2.a) Explain statistical Inference
Answer:
Statistical Inferencing
- As we commute to work on subways and in cars, as our blood moves through our bodies, as we’re shopping, emailing, procrastinating at work by browsing the Internet and watching the stock market, as we’re building things, eating things, talking to our friends and family about things, while factories are producing products, this all at least potentially produces data.
- Imagine spending 24 hours looking out the window, and for every minute, counting and recording the number of people who pass by. Or gathering up everyone who lives within a mile of your house and making them tell you how many email messages they receive every day for the next year. Imagine heading over to your local hospital and rummaging around in the blood samples looking for patterns in the DNA. That all sounded creepy, but it wasn’t supposed to. The point here is that the processes in our lives are actually data-generating processes.
- Data represents the traces of the real-world processes, and exactly which traces we gather are decided by our data collection or sampling method. You, the data scientist, the observer, are turning the world into data.
- Once you have all this data, you have somehow captured the world, or certain traces of the world. But you can’t go walking around with a huge Excel spreadsheet or database of millions of transactions and look at it and, with a snap of a finger, understand the world and process that generated it. So, you need a new idea, and that’s to simplify those captured traces into something more comprehensible, to something that somehow captures it all in a much more concise way, and that something could be mathematical models or functions of the data, known as statistical estimators. This overall process of going from the world to the data, and then from the data back to the world, is the field of statistical inference.
- It is a discipline that is concerned with the development of procedures, methods and theorems that allows the extraction of meaning and information from the data generated by stochastic processes.
