped together as professionals then there is Biased Observation. This is because each of these qualifications is distinct and many executives may have more than one of the above qualifications. 

Posted Date: 9/15/2012 3:03:41 AM | Location : United States







Related Discussions:- Non-sampling errors, Assignment Help, Ask Question on Non-sampling errors, Get Answer, Expert's Help, Non-sampling errors Discussions

Write discussion on Non-sampling errors
Your posts are moderated
Related Questions
Read the following data on the economy of Angoia and answer/respond to the questions/instructions that follow. Unless otherwise stated, the monetary figures are in real billions o

1. Suppose you are estimating the imports (from both the U.S. mainland and foreign countries) of fuels and petroleum products in Hawaii (the dependent variable). The values of the

Origin and Development of probability Theory: The credit for origin and development of probability goes to the European gamblers of 17 th century. They  used to gamble  on gam

The incidence of occupational disease in an industry is such that the workers have a 20% chance of suffering from it. What is the probability that out of six workers 4 or more will

Examples of grouped, simple and frequency distribution data

Suppose both the Repair record 1978 and Company headquarters are believed to be significant in explaining the vector (Price, Mileage, Weight). Here, because of the limited sample s

Melissa Bakery is preparing for the coming thanksgiving festival. The bakery plans to bake and sell its favourite cookies; butter cookies, chocolate cookies and almond cookies. A k

The regression line should be drawn on the scatter diagram in such a way that when the squared values of the vertical distance from each plotted point to the line are added, the to

how to write result in the end of price index number problem

Mid year population 440000 Late fatal death          29 No. of live birth           5200 No. of infant death      423 No. of maternal death 89 No. of infant deaths i