Loading the player...

What is 'Descriptive Statistics'

Descriptive statistics are brief descriptive coefficients that summarize a given data set, which can be either a representation of the entire or a sample of a population. Descriptive statistics are broken down into measures of central tendency and measures of variability (spread). Measures of central tendency include the mean, median, and mode, while measures of variability include the standard deviation, variance, the minimum and maximum variables, and the kurtosis and skewness.

BREAKING DOWN 'Descriptive Statistics'

Descriptive statistics, in short, help describe and understand the features of a specific data set by giving short summaries about the sample and measures of the data. The most recognized types of descriptive statistics are the mean, median, and mode, which are used at almost all levels of math and statistics. However, there are less-common types of descriptive statistics that are still very important.

People use descriptive statistics to repurpose hard-to-understand quantitative insights across a large data set into bite-sized descriptions. A student's grade point average (GPA), for example, provides a good understanding of descriptive statistics. The idea of a GPA is that it takes data points from a wide range of exams, classes, and grades, and averages them together to provide a general understanding of a student's overall academic abilities. A student's personal GPA reflects his mean academic performance.

Measures of Descriptive Statistics

All descriptive statistics are either measures of central tendency or measures of variability. These two measures use graphs, tables, and general discussions to help people understand the meaning of the analyzed data.

Measures of central tendency describe the center position of a distribution for a data set. A person analyzes the frequency of each data point in the distribution and describes it using the mean, median, or mode, which measures the most common patterns of the analyzed data set.

Measures of variability, or the measures of spread, aid in analyzing how spread-out the distribution is for a set of data. For example, while the measures of central tendency may give a person the average of a data set, it does not describe how the data is distributed within the set. So, while the average of the data may be 65 out of 100, there can still be data points at both 1 and 100. Measures of variability help communicate this by describing the shape and spread of the data set. Range, quartiles, absolute deviation, and variance are all examples of measures of variability.

RELATED TERMS
  1. Variability

    Variability is the extent to which data points in a statistical ...
  2. Descriptive Billing

    Descriptive Billing is a type of credit card billing that lists ...
  3. Coefficient of Determination

    The coefficient of determination is a measure used in statistical ...
  4. Standard Error

    Standard error is the standard deviation of a sample population.
  5. Central Limit Theorem - CLT

    The central limit theorem states that when one aggregates samples ...
  6. Population

    Population is the entire pool from which a statistical sample ...
Related Articles
  1. Trading

    Trading with Gaussian models of statistics

    The study of statistics originated from Carl Friedrich Gauss and helps us understand markets, prices and probabilities, among other applications.
  2. Investing

    Stock and Flow Variables Explained: A Closer Look at Apple

    The difference between stock and flow variables is an essential concept in finance and economics. We illustrate with financial statements from Apple Inc.
  3. Tech

    Data Analyst: Job Description & Average Salary

    Learn about a data analyst career and how much money you can expect to make. Understand the skills and education needed to become a data analyst.
  4. Tech

    6 Robo-Advisors That Require Little to Start

    There are many well-regarded robo-advisor options that come with minimum investment amounts. Here are snapshots of a handful of them.
  5. Insights

    World Bank Data For Dummies

    Developing countries can't always afford to track the data crucial to setting the right economic policies and programs. That's where the World Bank steps in.
  6. Investing

    How Investment Risk Is Quantified

    FInancial advisors and wealth management firms use a variety of tools based in modern portfolio theory to quantify investment risk.
  7. Managing Wealth

    Key Features for Selling a Home

    Besides the timing of your listing, the words you use to describe your house can help you sell it faster – and for a higher price.
  8. Personal Finance

    MBA Programs Admissions

    When applying to a business school, an important metric is an applicant's undergraduate GPA. But other features of an MBA application are also important.
  9. Investing

    What's a Sensitivity Analysis?

    Sensitivity analysis is used in financial modeling to determine how one variable (the target variable) may be affected by changes in another variable (the input variable).
RELATED FAQS
  1. What is the most important type of data used in business analytics?

    Consider what makes data useful in business analytics, and why companies should search for the types of data that provide ... Read Answer >>
  2. When should I use seasonally adjusted data from the consumer price index (CPI)?

    Learn what seasonally adjusted data is, how it is determined, and when it should be used to evaluate the information gathered ... Read Answer >>
  3. How do I calculate correlation between market indicators and specific stocks?

    Discover how to calculate the correlation coefficient between market indicators and stock prices, a critical skill in technical ... Read Answer >>
  4. What assumptions are made when conducting a t-test?

    Learn what a t-test is and discover the five standard assumptions made regarding the validity of sampling and data used in ... Read Answer >>
Trading Center