Data Analyst

Statistical Thinking

Karen Hovhannisyan

2025-11-15

Overview

This chapter introduces the foundations of data analytics and statistical thinking.
Students explore how data becomes insight, what types of analytics exist, and how organizations move through the data lifecycle—from collection to decision-making.

By the end of the class, you should be able to describe what data analytics is, recognize the main forms of analytics, and identify how data-related roles interact within a company.

What Is Data Analytics?

Data analytics is the practice of examining data systematically to discover useful information, reach conclusions, and support decision-making.
In practice, it bridges raw data and business strategy. The process typically follows five stages:

Data Generation – transactions, sensors, user interactions, or surveys produce raw data.
Collection and Storage – data is gathered and kept in databases, data warehouses, or cloud systems.
Processing and Integration – data is cleaned, formatted, and connected across sources.
Analysis and Modeling – statistical or machine-learning methods reveal patterns and predict outcomes.
Communication and Action – visualizations, dashboards, and reports communicate insights for business decisions.

This “data-to-insight” flow is iterative; every analysis generates new questions that feed the next cycle.

Business Applications of Data Analytics

Analytics supports decision-making across many domains:

Telecommunications: predicting churn, optimizing network performance, or tailoring offers.
Retail: analyzing baskets, forecasting demand, or optimizing pricing.
Finance: assessing credit risk or detecting fraud.
Marketing: evaluating campaign effectiveness and designing experiments (A/B tests).
Healthcare: identifying risk factors or optimizing treatment outcomes.

The unifying theme is that analytics translates data into value by informing actions.

Types of Analytics

Different analytical approaches answer different questions.

Type	Central Question	Typical Methods	Example
Descriptive	What happened?	Aggregation, visualization	Monthly sales by region
Diagnostic	Why did it happen?	Correlation, segmentation	Analyzing the effect of pricing on sales
Predictive	What might happen?	Regression, classification, forecasting	Predicting churn probability
Prescriptive	What should we do?	Optimization, simulation	Recommending personalized offers

Explanation with Lego

The Data Lifecycle

The data lifecycle describes how information moves through an organization and is transformed into insight.

Capture / Collection: raw data is obtained from transactional systems, sensors, APIs, or external datasets.
Storage / Management: engineers design and maintain databases, warehouses, or data lakes to store data efficiently and securely.
Processing / Transformation: data is cleaned, structured, and enriched to prepare it for analysis.
Analysis / Modeling: analytical teams explore data, test hypotheses, and build models that explain or predict outcomes.
Communication / Decision: results are shared through dashboards, visualizations, and reports to support business actions.

Professional Roles

Role	Primary Responsibilities
Data Engineer	Builds and maintains the data infrastructure, pipelines, and integrations that collect and store raw data.
Analytics Engineer	Bridges engineering and analysis by transforming raw data into clean, documented, and reusable datasets—often using SQL, dbt, and data-modeling best practices. Ensures analysts and data scientists can work efficiently with trustworthy, well-structured data.
Data Analyst	Explores datasets, performs aggregations, builds dashboards, and answers business questions through descriptive and diagnostic analysis.
Business Analyst	The business analyst plays a similar role to the data analyst while bringing domain-specific knowledge to their work. A financial analyst, for example, is a type of business analyst who specializes in working with data from the finance industry.
Data Scientist	Applies statistical and machine-learning techniques to uncover patterns, generate predictions, and perform experimentation.
Business Stakeholder / Manager	Interprets and acts on insights, ensuring that data-driven decisions translate into measurable outcomes.

Flow

flowchart LR
    A[Capture / Collection] --> B[Storage / Management]
    B --> C[Processing / Transformation]
    C --> D[Analysis / Modeling]
    D --> E[Communication / Decision]

    classDef stage fill:#f4f4f4,stroke:#555,stroke-width:1px,color:#000,font-weight:bold;
    class A,B,C,D,E stage;

    subgraph Roles [Key Roles]
        DE[Data Engineer]
        AE[Analytics Engineer]
        DA[Data Analyst]
        DS[Data Scientist]
        BM[Business Manager]
    end

    DE -. supports .-> A
    DE -. builds pipelines .-> B
    AE -. transforms data .-> C
    DA -. explores data .-> D
    DS -. models data .-> D
    BM -. acts on insight .-> E

    style Roles fill:#f9f9f9,stroke:#ccc,stroke-width:1px,color:#333;

Reflection and Discussion

Types of data used commonly

Definition of data

Data is used in its broadest sense: observations, measurements and facts (both quantitative and qualitative) that serve as information or evidence.

Zero-party data

Data intentionally or proactively shared by audiences, such as:

Responses to polls, surveys or quizzes
Profiling details added to online accounts or loyalty programmes

First-party data

Proprietary data collected directly (with consent) via a company’s own channels. It typically captures behaviours and is a key marketing asset. Common sources include:

Digital interactions (website, apps)
Customer Relationship Management (CRM) systems
Content engagement
Point-of-sale systems
Transactions (accounting systems)
Interactions with digital support and call centres

First-party data | Examples

Examples of first-party data products:

Sales performance metrics by region/country/category
CRM extracts: contact info, purchase and interaction history for segmentation/personalization
Loyalty/payment card purchase data showing behavioural patterns
Email marketing metrics: open rate, click-through rate, subscriber behaviour

Second-party data

Data not collected by the business itself but associated with its customers/audiences and obtained via a partnership or contractual agreement. Examples:

Retail purchase data
Market research and survey data
Channel partner/supplier data treated as first-party within that relationship

Typical second-party sources in business:

In-store shopper research
Panels/retail share data (e.g., Kantar/Nielsen/IRI/Mintel)
Brand and communications tracking studies; ad testing; in-depth interviews
Web scraping (owned sites) and forums for sentiment, reviews, and competitive intelligence

Third-party data

Data collected by another entity that doesn’t have a direct link to your customers/audiences, often aggregated and licensed for use. (Note: privacy regulations like GDPR have tightened access and usage.)

Trusted third-party examples:

Social platforms’ aggregated audience and behaviour insights
External website analytics (e.g., Google Analytics) offering traffic, conversion, and interaction insights
Vendors (e.g., Experian/Acxiom/Dun & Bradstreet) providing profiles, segmentation, and targeting datasets
Open/public data (e.g., census aggregates)

Definition of insight

An actionable insight connects observations to what matters and what to do next:

What? — the observations from the data
Why? — why it matters
So what? — relevance and relative importance
Now what? — the recommended action

Definition of insight| What? Why? So what? Now what?

Key reminders:

A data point isn’t useful unless it links to why it matters.
It isn’t insightful unless it answers so what (why it’s relevant/important).
It isn’t actionable unless it leads to a feasible now what recommendation.

Data Reporting vs Data Story

Reporting focuses on standardized, repeatable outputs that explain the data point itself. Storytelling focuses on synthesizing evidence, reducing noise, and surfacing meaning and judgement to drive decisions and action. Visualization helps, but visualization alone is not a story.

Dimension	Data reporting	Data storytelling
Primary focus	Communicates the data	Communicates the insight and recommendations
Approach	Standardized	Customized to the situation and audience
Audience effort	Requires a data-literate audience	Does the hard work for the audience
Core skills	Good data visualization skills	Strong critical thinking and creative communication

Definition of storytelling

Storytelling is the creation and telling of stories. In business settings, it is a form of communication that adapts structures from wider storytelling to persuade audiences to think, feel and act.

Data storytelling applies storytelling techniques to communicate insights, actions and ideas that come from data (rather than the raw data alone). It starts by understanding the data available within the broader goals, then draws out meaning from the background noise to guide the right conversations and decisions.

Bias in Data

Types of Bias in Data

Understanding bias is crucial in data analytics, as it affects the reliability and fairness of insights and models.
Below are the main types of bias with examples and ways to avoid them.

Selection Bias

Happens when certain groups are systematically excluded or included due to how data is selected.

Example:

A marketing campaign’s success is evaluated only on customers who opened emails, ignoring those who didn’t → engagement appears artificially high.

How to avoid:

Randomize inclusion criteria; avoid convenience filtering (e.g., “openers only”).
Compare included vs. excluded groups; use propensity scores or re-weighting.
Expand recruitment channels and reduce barriers to inclusion.

Sampling Bias

Measurement (Instrumentation) Bias

Arises from inaccurate tools or methods used to collect data.

Example:

A survey app records 0 when users skip a question instead of missing, misleading analysts to think respondents selected zero.

How to avoid:

Standardize definitions and validation rules; treat missing explicitly.
Calibrate and test instruments; run overlap/parallel periods when switching tools.
Include data-quality checks (range, type, logic) in ETL.

Recall Bias

Occurs when participants don’t accurately remember past events.

Example:

When asked how many times they visited a store last month, respondents under/over-report due to memory errors.

How to avoid:

Shorten recall windows; use diaries or passive behavioral data where possible.
Ask concrete, bounded questions (“in the last 7 days”).
Provide anchors/examples to improve recall.

Observer (Experimenter) Bias

A researcher’s expectations influence data collection or interpretation.

Example:

An analyst expecting a new ad to perform better focuses on positive feedback and downplays negatives.

How to avoid:

Blind analysts to treatment where feasible; pre-register analysis plans.
Use objective scoring rubrics and inter-rater reliability checks.
Automate extraction/labeling where appropriate.

Response Bias

Participants give socially desirable or expected answers rather than truthful ones.

Example:

In a satisfaction survey, customers rate service higher to appear polite.

How to avoid:

Use neutral wording and anonymity; avoid leading questions.
Prefer behavioral measures over attitudinal when possible.
Include validity checks (e.g., reverse-coded items).

Confirmation Bias

Tendency to favor data that confirms existing beliefs or hypotheses.

Survivorship Bias

Focusing only on successful cases while ignoring failures.

Historical Bias

Outdated or biased historical data perpetuates inequalities.

Exclusion Bias

Important variables are mistakenly left out during data collection or preprocessing.

Example:

An e-commerce model excludes device_type (mobile vs. desktop), missing behavior differences that affect conversion.

Algorithmic (Automation) Bias

Algorithms learn or amplify biased patterns from data.

Reporting Bias

Selective presentation of data or results that favor a narrative.

Availability Bias

Recent or vivid events are over-weighted in judgment.

Bias Summary

Bias Type	Key Cause	Example Context
Sampling Bias	Non-representative sample	Using only urban data for churn model
Selection Bias	Inclusion/exclusion errors	Only counting email openers
Measurement Bias	Faulty data collection	`0` recorded for missing survey data
Recall Bias	Inaccurate memory	Self-reported visits per month
Observer Bias	Researcher expectations	Analyst highlights positive feedback
Response Bias	Social desirability	Overrated service satisfaction
Confirmation Bias	Favoring expected results	Ignoring non-discount periods
Survivorship Bias	Ignoring failures	Studying only successful campaigns
Historical Bias	Biased historical data	Credit score discrimination
Exclusion Bias	Missing variables	Omitting device type in model
Algorithmic Bias	Model learning bias	Gender bias in hiring model
Reporting Bias	Selective reporting	Hiding negative KPIs
Availability Bias	Recency/vividness overweighted	Overestimating crash risk after news

Preview of Next Class

The next chapter introduces Descriptive Statistics and Introductory Visualization.
Students will summarize real datasets using both Excel and Python, practice using pandas.describe(), and interpret charts as the first step toward exploratory data analysis.