DEFINITION, SCOPE, IMPORTANCE

AND LIMITATIONS OF STATISTICS

STATISTICS

PLURAL NOUN SINGULAR NOUN

 Numerical facts or Scientific method, with
Information which the help of which
can be used to draw numerical facts can be
some conclusions. used to analyse these
data and draw
conclusions from
them.

1. Statistics as Numerical Facts or Statistical Data: In

‘plural’ sense, statistics means numerical
statements of facts related to the field of
knowledge or inquiry. Statistics refers to
information in terms of numerical data. The
numerical facts may relate to any branch of
knowledge.
2. Statistics as Statistical Methods: In the ‘singular’
sense, statistics refers to statistical methods or
techniques. It is a science or body of knowledge
 which relates to the methods of collection,
classification, presentation, description, analysis
and interpretation of numerical facts and data.

DEFINITIONS (Plural Sense)

Yule and Kendall – “Quantitative data affected to a marked
extent by multiplicity of causes.”
A.L. Bowley – “Numerical statements of facts in any
department of enquiry placed in relation to each other.”
THE MOST COMPREHENSIVE DEFINITION OF STATS:
Horace Secrist – “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 systematic manner for a
predetermined purpose and placed in relation to each
other.”

THESE FACTS MUST HAVE CERTAIN CHARACTERISTICS:

1. Statistics are aggregate of facts – A single numerical fact
cannot be called statistics, even though the fact is
numerically expressed. No conclusion can be drawn
from a single numerical fact. If this numerical fact is not
placed in relation to any other numerical fact, it is not
statistics. Statistics should be aggregates of facts and not
 one fact only as these facts can be compared and
conclusions can be drawn from them.

2. Statistics are numerically expressed – Stats are

expressed in terms of numbers. Eg: height or age of
students. Non-quantitative (or qualitative) facts such as
tall, short, etc., are useful information but these are not
called statistics.

3. Statistics data affected by multiplicity of causes –

Several factors or causes influence statistics. They are
not affected by any single factor, but are influenced by
many factors. Data related to number of deaths in a
town is statistics. But if data relates to only one cause,
say accidental deaths, the data will not be an aggregate
of facts.

4. Statistics must be enumerated or estimated according to

reasonable standards of accuracy – Since statistics are
needed to draw certain conclusions from them, it is
necessary that they are reasonably accurate. Lack of
accuracy can lead to misleading conclusions. Statistics
may be collected either by enumeration or the same
may be estimated. In enumeration, actual counting is
done. Estimates are made on the basis of some
principles.
5. Statistics are collected in a systematic manner – Stats
has to be collected in a systematic manner. Haphazardly
collected data do not serve the purpose of stats. While
collecting data, there should be a clearly laid out plan.
Without a plan the data may not lead to the correct
conclusions.

6. Statistics are collected for a pre-determined purpose –

In order to collect the facts which are necessary, it is
essential that the purpose for which data are collected is
clearly laid out. Facts which are not relevant should not
be collected. All the facts, which have an influence on
the object of study, must be collected. Any information
collected without any definite purpose will only be a
numerical value and not statistics.

7. Statistics are placed in relation to each other – Since

statistics is aggregate of facts, these facts must be
studied so as to draw conclusions from them. For this
purpose, these facts have to be compared. The
comparison may be over time or over geographical
areas or over different causes, etc. Unless numerical
data are related to each other and are comparable they
cannot be called stats.
All numerical facts which have the above-mentioned
characteristics can be put in the category of statistics,
otherwise they are mere numbers.
All numerical data cannot be called statistics but all
statistics are called numerical data.

DEFINITIONS (Singular sense)

In the singular sense, statistics is a method or technique of
dealing with numerical facts. It involves collection of data,
presenting them in systematic manner, analysing or
condensing these data and then drawing conclusions from
them.
Croxton and Cowden defined – “Statistics may be defined
as the collection, presentation, analysis and interpretation
of numerical data.”

SCOPE OF STATISTICS
It has become an indispensable tool for drawing
conclusions and making decisions in various fields.
Although statistics was used in its early phase to deal with
the affairs of the state, the cope of statistics has now
spread to various fields of science and engineering.
 IMPORTANCE OF STATISTICS IN
ECONOMICS
Statistics helps in grasping the meaning of certain laws of
behaviour in social sciences and lends precision to
scientific inquiry.
1. Understanding the performance of the economy: It is
important for understanding the performance of an
economy. It also provides us important data for
comparing the performance of an economy with itself
over time and with other economies. In this respect,
stats of aggregate production, employment, national
income, level of prices, etc., are very useful.

2. Understanding the importance of various sectors of

the economy: It is possible to understand the
contribution of various sectors in an economy with
the help of statistics. Statistics help in intersectoral
comparison and intertemporal comparison
(comparison over time). For eg, to analyse the
problem of poverty, the economists would like to
know the magnitude of poverty across rural and
urban areas of the economy. Intertemporal
comparison of poverty, on the other hand, would
mean a change in the magnitude of poverty over
time.
3. Studying the regional balances and imbalances:
Statistics are also helpful in finding out the share of
different regions of an economy. How much
production from agriculture is generated in Punjab
and Haryana and how much is the contribution of the
other states in agricultural production. Similarly, stats
help us to know the share of different states in
industrial production of a country.

4. Studying the role of government in an economy and

in the formulation of economic policies: Government
collects a part of the income in the form of taxes. It
also takes loans and pays interest on them. It incurs
expenditure on various activities such as defence,
education, etc. All this is an important part of the
economic activity. These are essential to understand
the role of the government in the functioning of an
economy. These stats are also helpful in the
formulation of economic policies of the government.

5. Statistics for planned development: Economic

planning helps in ensuring better utilisation of
resources of an economy. For this, stats relating to
the availability of resources and their distribution
among different uses is essential. Stats also helps in
evaluating the progress of various five-year plans.

6. Better comprehension of the basic principles of

economics: Economics as a subject has evolved its
 own principles like laws of demand and supply, the
relationship between cost of production and the
quantity of production, etc. These principles are
supposed to be universal and applicable in most
situations. Study of data relating to prices and
quantity demanded or supplied of a commodity, of
costs and quantity of output, etc. helps us in
understanding the functioning of the markets and
firms. Stats data enables economists to find out cause
and effect relationship between different sets of data
such as price and demand. This helps in formulation
of various economic theories.

7. Quantitative expression of economic problems: