Scatter diagrams and critical thinking in data analysis

¶ … Scatter Diagram" critical thinking

This article will discuss the definition of the scattered diagram, its application in multiple fields, and will also present an empirical example for the use of the concept. This example will show that this decision making tool is used in a wide range of applications, underlying its extreme importance.

The scattered diagram, also known as scattered plot, represents the decision making tool by which a relationship between two variables is defined. This relationship is underlined by building up a bi-dimensional graph, and the concentration of the intercepting points (the horizontal and vertical coordinates) represents the relationship between the two variables. It should be noted that the scattered diagram represents the association between the values of two variables, not the causality incurred among them.

Theoretically speaking, the correlation of the variables is observed by the arrangement of the intersection points - if the slope of the imaginary line that better follows their position is oriented from the inferior left part to the superior right part of the diagram - there is a positive correlation. And on the contrary, if the slope is oriented from superior left side to inferior right side, the correlation between the two variables is negative.

Scattered diagrams are used as important tools in many fields. Specialists in the Business Administration domain may want to find out about the relationship between advertising budgets and the company growth in a particular period. This correlation or lack of correlation may indicate the efficiency of the advertising campaign, as compared to other growth determinants, launching new products, opening new subsidiaries and branches, performing a merger with a rival company. Another application of this decision making tool would be the Government, which may desire to identify the correlation between the unemployment and inflation. As it was proven by the world economists, the inflation and unemployment are negatively correlated - when for example the U.S. economy is booming and in an accelerated stage of development, and therefore the unemployment is close to the natural rate of this variable (the optimal rate of unemployment), inflation is increasing due to numerous factors - up warding money supply, wages, expectation on interest rates, and so on. Also the police units may use the scattered plot to determine the relationship between different variables, topic that will discuss in the following paragraph.

The empirical evidence below will show the situation report of the Police Unit administration in Seattle, containing a scattered plot underlining the correlation between the Crimes familiar to the state police and the drug delivery arrests. Why is this connection important to Police officials? Because it shows the efficiency of the police department in this district, taking into account the total number of crimes reported and the drug delivery arrests.

We have attached above the scattered plot that we were mentioning about. On the vertical axis, it represents the values for the drug delivery arrests, while on the horizontal axis we have the known violent and property crimes. As it can be observed there is a strong association between the crimes familiar to the police bodies and the numbers of drug deliveries arrests - most observation points are situated on the imaginary 45 degrees slope line.