Book Summary of Decisions by the Numbers by Dipak K. Gupta

Decisions by the Numbers, Dipak K. Gupta, (Englewood Cliffs New Jersey: Prentice Hall, 1994), 525pp.

Decisions by the Numbers is routinely required reading for economics courses and recommended reading for environmental economics and philosophy courses at CU Boulder. This work is divided into five distinct sections. The first section will be useful to those who desire an understanding of the basic elements of quantitative analysis. This section is devoted to defining quantitative analysis as numbers derived from data and understanding what those numbers mean. Gupta first examines methods of descriptive statistics by focusing upon; measures of central tendency, measures of dispersion, and skew ness and symmetry of distribution. The author offers a brief introduction to probability theory by discussing objective and subjective probability. The next undertaking is to examine the source of the data used to derive the numbers. Gupta looks at: where the numbers come from, what is being measured and the validity of the measuring scales. The author examines in some depth the use of surveys as the primary source of data with secondary sources being library searches. Gupta concludes the first section by discussing the meaning of the numbers derived from the data. Specifically, Gupta examines techniques of statistical assessment and presentation of data as well as the use of graphical methods of analysis. The author acknowledges the problem of interpretation and intentional deception in the presentation of quantitative analysis.

The second section focuses, in some depth, upon projection techniques. This section will be helpful to those who wish to understand the methods employed by quantitative analysis to predict future trends based upon statistical analysis of present data. Gupta discusses the analysis of historical data as a projection technique in which context methods of seasonal adjustment and trend adjustment and Markov's chain are examined. The author next examines the building of and the accuracy of the method of least squares as a projection technique. The problem of changes in trends, estimation of non-linear trends and the difficulties associated with forecasting in general are given consideration. Gupta devotes a lengthy chapter to multiple regression analysis.

The third section is devoted to efficient management through the use of quantitative analysis. This section will be useful to those who need information on planning a large data gathering project. Gupta examines the use of: a Gantt chart, PERT and the Critical path method. This section concludes with approaches to inventory and cash management.

The fourth section offers advice to those seeking assistance in choosing the best alternative among multiple options presented to the public policy decision-maker. The focus is upon benefit-cost analysis and the steps necessary for conducting such an analysis. Gupta offers an examination of linear programming as a tool for choosing the optimal mix of alternatives.

The final section is helpful in understanding how decision-makers might deal with uncertainty. Game theory is briefly discussed with more space being devoted to queuing theory. Finally, Gupta discusses problems with quantitative analysis and possible solutions.

A useful feature of Decisions by the Numbers are the appendices (six in all). Contained in the appendices are: the z table, critical values of the t distribution, the F statistic at the 1% and 5% level of significance, chi-square distribution and instruction manuals for a computer program (Mystat) which may be used in conjunction with the text. Decisions by the Numbers is a primer on quantitative analysis which offers the methods, justifications, applications and difficulties with such analysis.