Chapter 1 THE NATURE AND SCOPE OF STATISTICS 1.1. INTRODUCTION The word ‘statistics’ may be used in any one of the following three senses : 1, Quantitative information of facts or simply data. The word is plural in this sense. 2, Statistical methods for handling numerical data, The word is singular is this sense. % 3. Measures based on observations on’some of the units selected from the whole lot. In this sense, the word is plural of the word ‘statistic’. To a layman, the word ‘statistics’ usually carries the first meaning, i.c., columns of figures, tables, zig-zag graphs or charts in our daily newspapers related to population, production, national income, consumption, expendi- ture, demand, supply, sales, imports, exports, births, deaths, accidents, etc. or any other phenomenon. In this sense, the word ‘statistics’ is employed. synonymously-with the word"data". A comprehensive definition is given by Horace Secrist as “Statistics are aggregates of facts affected to a marked extent by multiplicity of causes, numerically expressed, enumerated or estimated according to reasonable standard of accuracy, collected in a systematic manner fora pre-determined purpose and placed in relation tocach other.” Certain characteristics which these quantitative data must possess so that they may be called statistics are given below : 1. Statistics are aggregates of facts. A Single figure related to agricul- lure, production, birth, death, sale, purchase, accident, etc., even though numerically expressed cannot be called statistics whereas the aggregates of such figures would be called statistics. For example, a single birth ina hospital does not reveal anything unless such information is collected for a period or for different hospitals. With the help of this information, we can compare births over time or over different hospitals. 2. Statistics are affected to a marked extent by a multiplicity of “auses, Facts and figures of any phenomenon are affected by a large num! Of internal and external forces. Statistics help us to find a most proximate “ause that affects the phenomenon, For example, the statistics of production OF @ crop is influenced by many factors like quality of seed, soil contions, Use of fertilizers, use of insecticides and pesticides, rainfall, method o Cultivation, etc. If data on all the relevant factors are collected and analysed,Statistical Methods for Research w, 2 tke i i ie factors responsibl A then it becomes possible a out the fac Ponsible for ins production of that particul “crop. ee 3. Statistics are numerically expressed. All statis assigned certain scales or ranks asa quantitative measures of, assessment Re example, ‘per capita income of an Indian is low docs notconstitute Statistics On the other hand, ‘per capita income of an Indian increased by 5 Percent in this year’ is a statistical statement. | 4, Statistics are enumerated or estimated. The data about any Dhe. nomenon can be collected by actual counting or measuring or May be statistically estimated under the conditions when enumeration is not feasible or it involves a very high cost. For example, the number of non-vegetariang ina family canbe enumerated by actual counting whercas thisnumberin India will be estimated by takin ig small samples from the whole Population, 5. Statistics are estimated with reasonable standard of accuracy, Estimates are based on samples, therefore, these cannot be as precise and accurate as actual counts or measurements. As in the example given above, the number of non-vegetarians ina family can be determined with 100: )percent accuracy whereas for this number in the. whole of India, 100 percent accuracy 7. Statistics are co llected for a pre. and scope of data coll bite : determined purpose. The purpose ‘ection should be determined before conducting the Tal purpose of inquiry is not sults sideri NitpeutPle, data on complexion will onside, i , pI t but this will sure] orale biltyofastudentiogetadaee nn university {;Statisticsshoutd be pine CoSidring hisher Physical personality. lectionisto facilites ation toeachothee The nar obied Of facts and ures ma ay Par: tive or relative study. Comparisons es? oF Wheat in India may pet'°¢-Wise or rogion-wise, For examples th “a ies. Butthis sour be nP&ted over different periods or wilh "8 habits of vant to compare wheat production © The data shoud be homosencote for validNature and Scope of Statistics ‘The 3 In this book, the word ‘statistics’ in this sense will not be used at all, Whenever we want o refer to ‘factsand figures’, we will use the term ‘obser. vations’ or ‘data’. . In the second sense, the word ‘statistics’ refers to statistical Principles and methods dealing with the collection, description, analysis and interpre- tation of data. These methods are used on the raw data collected to make decisions. That is why, in these days statistics is used as a method of decision- making in various fields of scientific inquiry. Croxton and Cowden have given a very simple and comprehensive definition of statistics. In their sense “statistics may be defined as the collection, presentation, analysis and interpretation of numerical data”. If we analyse the above definition, it becomes very true that the methodology of Croxton and Cowden is the most scientific as well as realistic one. This will form the subject matter of this text book. This definition clearly points out the various phases in a statistical investigation which are given below : 1, Collection of data. This is the first step in any statistical investigation. ‘The data may be obtained from existing published or unpublished sources or the investigator may collect his/her own information, going from one respon- dent to another to obtain the data. This has been dealt in detail in chapter 2. The data obtained from published sources are generally in a well organized form whereas a large mass of figures that are collected from a survey needs tabulation in various rows and columns so that there is clarity in the data. 2. Presentation. After the data have been well categorized they may be presented with the help of (®) Diagrams ; and (i) Graphs. These have been developed/described in chapter 4. 3. Analysis. After presentation the next stcp is that of analysis. Many important methods of statistical analysis of the data are described in the Procecding chapters of this text such as measures of location and dispersion, Correlation and regression, estimation and testing, etc. 4, Interpretation. This is the last stage of statistical investigati . drawing of conclusions based on the results of analysis of collected data. This is the most important as well as difficult part of an investigation which needs t A high degree of skill. An incorrect interpretation may Icad to very fal Must which helps in taking suitable decisions, : | the third sense, ‘statistic’ as a singular represents some algebraic GPression based on some of the selected units (from the whole lot) for drawing inferences about the whole lot. This text does not deal with this sense Statist The science of statisti ics may be classified into : lacious conclusions of the whole study. Thus the proper interpretation is . |a Statistical Methods for Research Werke n () Theory of Statistics or Mathematical (Pure) (ii) Applied Statistics. In theoretical statistics, newer and stronger research tools are deve which are then applied in different fields. of applied statistics, Thus, th long cal statistics continues to develop the research tools for applied dat whereas the latter continues to present challenging problems for the fom Theory of statistics, the basis of statistical methods, are applicable very large number of fields. Statistics in this sense of statistical methods, fe techniques can be considered in terms of its major divisions, namey descriptive (or deductive) statistics and inferential (or inductive) Statstig” @ Descriptive Statistics. These are measures used tocharacterizea mass of figures, i.e., the reduction of data to a form that can be readily Compre, hended. These help in analysing and describing the main features Of the day without making any inferences or conclusions. i) Inferential Statistics. These are techniques used in drawing valiy conclusions about some group on the basis of incomplete knowledge on apan of it. The group of elements of interest on which information is desired is called population or universe. The Part of this population which forms the basis of inference is known as sample. In other words, in inferential statistics we use samples to infer about the populations from which those ‘samples have been drawn. ) Statistics ; ang 12. FUNCTIONS OF STATISTICS The important functions of statistics are given below : 1. To present facts from numerical figures in a definite form. Thisis the most important function of statistics to present facts in a preci definite form. The exact quantitative information is always more convi than those stated qualitatively. For example, the statement that arca of Ludhiana district is less than that of Patiala district is not convincing than stating that area 3802 sq. km. of Ludhiana district is less than 4669 sq. km.of Patiala district. Similarly, statements like ‘Production of wheat has reached at its saturation point’, ‘Punjab is much better than rest of the states’, and ‘male population in India is more than female population’ do not provide ws with worthwhile information as they are not expressed in numerical figures 2. To condense the unwieldy and voluminous data. The raw dat @ usually available is unwieldy, voluminous and complex. It is not possible draw any conclusion from this type of data in its original form. Itis, therefor’ always desirable to express the information contained in mass of data in fe" numerical values. This is the layman's concept of statisti + presenting the unwieldy data by means of charts and diagrams, etc. For example, th _ Fesulis of students of a class in some subject will be quite intelligible, us Mp ) Showing number of students getting different divisions in the subject ® “f 7se Nature and Scope of Statistics i. compared with the massive data. 3, To help classification of data. This means the arrangement of numerical data with respect to different characteristics possessed by units of the data and in tum, this facilitates comparison and interpretation. For example, the dataon age, height, sex, education, income, expenditure, etc., of respondents ina certain city do not give a clear picture of various character- istics possessed by respondents unless classification is done according to various characteristics. 4. To provide methods for making comparisons. The significance of certain figures may be better appreciated when they are compared with others of the same kind. For example, we estimate per capita income of an Indian not for itself, but to compare it with the past years or with other countries. With the helpof this comparison, we can see whether standard of living of an Indian in general is improving or better in comparison to other countries under consideration. 5. To formulate policies. Statistics helps very much in formulating policies in various fields. Various government policies regarding planning, importand export trade, taxation, etc. are formulated on the basis of statistical analysis of data and various inferences drawn from them. For example, statistics related to prices of commodities will determine the future demand for those commodities and thus help in making policy regarding their supply. 6. To determine relationship between different phenomena. Statisti- cal measures like coefficient of correlation, association and regression, etc., determine relationships between different characters possessed by data. For example, the coefficient of correlation between literacy and employment in Punjab state gives us the extent of relationship between the twocharacteristics in the state. 7. To indicate trend behaviour. Our activities are based on the future estimates and forecasting of future trends needed for formulation of various policies, The statistical methods of time series and forecasting are very useful for forecasting future events. For example, data pertaining to population of a country for the last few years may give us an idea about the population in coming years. 8. To formulate and test the hypothesis. Statistical techniques are very beneficial in formulating and testing hypothesis. For example, the hypothesis whether acoin is fair or not, whether quinine is effective in checking malaria Ornot, whether education depends on sex or not, can be tested by the statistical lechniques. 9. To draw valid inferences. Valid inferences regarding the nature and characteristics of the whole lot can be drawn on the basis of the sample servations only with the help of various statistical techniques.. Forexample, general quality of the product of a factory is estimated by taking servations on a small sample. be6 Statistical Methods for Research Worker, F STATISTICS. . 13. rsinitiics has been applied to problems ranging | from household to big business, i.e. , the scope of statistics is vast. Initially it was used by the Sta to get information on public affairs for effective planning, ruling and tay. collection. But now, in modem times, it has shown its existence inall of life. In short, statistics can be used wherever a mass of ‘quantitative infor. mation needs simplification and analysis is involved. This can also be to get estimates of certain unknown characteristics of the Population ON the basis of past experience or on the incomplete available information. Some of the important areas where statistics can be used are given below : 1.In the State. The State collects information for several problems. This information helps the government in framing suitable policies. All the government departments as well as ministries depend on the data which evaluate functioning. For example, Government wants to control the popula. tion, this can not be done unless it knows the present total population, birth and mortality rates, willingness of the different sections of the society to adopt family planning programme, etc. Similarly, in war times, country needs the estimate of strength of the enemy country to fight it successfully. Thus, statistics are very much significant for the government to arrive at useful conclusions and which in tm help in making decisions. 2. In business. In modern times, even if a business firm is operating on a small scale, it has to plan its working very systematically. Let us take a comprehensive example that a person wants to start a business. First of all, he is to make a decision about location which will depend on the information data) on availability and cost of | land, labour and raw material to be used, etc. Then heis to prepare cost estimates for di ferent scales of business. Next step deals with the study of demand and supply (production) of various types of goods with the help of statistical techniques. The quality of the product can becontrolled using quality control techniques. For this purpose, our decision will be based on the sample observati bei? . Statistical i. ting and ating ical methods are also employed 3.In Economics. The role of statistics in ics i significant a Econom! a economics is very significan! Economics is mainly concemed with the production and distribution wealth and on the other side with Consumption, saving and investment 0 great help for proper understanding of the economic Problems and formulating various economic policies. Some of the importaspe Nature and Scope of Statistics 7 of statistics in economics are : ; @ Statistical estimates of gross national product have advanced eco- nomic knowledge. . : a (p) Statistical studies of business cyclesin economics, viz., long-term and short-term growth, scasonal and cyclical movements have added a lot to the concept of economic instability. ; i : (o) Financial forecasts, break-even analysis and decisions regarding investments under the conditions of uncertainty are part of statistics. @d) Financial statistics are basic to taxation, public borrowing, def:. it financing, banking credit and issues of shares, etc. (e) Statistical data and methods help in proper understanding of many economic problems, ¢.g., unemployment, bank deposits, clearing house returns, disparity in the distribution of wealth, etc. (f) Econometric models are used for optimum available. (g) For economic planning, data has to be collected on the availability of resources including physical, human and financial resources. (H) Statistical methods are also employed for evaluation of the progress made. 4. To bankers, brokers and insurance companies. The usc of statisti- cal data and statistical techniques is extensive to bankers, investors, stock exchange brokers, insurance companics and all public utility concerns. Bankers have to use statistics in credit rating of all the customers. Stock exchange brokers, speculators and investors should be fully conversent with the existing money rates at the various centres and their future trends, Insurance companies carry on their business with statistical data related to life lables and premium rates, ctc. Public utility concems like railways, state electricity boards, public works department, water works, ctc., cannot carry on their work without making the use of statistics. 5. In physical, natural and social sciences. Statistics has Proved to be extremely useful in the study of physical, natural and social sciences. For Cxample, meteorology (physical science) predicts weather: using statistics. In botany (natural science) one has to depend on statistics in conducting experiments about the plants, effects of temperature and climatic conditions, \ype of soil, etc. In sociology and psychology (social sciences) statistics may ee to determine the reliability and validity of a test, ctc. The usc of eae in social sciences is relatively more. In fact, there is harcly any lific activity where statistics is not uscd. i &.n research, There is no advanced research work in these days which techniques not worthwhile without the usc of statistical dataand statis 7 effective nea is used Constantly in medical and pharmaceutical rescarch. - of the new drugs is determined by experiments, first on animals, zation of resourcesy Methods for Research 4 Statistical Met fe Worker beings. Experiments about different crop yields, types fertilizers, types of soils or growth of animals under erent types environments and under diff ferent diets are commonly design and analyse4 by taking help from statistics. With its help, the significance of effect different treatments on materials can also be tested. For a research worker jy any field, statistics is not only useful but necessary. 7 The universality of statistics indicates its impcrtance, scope, utility ang indispensability to the modern world. Bowley has written about it as “4 knowledge of statistics is like a knowledge of foreign language or of algebra ; it may prove of usc at any time under any circumstances”. and then on human 1.4, LIMITATIONS OF STATISTICS In spite of the fact that the statistics can be applied to a number of problems related to the government, business, economics and in rescarch, it has certain limitations. Thus, it may not be able to provide correct solution to all the problems and is sometimes misused by interested people which limits the scope of statistics. Few important limitations of statistics are given below : 1. Does not deal with individuals. Being the subject dealing with aggre- gates of facts, it docs not give recognition to an individual fact. If we take any one figure from data, that does not constitute statistical data unless we have many figures over different periods or for a number of regions, etc. 2. Does not deal with qualitative characteristics. Since science of statistics deals with numerical data only, it is not applicable to qualitative characte like colour, honesty, poverty, beauty, etc., which cannot be exposed to numerical terms directly. However, we may usc statistics by converting these characteristics into quantitative figures with some logical criterion. 3.Resultsare true only onanaverage. Asstatistics is lessexactscicnce as compared to natural sciences, the statistical conclusions arc not tue universally, i.e.,cannot be substituted for any specific unit or used as fact. Fo example, the per capita income of an Indian cannot give an idea about the income of a particular person or a group of persons unless we know the vee Present in incomes of that group. ane Stats laws are only approximations. Like the laws of natu‘! cee ee es, Statistical laws are not exact and are only approxima" ee mii ie throw acoin, say, 100 times, we cannot predict wil! ._ ‘number of heads or tails, For a large number of throws ime conditions, we can only say that th approximately equal (not exactly cqual). e method Of studying a problem. Statisti "ide the best possible solution under all 1%she Nature and Scope of Statistics 5 conditions. Ifastatistical resultis valid in one situation, itis not necessary that the same W {ll be best for another problem. Statistical conclusions should also te supplemented by the other relevant available evidences. 6, Statistics can be misused. This is most important limitation of statistics and, therefore, statistical techniques should be used by experts only. Unwaincdand unexperienced persons may lead to fallacious conclusions with the wrong application of statistical tools which limits the scope and utility of statistics. For example, the statement based on incomplete information, ‘the expenditure of Rs. 50 per month on cosmetics in a family is very high’ is not statistically valid unless the total income of the family, number of members in the family, etc., are not stated. Thus statistics should be used with proper understanding of the subject to which it is applied. King has rightly said, “Statistics are like clay of which one can make a God or devil as onc please’. Few illustrations of the misuse of statistics are discussed under the heading “Distrust of Statistics’. 18. DISTRUST OF STATISTICS ‘This means the lack of confidence in statistical statements, methods and conclusions, The main reasons for this are following : 1. Facts supported by figures are more convincing, casily believable and psychologically more appealing. 2. Figures may be inaccurate or incomplete or manipulated to get desirable inferences. 3. Figures, though accurate, may be presented in such a manner that the public is misled. For this we should not blame the layman for his distrust of statistics. Selfish persons may present a distorted picture of statistics for Personal motives. 4, Statistical techniques are very delicate tools. If they are not properly used, the fault does not lie with statistics but the person using it. Itis in the interest of the subject that we should use it in a proper manner and not in the way we like. Statistics neither proves nor disproves anything. Itis a method or tool, if used properly, it helps in taking wise decisions otherwise it does more harm than good. Duc to this reason, we sometimes say that statistics isnot a science but a scientific method. For example, insecticides are meant for curing diseased plants, but if a wrong insecticide is used or an excessive dose of it isgiven, the plant may dic. For such a result we cannot blame the insecticide. As Bowley pointed out, “Statistics only furnishes a tool, necessary though imperfect, which is dangerous in the hands of those who do not know its use and its deficiencies”. An example of misrepresentation of statistics is the Statement, “The number of graduate students taking admission in M.A- (Mathematics) has doubled during the last 4 years. Thus, Mathematics '$ia Statistical Methods for Research Mr, gaining popularity among the students’ . Here, the details about Other subj and their comparative study is not given. Thus, statistical arguments: based, incomplete data often lead to fallacious conclusions. ‘a 1.6, EXPERIMENTAL AND STATISTICAL METHODS Systematic swdy: foradvancing knowledgeconstitutesascientific ‘mi Experimental methods are the best known of scientific methods, The exper. mental methods can be used only in physical and natural sciences Wherein i is possible to allow only the factor we are studying to vary, and Attempt ig control as many as possible of the other factors. For example, if one Wishes to study the effect of car weight on tire mileage, one could control Toad conditions, speed, temperature, size of tire, inflation of tire, quality ‘Of rubber and of cord, and many other factors. In the social sciences, the experimenuy methods can rarely be applied as it is difficult to isolate various forces affecting a particular phenomenon. In order to determine the effect of some change in price of a commodity on its demand, we know that supply of commodity, tastes of people, disposable funds of consumers, attitude of traders to change in price, etc., cannot be studied in isolation, In ‘such cases, statistical methods are used in lieu of experimental methods. Ifan experiment could be so designed that all the variables were completely controlled, statistics might not be needed. Usually, we can control only few factors and thus it becomes necessary to evaluate statistically the importance of a hostof other disturbing factors. In fact and in short, a statistical method is the study ofa problem systematically which allows all forces to operate since they can- not be kept constant. We, then, try to determine the Part played by each force in influencing the result. 7 EXERCISES 1. (@) What are the various meanings of the term ‘statistics* 2 (®) Discuss various characteristics of ‘statistics’ as data, 2. (a) Define ‘statistics’ in the sense of Croxton and Cowden, (2) Discuss ‘statistics’ as a science of collection, presentation, analysis and interpretation of quantitative data. 3. @ How does the theoreti (6) Discuss the main divisions of the theory of statistics, 4. (a) “The important function of statistics is to condense the unwieldy lefinite form’. Comment on it. (6) Explain the various functions of statist : ics can be extensively used. (©) Discuss the usefulness of statistics to the State, the busimeresman and tH Explain with illustrations, six uses of statistics in economics.‘The Natt re and Scope of Statistics YW () ©) @® @) (o) ©) @ . (a) () © . (a) ) . (a) (6) -@ (b) Explain the statement with suitable illustrations, ‘Statistics affects every- body and touches life at many points’. Discuss the importance of statistics with special reference to business and industry. Examine critically, ‘Statistics is what statisticians do’. Comment on the following statements : “Statistics can prove anythin; “Statistics can prove nothing.’ “Statistics is half lie.” “Figures do not lie but liars use figures to lie." “Statistical methods are most dangerous tools in the hands of the experts’. Discuss with illustrations. Discuss the important limitations of statistics. Explain with illustration, ‘Statistics is less exact science as compared to the natural sciences’. ‘Figures cannot be manipulated in statistics.’ Do you agree with the statement ? If not, give reasons. “The lack of confidence in statistical statements, methods and conclusions account for the distrust of statistics.” Explain with suitable illustrations. Explain clearly the different meanings of the word ‘statistics’ contained inthe following statement: ‘Statisticians compute statistics from statistics by statistics." “Statistics gives an accurate answer to any economic problem.” Is it true ? If not, why ? How do the statistical methods differ from experimental methods ? Give suitable examples. Explain the following statement : ‘There is hardly any advanced research #ctivity which can be considered worthwhile without the use of statistical data or techniques.”