INTRODUCTION

The word 'Statistics' seems to have been derived from the Latin word ‘status’ or the Italian word
‘Statista’ or the German word ‘Statistik’ each of which means a 'political state'. It is used for the
collection, analysis and interpretation of data in order to provide a basis for making correct decisions.
This concept of Statistics is very different from the sense it originally used to denote.
The theoretical development statistics came during the mid-seventeenth century with Pascal, Fremat,
James Bemouli, Laplace, De movire, Gauss and many more. Later on, most of the prominent
mathematicians of 18th, 19th and 20th centuries, viz., Euler, Lagrange, Bayes, A. Markoff, Khintchin,
Kolmogorov, to mention only a few, added to. the contributions.
Modem veterans in the development of statistics done by prominent persons Sir Francis Galton,
Prof. Karl Pearson, Sir W.S. Gosset, J.Neyman, Sir, R.A. Fisher, Prof. P.C.Mahalanobis, Prof.
C.R.Rao and many more.

Definition of Statistics
Statistics has been defined differently by different authors from time to time. So, the term ‘Statistics’
has been defined in two senses, i.e. in Singular sense (Statistical methods) and in Plural sense
(Statistical data).

Statistics as Statistical Data

1. According to E.L. Bowley’s Statistics is defined as "Numerical statements of facts in any
department of enquiry placed in relation to each other.”
2. According to Prof. Horace, “Statistics we mean aggregates of facts affected to a marked
extent by multiplicity of causes numerically expressed, enumerated or estimated according
to reasonable standards of accuracy, collected in a systematic manner for a pre-determined
purpose and placed in relation tv each other.”

Statistics as Statistical Methods

1. According to Boddington, “Statistics is the science of estimates and probabilities.”
2. According to King, “The science of Statistics is the method of judging collective, natural or
social phenomenon from the results obtained from the analysis or enumeration or collection
of estimates.”
3. According to Croxton and Cowden, “The science which deals with the collection,
presentation, analysis and interpretation of numerical data.”

Importance and Scope of Statistics

In modern times, Statistics is viewed not as a mere device for collecting numerical data but as a
means of developing sound techniques for their handling and analysis and drawing valid inferences
from them. It is now finding wide applications in almost all sciences - social as well as physical-
such as biology, psychology, education, economics, business management etc. It also various
diversified spheres of life like social, economic and political sciences.
Statistics and Planning:
Statistics is indispensable to planning. In the modem age which is termed as ‘the age of
planning’, almost all over the world, governments, particularly of the budding economies, are
resorting to planning for the economic development. In order that planning is successful, it must be
based soundly on the correct analysis of complex statistical data.
Statistics and Economics:
Statistical data and technique of statistical analysis have' proved immensely useful in solving
a variety of economic problems, such as wages, prices, analysis of time series and demand analysis.
It has also facilitated the development of economic theory. Wide applications of mathematics and
statistics in the study of economics have led to the development of new disciplines called Economic
Statistics and Econometrics.
Statistics and Business:
Statistics is an indispensable tool of production control also. Business executives are
relying more and more on statistical techniques for studying the needs and the desires of the
consumers and for many other purposes. The success of a businessman more or less depends upon
the accuracy and precision of his statistical forecasting. As such most of the large industrial and
commercial enterprises are employing trained and efficient Statisticians.
Statistics and Industry:
In industry Statistics is very widely used in ‘Quality Control’ in production engineering, to
find whether the product is conforming to specifications or not, statistical tools, viz., inspection
plans, control charts, etc., are of extreme importance. In inspection plans we have to resort to some
kind of sampling a very important aspect of Statistics.
Statistics and Mathematics:
Statistics and mathematics are very intimately related. Recent advancements in statistical
techniques are the outcome of wide applications of advanced mathematics. According to Connor,
“Statistics is a branch of Applied Mathematics which specializes in data.” Increasing role of
mathematics in statistical analysis has resulted in a new branch of Statistics called “Mathematical
Statistics”.
Statistics and Biology, Astronomy and Medical Science:
The association between statistical methods and biological theories was first studied by
Francis Galton in his work in ‘Regression’. According to Prof. Karl Pearson, the whole ‘theory of
heredity’ rests on statistical basis.
In astronomy, the theory of Gaussian 'Normal Law of Errors' for the study of the movement
of stars and planets is developed by using the ‘Principle of Least Squares’.
In medical science also, the statistical tools for the collection, presentation and analysis of
observed facts relating to the causes and incidence of diseases and the results obtained from the
use of various drugs and medicines, are of great importance.
Statistics and War:

In war, the theory of ‘Decision Functions’ can be of great assistance to military and
technical personnel to plan ‘maximum destruction with minimum effort’.

Limitations of Statistics
Statistics, with its wide applications in almost every sphere of human activity is not without
limitations. The following are some of its important limitations:

(i) Statistics is not suited to the study of qualitative phenomenon:

Statistics, being a science dealing with a set of numerical data, is applicable to the study
of only those subjects of enquiry which are capable of quantitative measurement such as
qualitative phenomena like honesty, poverty, culture, etc., which cannot be expressed
numerically, are not capable of direct statistical analysis. However, statistical techniques
may be applied indirectly by first reducing the qualitative expressions to precise
quantitative terms.
(ii) Statistics does not study individuals:
Statistics deals with an aggregate of objects and does not give any specific recognition to the
individual items of a series. Individual items, taken separately, do not constitute statistical data and
are meaningless for any statistical enquiry.
(iii) Statistical laws are not exact:
Unlike the laws of physical and natural sciences, statistica1laws are only approximations and not
exact. On the basis of statistical analysis, we can talk only in terms of probability and chance and
not in terms of certainty. Statistical conclusions are not universally true they are true only on an
average.
(iv) Statistics is liable to be misused:
The most important limitation of Statistics is that it must be used by experts. As the saying goes,
“Statistical methods are the most dangerous tools in the hands of the in-experts. Statistics is one of
those sciences whose adepts must exercise the self-restraint of an artist.” The use of statistical tools
by inexperienced persons might lead to very fallacious conclusions.

Types of Data

Statistics is a science that deals with information(data). Statistical analysis is mainly concerned
with how to make generalizations from the data. In order to perform statistical analysis on data,
you have on hand or that you collect, you may need to transform the data or work with the data to
get it into a form where it can be analyzed using statistical techniques. Data can be found in
qualitative or quantitative form. These are further subdivided as follows:
 Discrete data
Quantitative data
Ratio data
(Numerical data)
Continuous data

Data Interval data

Ordinal data
Qualitative data
(Categorical data)
Nominal data

From what has been stated above, we can write that scales of measurement can be considered in
terms of their mathematical properties. The most widely used classification of measurement scales
are: (i) Nominal scale (ii) Ordinal scale (iii) Interval scale and (iv) Ratio scale.
(i) Nominal scale: Nominal scale is the least powerful level of measurement. It is simply a
system of assigning number symbols to events in order to label them. It indicates no order or
distance relationship and has no arithmetic origin. A nominal scale simply describes
differences between things by assigning them to categories. Nominal data are, thus, counted
data. The scale wastes any information that we may have about varying degrees of attitude,
skills, understandings, etc.
There is no generally used measure of dispersion for nominal scales. Chi-square test is the
most common test of statistical significance that can be utilized, and for the measures of
Correlation, the contingency coefficient can be used.
(ii) Ordinal scale: The lowest level of the ordered scale that is commonly used is the ordinal
scale. The ordinal scale places events in order, but there is no attempt to make the intervals
of the scale equal in terms of some rule. Ordinal scales only permit the ranking of items
from highest to lowest. Ordinal measures have no absolute values, and the real differences
between adjacent ranks may not be equal. All that can be said is that one person is higher or
lower on the scale than another, but more precise comparisons cannot be made.
The appropriate use of an ordinal scale of measure of central tendency is the median. A
percentile or quartile measure is used for measuring dispersion. Correlations are restricted
to various rank order methods. Measures of statistical significance are restricted to the non-
parametric methods.
(iii) Interval scale: In the case of interval scale, the intervals are adjusted in terms of some rule
that has been established as a basis for making the units equal. The units are equal only in
so far as one accepts the assumptions on which the rule is based. Interval scales can have an
arbitrary zero, but it is not possible to determine for them what may be called an absolute
zero or the unique origin. The primary limitation of the interval scale is the lack of a true
zero; it does not have the capacity to measure the complete absence of a trait or
characteristic.
Interval scales provide more powerful measurement than ordinal scales for interval scale
also incorporates the concept of equality of interval. As such more powerful statistical
measures can be used with interval scales. Mean is the appropriate measure of central
 tendency, while standard deviation is the most widely used measure of dispersion. Product
moment correlation techniques are appropriate and the generally used tests for statistical
significance are the ‘t’ test and ‘F’ test.
(iv) Ratio Scale: Ratio scales have an absolute or true zero of measurement. The term ‘absolute
zero’ is not as precise as it was once believed to be. We can conceive of an absolute zero of length
and similarly we can conceive of an absolute zero of time.
Ratio scale represents the actual amounts of variables. Measures of physical dimensions such as
weight, height, distance, etc. are examples. Generally, all statistical techniques are usable with ratio
scales and all manipulations that one can carry out with real numbers can also be carried out with
ratio scale values. Multiplication and division can be used with this scale but not with other scales
mentioned above. Geometric and harmonic means can be used as measures of central tendency and
coefficients of variation may also be calculated.

Collection of Data