INTRODUCTION OF STATISTICS

1.1 Introduction

Statistics is a field of mathematics that pertains to data analysis. For the last few centuries,
statistics has remained a part of mathematics as the original work was done by
mathematicians like Pascal, James Bernoulli, De-Moivre, Laplace, Gauss and others. Till
early nineteenth century, statistics was mainly concerned with official statistics needed for
the collection of information on revenue, population etc. of a state or kingdom. The science
of statistics developed gradually and its field of application widened day by day. In fact, the
term statistics is generally used to mean numerical facts and figures.

1.2 Meaning

What is Statistics?

Statistics is the study of the collection, organisation, analysis, interpretation and presentation
of data. It is built up from the field of mathematics known as probability. Probability gives us
a way to determine how likely an event is to occur. It also gives us a way to talk about
randomness.

The term ‘statistics’ has been derived from the Latin word ‘status’ Italian word ‘statista’ or
German word ‘statistik’.

All these words mean ‘Political state’. In ancient days, the states were required to collect
statistical data mainly for the number of youngmen so that they can be recruited in the Army.

1.3 Scope of Statistics

Scope of Statistics: Statistics is indispensable in this modern age aptly termed as "the age of
planning". The governments of most countries around the world are constantly researching to
improve its economic development. Statistical data and techniques of statistical analysis are
immensely useful in solving economical problems such as wages, price, time series analysis,
demand analysis. It is an irreplacable tool of production control. Business executives are
relying more and more on statistical techniques for studying the prefernce of the customers.

Industry statistics are widely used in equality control. In production engineering, statistical
tools such as inspection plan, control chart etc. are extensively used to find out whether the
product is confirming to the specifications or not. Statistics are useful to banker, insurance
companies, social workers, labour unions, trade associations, chambers and to the politicians.

1.4:Limitation
LIMITATIONS OF STATISTICS

The following are some of the limitations of statistical methods which should be kept in mind
while using them:

1. Statistics deals only with the quantitative characteristics: Statistics deals with facts
which are expressed in numerical terms. Therefore, those phenomena that cannot be

1
 described in numerical terms do not fall under the scope of statistics. Beauty, colour
of eyes, intelligence, etc., are qualitative characteristics and hence cannot be studied
directly. These characteristics can be studied only indirectly, by expressing them
numerically after assigning particular scores. For example, we can study the level of
intelligence of a group of persons by using intelligence quotients (IQ’s).
2. Statistics does not deal with individuals: Since statistics deals with aggregate of
facts, a single and isolated figure cannot be regarded as statistics. For example, the
height of one individual is not of much relevance but the average height of a group of
people is relevant from statistical point or view.
3. Statistical laws are not exact: Unlike the laws of natural sciences, statistical laws are
not exact. They are true under certain conditions and always some chance factor is
associated with them for being true. Therefore, conclusions based on them are only
approximate and not exact. They cannot be applied universally. Laws of pure sciences
like Physics and Chemistry are universal in their application.
4. Statistical results are true only on an average: Statistical methods reveal only the
average behaviour of a phenomenon. The average income of employees of a company
will, therefore, not throw much light on the income of a specific individual. They are
therefore, useful for studying a general appraisal of a phenomenon.
5. Statistics is only one of the methods of studying a problem: A problem can be
studied by several methods. Statistical methods arc only one of them. Under all
circumstances, statistical tools do not provide the best solution. Quite often it is
necessary to consider a problem in the light of social considerations like culture,
region, etc. Therefore, statistical conclusions need to be supplemented by other
evidences.
6. Statistics can be misused: The various statistical methods have their own limitations.
If used without caution they are subject to wrong conclusions. So one of the main
limitations of statistics is that, if put into wrong hands, it can be misused. This misuse
can be, at times, accidental or intentional. Many government agencies and research
organisations are tempted to use statistics to misrepresent the facts to prove their own
point of view. Suppose you are told that during a year the number of car accidents in a
city by women drivers is 10 while those committed by men drivers is 40. On the basis
of this information, you may conclude that women are safe drivers. If you conclude
like that you are misinterpreting the information. You must know the total number of
drivers of both types before you could arrive at a correct conclusion.

1.5 Statistics and its relationship with other Sciences

1. In the field of Economics:

The role of statistics is very vital in Economics. Long ago it has been of enormous use in this
subject. In 1926 Fisher mentioned,

“The painful misapprehension is that statistics is a branch of economics.”

He not only complained about it but emphasised that statistics in totality is Economics.
Economics cannot be successful without statistics.

2
We think of any part of Economics and cannot proceed without Statistics; May it be demand,
supply, wages, interest, prices, profits, rents savings, investments, unemployment etc.
Various laws such as law of consumption, of returns or distribution of incomes and profits are
often used in Economics. We use it in Economics in measurement of correlation, analysing
demand and supply, forecasting through regression, interpolation and time series analysis.
We also use Index Numbers.

2. In the field of Planning:

Planning is mainly a part of economics. We have to make different planning for different
components for different periods. In almost all the spheres, whether those are individual, joint
or any government decisions, nothing can be done without success and success cannot be
attained without planning and planning cannot be undertaken without statistics.

Adequacy of data cannot be proved without statistics. To go for an economic plan in a

country, the data about population, consumption, prices, investments, saving, incomes and
expenditure has to be known and then analysed for demand forecasting using various
statistical methods. A plan cannot be successful if its analysis is not undertaken properly.

3. In the field of Business and Commerce:

These are the activities such as, trading, manufacturing, banking, transportation, mining,
insurance or such other activities, those are undertaken for making profits. Statistics helps us
to great extent in planning, analysing and executing the plans. To analyse the plans we have
to use methods of statistics such as probability or forecasting by regression, time series or
interpolation.

Economic barometers (Index numbers) are also used, which are also the gifts of statistics. A
manufacturer has to get the help of forecasting for his production in coming years. Similarly a
new entrant has also to analyse the demand and supply both to find a gap so that production
supplied by him may be easily sold in the market to earn adequate profits.

4. In the field of State Administration:

As was stated on the first page during introduction that it was a science of the kings which
meant that it was a kind of science, which proved useful in the administration of the state
through its use. It became an important tool in the hands of administration. Various
department of a government use it for their benefits and proper success of the departments
held. Defence ministry has to keep the data of number of armed personals in various
segments such as army, navy and air force and similarly the number of persons working in
enemy’s services.

5. In the field of Physical and Natural Sciences:

In physical and natural sciences like Physics, Chemistry, Engineering, Botany, Astronomy,
Zoology and Medicine etc. the statistics is of immense importance these days. In Botany and

3
Zoology its use has increased many fold these days. In inheritance of stature, Sir Frances
Galton used various methods of analysis in his own work “Regressions”.

Similarly Sir Karl Pearson stated that theory of heredity is also based on statistics. A
periodical data of a patient w.r.t temperature, blood Pressure, weight, and heart beats, a
doctor decides about the medicines to be given to his patient.

6. In the field of social Sciences:

Not only in the field of natural and physical science but statistics has made much impact on
social sciences and is of immense use in these also. These include subjects like History,
Political Science, Education, Psychology, Sociology and Logic etc. Even in mathematics,
many theories have been drawn from statistics. To name a few, Binomial Method, Linear
programming, Probability, Sampling and Least square method are there.

As far as Education is concerned, government opens or allows opening various institutions on

the basis of data obtained about number of institutions present, and increasing in population.
That means it also plays important part in collection of data about birth and death rate i.e.
number of births and deaths during a period. Birth rate also depends upon the no. of
marriages taking place each year and other such factors.

1.6 Descriptive and Inferential Statistics

Types of Statistics –

 Theoretical Statistics

 Applied Statistics

1. Descriptive Statistics

Descriptive statistics is a term given to the analysis of data that helps to describe, show and
summarize data in a meaningful way. It is a simple way to describe our data. Descriptive
statistics is very important to present our raw data ineffective/meaningful way using
numerical calculations or graphs or tables. This type of statistics is applied on already known
data.

4
Types of Descriptive Statistics –

 Measure of Central Tendency

 Measure of Variability

2. Inferential Statistics :

In inferent ial statist ics predict ions are made by taking any group of data in
which you are interested. It can be defined as a ran dom sample of data taken
from a populat ion to describe and make inference about the populat ion. Any
group of data which includes all the data you are interested is known as
populat ion. It basically allows you to make predict ions by taking a small sample
instead of working on whole populat ion.

Difference between Descriptive and Inferential statistics :

S.No.Descriptive Statistics Inferential Statistics

5
 It gives information about raw It makes inference about
data which describes the data in population using data drawn
1. some manner. from the population.

It helps in organizing, analyzing It allows us to compare data,

and to present data in a make hypothesis and
2. meaningful manner. predictions.

It is used to explain the

chance of occurrence of an
3. It is used to describe a situation. event.

It explain already known data It attempts to reach the

and limited to a sample or conclusion about the
4. population having small size. population.

It can be achieved with the help It can be achieved by

5. of charts, graphs, tables etc. probability.