MODULE 1: INTRODUCTION TO STATISTICS

(For AUGUST 24)

Learning Outcomes:
(1) Define statistics and identify its nature, scope and limitations.
(2) Discuss the role that statistics can play in multi-disciplinary problem-solving
and decision making process.

In this module, you will know of the nature of statistics and differentiate the two divisions of
Statistics. You will also learn the scope and limitations of statistics for you to appreciate the
usefulness of statistics in various areas. Though statistics also has some limitations, please
don’t focus on them, since its scope and usefulness are much more important that its
limitations.

What do you remember about statistics in your previous courses?

WHAT IS STATISTICS?

Statistics is a branch of science concerned with the collection, organization, presentation,

analysis and interpretation of data. It is a science that is applied to every aspect of our
lives. In the field of business, as well as in other sciences, Statistics provides us with a tool for
us to transform data into useful information for decision making. It provides us with methods
for us to make better sense of the numbers or information used every day for us to describe
or analyze the world we live in.

Articles in your local newspaper, news stories on television, and national publications
discuss stock prices, crime rates, government-agency budgets, and company sales and
profit figures. These values are also called statistics, but they are just a small part of the
discipline called business statistics, which provides a wide variety of methods to assist in
data analysis and decision making.

In the business world, statistics has important specific uses and these are:
 to summarize business data
 to draw conclusions from those data
 to make reliable forecasts about business activities
 to improve business processes

The methods used for these tasks come from one of the two branches of statistics:
descriptive statistics and inferential statistics.

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 Descriptive and Inferential Statistics

Descriptive statistics involves the procedures and techniques of collecting, organizing,

summarizing and describing data using charts, graphs, and numerical measures. Inferential
statistics includes tools and techniques that help decision makers draw inferences from a
set of data. Inferential procedures include estimation and hypothesis testing. Inferential
statistics concerns with the generalization of sample results for the whole population. It
demands inductive reasoning and it needs a higher degree of critical judgment and
mathematical methods.

Some Fundamental Terms/Concepts

In our study of Statistics, the following are the fundamental terms/concepts essential in the
use of statistics.

 Population and Sample

The population refers to a group of a total number of people, objects, reactions, or
events that can be described as having a unique or combination of qualities about
which you want to reach conclusions. The sample, on the other hand, is that portion
of the population selected for analysis.

In most situations, information about the population is usually required. However, due to
time, cost, and other considerations, data instead is collected from only a small portion
(sample) of the population.

The process of conducting a survey in order to gather data from all the elements of the
entire population is called a census. On the other hand, the process of conducting a
survey to gather data from every element of a sample is called a sample survey.

 Parameter and Statistic

Parameter and statistic collectively refer to statistical measures obtained from the
population and sample, respectively. The parameter is a measure that describes a
certain characteristic of the population while the statistic is a measure that
describes a characteristic of the sample. A parameter is usually represented by
Greek letters such as 𝜇 and 𝜎 while a statistic is represented by English letters such as
𝑥 and 𝑠. Now don’t get confused with the terms Statistics (the field of science) and
statistics (a collection of numerical figures of a sample).

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 WHAT IS THE SCOPE OF STATISTICS?

Statistics has a wide range of applications in many fields. In fact, , we can conclude that
nowadays there is hardly any sphere of human activity where statistics ha s not been
used.

1. Statistics in economic planning

Statistical data and different techniques of statistical analysis are useful in solving
economic problems. All economic plans are formulated on the basis of statistical data.
The success of the plan is also evaluated with the help of statistics since economic
problems such as production, consumption, wages, price profits, unemployment,
poverty, etc. can be modeled statistically since these variables can be expressed
numerically.

The study of production statistics enables us to make a balance between supply and
demand. By the proper use of statistics, the supply can be adjusted according to
demand.

The study of consumption statistics enables us to have some idea about the purchasing
capacity and living standard of the different classes of the people of a society by
analyzing their consumption patterns.

2. Statistics in business and management

Statistics are very useful to businessmen. It helps businessmen in formulating policies

regarding business and forecasting future trends.

Modern business has its roots in the accuracy and precision of the estimates and
statistical forecasting regarding the future demand for the product, market trends and so
on. Correct estimation and decision making of many successful businessmen depend
upon their experience and proper use of statistical methods.

According to Wallis and Roberts (2012), “Statistics may be regarded as a body of

methods for making a wise decision in the face of uncertainty.”

3. Statistics in administration

Efficient business administration cannot be perceived without statistics. Statistics have

been used since to collect information regarding the military and fiscal policies.

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 Governments collect a huge amount of statistics on different aspects of the people and
thereby frame different policies for the welfare of the people.

4. Statistics in research

Statistical methods are extensively used in every type of quantitative research. Whether it
is in business, health, social science, or agriculture, statistics help in carrying out different
types of researches. Similarly, statistics are of great help to researchers in insurance
companies, industries, banking, physical science,railways, transportation, astronomy, etc.

WHAT ARE THE LIMITATIONS OF STATISTICS?

Like any other fields, there are also limitations of Statistics. You may want to study the
following limitations. However, you are encouraged to focus on the importance and
usefulness of statistics especially in business as a whole.

1. Statistics is unable to explain individual items

Statistics always studies a group of values instead of single observations. For example,
in a study to describe the incomes of the employees of a certain company using
statistics, a description for the whole company can be done, but descriptions for each
employee may not be useful and valid.

2. Statistics is unable to study qualitative characters

In general, qualitative parameters are not very accurately modeled by statistical
methods.

3. Statistical results are not accurately correct

There are only a few results that are perfectly correct in statistics and almost all are
only approximately correct. In other words, a hundred percent accuracy is impossible
in statistical work because statistics allows a certain amount of error.

4. Statistics deals with average

Statistics deals with averages (or any other estimands) of data that are obtained from
different individual items. The laws of statistics are true only for average (or for the
particular estimand).

5. Statistics is only one of the methods of studying a given problem

The best solution under all conditions of the given problem is not only by the statistical
methods. Statistics may not be of much help in studying a given problem, like a
country’s culture, religion, and philosophy unless they are supplemented by other

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 evidence.

6. Statistics is liable to be misused

The greatest limitation of statistical science is that it can be misused. The only one who
has expert knowledge of statistical methods can scientifically handle statistical data.
Statistical methods, if misused by incompetent, unskilled and inexperienced persons,
may lead to false conclusions.

7. Qualitative aspect ignored

Statistical methods are not appropriate to utilize in the study of a phenomenon which
cannot be expressed in quantitative terms. These include health, riches, intelligence ,
etc. It needs the conversion of qualitative data into quantitative data.

8. Too many methods to study problems

In statistics, we can use a number of methods to treat a single problem. Different
methods may come up with different results. For example, variation can be measured
by the range, mean deviation, or standard deviations and results vary in each case.

9. Results are true only on average

If the average of two sections of students is the same, it does not mean that all the 50
students who are in section A got the same marks as in B. There may be many
variations between the two. So we get average results.

10. Statistical laws are not exact

Statistical laws are not exact as in the case of natural sciences or even mathematics.
These laws are true only on average. Some hold true under certain conditions only.
They cannot be universally applied.

Learning Reinforcement Activity No. 1: IMPORTANCE OF STATISTICS

Accomplish by August 24, 2020

Answer the following reflection questions in paragraph form on a short bond paper. Limit
your discussion to a maximum of fifteen (15) sentences. Your answers should be
handwritten. (10 points)
1. As an accountancy or management accounting student, discuss about the
significance of taking up a course in statistics in light of your upcoming research
courses and your future career path.
2. What do you think will be your advantage in taking up this course with the software
applications R and RStudio? Talk about your strengths and weaknesses with regard
to the use of technology.

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means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 17
 3. Discuss some concerns you have about taking this course using the OBL/CBL mode.
How do you plan to address these concerns? What suggestions can you give to the
course facilitators in connection with this?

Congratulations! You just completed Module 1.

Take a break and get ready for Module 2.

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means, electronic, mechanical, photocopying, recording, or otherwise of any part of this document, without the prior written permission of SLU, is strictly prohibited. 18