Here’s a common, classical statistics problem. Uncle Ted’s chain of Kill ’em and Grill ’em Venison Burgers tested two ad campaigns, A and B, and measured the sales of sausage sandwiches for 20 days under both campaigns. This was done, and it was found that mean(A) = 421, and mean(B) = 440. The question is: are the campaigns different?
In Part II of this post, I will ask the following, which is not a trick question: what is the probability that mean(A) < mean(B)? The answer will surprise you. But for right now, I merely want to characterize the sales of sausages under Campaigns A and B. Rule #1 is always look at your data! So we start with some simple plots:
I will explain box and density plots elsewhere; but for short: these pictures show the range and variability of the actual observed sales for the 20 days of the ad campaigns. Both plots show the range and frequency of the sales, but show it in different ways. Even if you don’t understand these plots well, you can see that the sales under the two campaigns was different. Let’s concentrate on Campaign A.
This is where it starts to get hard, because we first need to understand that, in statistics, data is described by probability distributions, which are mathematical formulas that characterize pictures like those above. The most common probability distribution is the normal, the familiar bell-shaped curve.
The classical way to begin is to then assume that the sales, in A (and B too), follow a normal distribution. The plots give us some evidence that this assumption is not terrible—the data is sort of bell-shaped—but not perfectly so. But this slight deviation from the assumptions is not the problem, yet.