St at ist ics -

1 W ha t an d Why

♦ INTROD UCTION
• ♦ ORJCIN AND CROW'Tri OF STATISTICS
♦ STATISTICS DEF'lNED
• STA·n sncs. SCIENCE OR ART
♦ FUNC:I ION~ OF S"fA11STICS
♦ APPU CA'l70N S Or ~7'A11S'nCS
♦ LIM11A'1 10NS Di' !)tATIST ICS
• l)I S'n-<llST (W ~iATIS 'nc"
♦ STA'l1S1 IC.Al. M~ll lOIJ~ V, l-..Xl1 l:.l{IMt-:N'Ti-\ l Mt-:'n IODS
♦ ~,A1,snc ~ A1'lJ < <,-.u·t n-.to
 STATISTICAL METBoDs
2

INTRODUCTION
The word .statis ti~s. conv eys a van.e ty of mea ning s hto peo ple. To son-.
. fi of mat hem atic s, w erea s t o others .,,e it
'stat istic s' is an imp osm g J~g ure s whi
ch one com mon ly fmds in
sugg ests tabl es, cha rts ban k vari o~s repo rts. spee che s, classroom
newspapers. joum als , h doo s~e are exp
osed to a wid e asso rtm ent of
lect ures . 'IV. etc. Eac whi :6 ofte n has a
prof oun d imp act on our lives .
num eric al info rma tion ss stat eme nts like 'The re .a re 932 females
For example, wel cdiome a~;~eas in the Ru~ sia per
1 000 mal es in n a w ther e are 1, 1 70 fem ales per
1'000 males": "On an aver age for 400 stu d t th · nl b
wrttten, prin ted and pub lish ed in Indi a everen s .. er.:y~s ope y one ·ta oak
y y_ear : e r cap1 net
national prod uct has gon e up from Rs. 769th
in 1998-99"· 'The Public Sec tor Out lay of 8.2 N11;1 thl99F~-9 4yto Rps . 14_682R.3
e m 1ve- ear 1an 1s s.
8 59 200 cr~re whi ch is mor e than the com
bine d outl ays of all the other
Five:Year Plan s take n toge ther": 'Th e den sity
~f
from 216 in 1981 to 267 pers ons in 1991 ~?p ulat ion . has gone up
: Mum bai 1s the most
populated city of the cou ntry with urb an
pop ul~t ion of 12.5 7 milli~n.
Calc utta taking the seco nd plac e hav ing 10.9
2 million. Del hi r~nk~ ~hird
with a pop ulat ion of 8.38 million followed
by Che nna i 5 .36 milh on : The
num ber of univ ersi ties has witn esse d a con
side rabl e incr ease from 110 to
146 betw een 1981 and 1991 ".
Num bers play an esse ntia l role in stat istic
mat eria l of stat istic s. The se mat eria ls mus s. The y prov ide the raw
t be proc esse d to be useful.
just as crud e oil mus t be refined into petr ol
before it can be used by an
automobile engine. The stud y o, stat istic s
involves met hod s of refining
num eric al (and non -num eric al) info rma tion
into
The se stat eme nts cont ain figures and as suchusef ul form s .
stat eme nts of facts. They are highly conv they are call ed numerical
enie nt form s of com mun icat ion
and are, at the sam e time. quit e clear,
prec ise and mea ning ful. An
anal ysis of such stat eme nts can help in fram
people stati stics generally refers to info rma ing suit able policies. To most
proc ess whe ther it be prod ucti on, pop ulat ion. tion abo ut an activity or a
nati ona l inco me, etc .. that is
expr esse d in num bers . Num bers repr esen
commodities prod uced and sold. pric es of prodt qua ntiti es and value of
liabilities, raw materials, cust ome rs, inco mes ucts , inve ntor ies, asse ts and
birth s, deat hs, num ber of pass eng ers travelled and exp ense s. Records of
ship and othe r modes from one plac e to duri ng a yea r by road , rail.
ano ther , qua ntit y and valu e of
imp orts and expo rts of different commod 1

coun tries . num ber of stud ents in vari ous cou ities to and from different
provident fund, leave, cost s and profit, indurses in a univ ersi ty, reco rds of
production, etc., also lead to num eric al expr stria l prod ucti on, agri cult ural
essi ons. Whe neve r num bers are
collected and compiled, rega rdle ss of wha
t they repr esen t. they become
stat istic s. In othe r words, the term stati stics
with ways and mea ns of pres enti ng and han is con side red syno nym ous
logically and drawing relevant conc lusi ons. dlin g data , mak ing inferences
!n addi tio~ to mea ning data , 'stat istic s·
·ma them atic s refers to a subj ect as well also refers to a subj ect, just as
as to symbols, form ulae and
theo rem s and ·accounting' refers to principl
es and met hod s as . weli as to
acco unts . bala nce shee ts and income stat eme
is a bod y of met hod s of obtaining and anal nts. In this sen se stat istic s
deci sion s on them . It is a bran ch of scientifi ysin g data in orde r to base
c met hod used in deal ing with
 STATISTICS-WHAT AND WHY 3

phenomena that can be described numerically either by counts or by

measurements. Thus the word statistics refers either to quantitative
information or to. a method of dealing with quantitative information. In the
first reference, it is used as a 'plural' noun-the statistics of births, deaths,
imports, export&, etc.; in the second reference, the word is used as a
'singular'. Statistics deals with the collection. presentation, analysis and
interpretation of the quantitative information.
However, it is in the second sense (statistical methods) that the word
statistics is used in this text except in a few places where the context
makes it quite clear that the facts and figures sense is intended, for
example, in the phrase 'statistical data'.
The methods by which statistical data are analysed are called statistical
methods, although the term is sometimes ttsed more loosely to cover the
subject 'st;atistics· as a whole. The mathematical theory which is the basis of
these methods is called the theory of statistics or mathematical statistics.
Statistical methods are applicable to a very large number of
· fields-economics, sociology, anthropology, management, agriculture.
psychology, medicine, education-all lean heavily upon statistics. Numerous
books have been written on business statistics, agricultural statistics,
industrial statistics, medical statistics. educational statistics. psychological
statistics and other specific areas of application. It is true. of course. that
these diversified fields demand somewhat different and specialised technique
in particular problems. yet the fundamental principles that underlie the
various methods are identical regardless of the field of application. This will
become evident to the reader if he realises that statistical methods in general
are nothing but a refinement of everyday thinking•. They are specially
appropriate for handling data which are subject to variations that cannot be
fully controlled by experimental method and for which we can. have only a
fraction of the totality of observation which may exi~t.
It should be noted at the very outset that statistics is usually not
studied for its own sake: rather. it is widely employed as a tool-and a
highly valuable one-in the analysis of problems in nature, physical and
social sciences. In th~ eas. statistics often assumes greater
importance in th~ study of economics and business. Statistical methods are
used by governmental bodies, private business firms, and research agencies
as an indispensable aid in ( l) forecasting. (2) controlling, and (3) exploring.
Statistical methods range from the most elementary descriptive devices
which may be understood by the common man to those complicated
mathematical procedures which can be apprehended only by the expert
theoreticians. The purpose of this text is to discuss the fundamental
principles and techniques of statistics in simple and easily comprehensible
manner without going into the highly mathematical aspects of the subject.
ORIGIN AND GROWTH OF STATISTICS
It may be interesting to point out that statistics is not a new discipline but
as old as the human society itself. It has been used right from the exi~-

• Data are collection of any number of related observations. We can collect the
number of telephones installed in a given day by several workers or the
number of telephones installed per day over a period of several days by one
1 worker and call the results our data. A collection of data is called a data set
and a single observation a data point. -Levin
j
J
 STATISTICAL METHoos
4

tence of life on earth, though its use was very much limite~. In the good
old days statistics was regarded as the 'Science of Statecraft and was the
by-product of the administrative activity of the State. It has been the tradi-
tional function of the governments to keep records of population, births.
deaths. taxes, crop yields and many other types of activitie~. Counting and
measuring these events may generate many kinds of numerical data.
Though. in its present usage, · the word "statistics" is barely a century
old, it has been in use for a much longer period. Census of population
and wealth were taken even in the ancient times. According to a Greek
historian, in 1400 B.C. a census of all the lands in Egypt was taken.
Similar reports on the ancient Chinese. Greeks and Romans are also
available. People and land •were the earliest objects of statistical enquiry.
The word 'statistics' comes from - the Italian word 'statista' (meaning
"Statesman") or the German word 'statistik' which means a Political
State. It was first used by Professor Gottfried Achenwall (1719-1772), a
professor in Marlborough in 1749 to refer to the subject-matter as a
whole. Achenwall defined statistics as ''the political science of the several
countries". The word ·statistics' appeared for the first time in the famous
book, Elements of Universal Erudition by Baran J .F. Von Bielfeld.
~ansl~ted ~y W: ~o~per M.D. (3 Vols., London, 1770). One of its chapter
1s. entitled Stati:5tics and contains a definition of the subject as "the
science that teaches us what is the political arrangement of all the
modern States of the known world".
The science of statistics is said to have originated from two main
sources:
• Government Records. and
• Mathematics.
Government Records

1:1fs is the earliest fou~dayon because all cultures with a recorded

history had recorded statistics, and the recording, as far as is known.
was
· done
· t by
E agentsh of the government for governmenta 1 purposes. Th us.
~mil~nicienl gypit. tt Je dpolice prepared registration lists of all heads of
1a es. n anc en u ea, a census of O ul ti
occasions. including one in 2 030 8 C
at 3 800 000 The first Roman
J P a on was . taken on several
· · w en the population was estimated
· · · census was take · 435 B . .
were recorded in Roman times I n m .C. Statistics
capacity of the peo.p le, births and dae!~sab~tt ~ilitary str~ngth, taxable
collected for governmental purpose t ti c. Since statistical data were
science of kings· or 'the science of ;ta:e~r~~cs w~s 1:I1en described as 'the
century. a large number of statistical handbBegmmng with 1:he sixteenth
prominent people such as Captain Joh G ooks were published. Many
(1623-1697) and Henry contributed n rant 0 6 20-1674). William Petty
Statistics. William Petty was the autho great deal to development of
(1690). He regarded Statistics as politi· r 0 f f:sthsays on Political Arithmetick
ca1 an metic.
Mathematics
Statistics is said to be a branch of a pplied ma thema . ,
of statistical met hods, pa rticularly those concerned ~ithcs. fhe present body
w1 drawing inferences
STATI STICS -WHA T AND WHY
5

abou t popul ation from a sampl e, is based on the mathe matic

al theor y of
proba bility which mark ed a major step in the intell ectua
l histor y of the
world . The theor y emerg ed in the seven teenth centu ry
as
gamb ling amon g the nobility of Franc e and Engla nd. The gamb a resul t of
lers of 17th
centu ry attrac ted the attent ion of such men as De Moivr~.
Ferme t, Galileo
and famo us mathe matic ians like Jame s Berno ulli, Danie l Berno
ulli, Lapla ce
and Karl Gaus s who discov ered and developed the theor y of
proba bility while
estim ating the chanc es of winni ng or losing in gamb le.
The mode m
statis tician , as the gamb ler in the past, is engag ed in
calcu lating risks
assoc iated with a partic ular decisi on or cours e of action . The
actua l outco me
in any single trial is unkno wn. but the theory of proba bility
indica
will happe n if a very large numb er of such trials are under tes what
famo us mathe matic ian Abrah am De Moivre (1667 -1754 ) taken . The
disco vered the
n~rm al curve which forms an impo rtant part of mode m statis
Lapla ce (1749-18 27) and Gaus s (1777- 1855) indep enden tly tical theor y.
arrive d at the
same resul ts as De Moivre. The great mathe matic ian Jacqu
(1796 -1874 ) discovered the funda menta l princi ple 'the const es Quetl et
ancy of great
numb ers' which is the basis of sampl ing. Much of the
devel opme nt in
statis tical techn iques has taken place durin g the last centu
ry: Sir Franc is
Galto n (1822 -1911 ) developed the conce pt of regres sion,
Karl Pears on
(1857 -1936 ) developed the chi-sq uare goodn ess of flt test, Sir
Rona ld Fishe r
(1890 -1962 ) made major contr ibutio ns in the field of exper
iment
Galto n, Pears on and Fishe r all made signifi- cant advan ces becau al desig ns.
se of which
statis tics has reach ed the prese nt heigh ts as a body of know
ledge. They have
been the real giant s in the devel opme nt of the theor y of statis
tics.
Grow th of Stati stics

Altho ugh statis tics origin ated as a scien ce of kings . there

phen omen al devel opme nt in the use of statis tics has been a
in sever al fields .
Statis tics is now regar ded as one of the most impo rtant
tools for takin g
decis ions in the midst of uncer tainty . In fact, there is hardl
y any branc h
of scien ce today that does not make use of statis tics. The
the two main factor s which are respo nsible for the following are
devel opme nt of
statis tics in mode rn time:

Incre ased Dema nd for Stati stics In the prese nt centu

ry consi derab le
devel opme nt has taken place in the field of busin ess
and comm erce,
gover nmen tal activities and science. Statis tics h elps in formu
lating suitab le
policies, and as such its need is increa singly being felt in all
these spher es.
Takin g the case of busin ess, not only has the magn itude
of busin ess
consi derab ly incre ased but growi ng size of busin ess has made
its probl ems
more comp lex. Most of these probl ems are resolv ed in the
light of factu al
infor matio n and hence the need for statis tics.
Takin g gover nmen tal activities. there was a time when main
tenan ce of law
and order was consi dered to be the prima ry functi on of the
gover nmen t and
the policy of laisse zfaire (i.e., non-i nterfe rence in econo mic
matte rs) was
supre me in the field of publi c policy . Today there is hardl
y any spher e in
which the gover nmen t has not entere d. With the enlar
geme nt of these
funct ions of gover nmen t the dema nd for statis tics has also incre
ased.
Comi ng to the scien ces. one finds treme ndou s advan ceme
nt in the
existi ng scien ces and also devel opme nt of many new branc
hes of scien ces.
 STATISTICAL METHons
6

.
Exten sive resea rch work is now ~emg
than was done a centu ry ago. Smee s a
1r
derta ken by many more perso ns
tistlcs is a tool of resea rch, the
dema nd for statis tics has greatl y increa sed.
.
Decreasing Cost of Statistics The time anfd t cost
ti
of collec ting data are
ti·cs Howe ver with the
, · the use o s a s
very impo rtant limiting 1.actors m · '
ulato rs · comp uters etc
devel opme nt of electr onic mach ines, ~uch as ca1c do~ . This
the cost of analy sing data has consi derab ly gone has ied t~
the incre asing use of statis tics in solving vari?u ~ alpro
Moreover with the devel opme nt of statis tic
· ' •
th::
bl

&J
the cost of
•
collecting and proce ssmg data has gone d Own • For exam ple, h
consi derab le
bl
advan ce has been made in the samp ling techn iques whic
ena e us to
know the chara cteris tics of the popul ation by stu~y ing only
a_ part of it.
Since 1935, a branc h of statis tics, know n as design of expen
made rapid . progr ess and it is now possib le to collec t
ment s, has
and analy se
statis tics more promp tly and economically.
Of great intere st, even to the non-s pecia list in statis tics, is
the fact
that much of the basic progr ess in statis tical the<?IY of the
past few
decad es is attrib uted directly to a single individual, Sir Rona
ld Fishe r
(1890 -1962 ). Altho ugh many schol ars have contr ibuted
to the scien ce of
statis tics, Fishe r must be credit ed with at least half of the essen
tial and
impo rtant devel opme nts in the theoiy as it now stand s. The
outsta nding
contr ibutio n of Fishe r has put the subje ct of statis tics on
a very firm
footing and earne d for it the status of full-fledged scienc e.
However, an impre ssion shoul d not be formed that the
theor y of
statis tics is complete and final. In spite of the devel opme nts,
unsol ved statis tical problems is long and statis tical resea rchthe list of
more vigorous than ever before. today is

STATISTICS DEFINED

There have been many definitions of the term 'Stati stics' -inde ed
article s have carefully collected together hundr eds of defini tions.schol arly
have defined Statis tics as statistical data (plural sense) where as Some
statis tical metho ds (singular sens·e). A few definitions are other s as
exam ined below. analy tically \
·
Stati stical Data

Quan titativ e or nume rical information may be found _almos t

busin ess, economics and many other areas. It is probably everymore
where in
to refer to data in quantitative form as statistical data. But comm on
nume ~cal data is statist ical and hence it is necessary to exam not all
definitions of statis tics to under stand the characteristics ofine a few
data. statis tical
Webs ter defined statis tics as "~ _ clas_s~ed _ facts repres
condi tions of the people in a State ······ especially those facts enting the
be stated in number~ or in tables of numb ers or in any tabul which can
classified arran geme nt . ar or
The above defmition is too narrow as it confines the scope of statis
to only such facts and figures which relate to the condi tics
tions of the
people in a State.
STATISTICS-WHAT AND WHY 7

Yule and Kendall defined statistics thus: "By Statistics we mean

quantitative _ data affected to a m~ked exte~t by multiplicity of causes."
---'fllis definition is less comprehensive than the one given by Prof.
Horace Secrist who defmed statistics as follows:

"B! ?tatistics 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 p~·edetermined purpose and placed ·in relation to each other."

This definition clearly points out certain characteristics which numerical

data must possess in order that they may b~ called statistics. These are
as follows:

(i) Statistics are Aggregates of Facts. Single and isolated figures are not
statistics for the simple reason that such figures are unrelated and cannot
be compared. To illustrate, if it is stated that the income of Mr. X is
Rs. 90,000 per annum, this would not constitute statistics although it is a
numerical statement of fact. Similarly. a single figure relating to production,
sale, birth, employment, purchase, accident, etc., cannot be regarded
statistics although aggregates of such figures would be statistics because of
their comparability and relationship as parts of a common phenomenon.

(ii) Statistics are Affected to a Marked Extent by Multiplicity of Causes.

Generally speaking, facts and figures are affected to a considerable extent
by a number of forces operating together. For example, statistics of
production of rice are affected by the rainfall, quality of soil, seeds and
manure, method of cultivation, etc. It is very difficult to study separately
the effect of each of these forces on the production of rice. The same is
true of statistics of prices, imports, exports, sales, profits, etc. In the
experimental sciences like Physics and Chemistry it is possible to isolate
the effect of various forces on a particular event. Ways and means are
also being devised in 'Statistics' for segregating the effect of vario·u s forces
on an event. However, it has proved to be a difficult task in statistical
studies of phenomena which are influenced by a complex variety of
factors, many of which are not measurable.

(iii) Statistics are Numerically Expressed. All statistics are numerical

statements of facts, Le.. expressed in numbers. Qualitative statements
such as 'the population of India is rapidly increasing'; or 'the production
of wheat is not sufficient'; or 'India is a poor country' do not constitute
statistics. The reason is that such statements are vague and one cannot
make out anything from them. On the other hand, the statement, "The
estimated population of India in the terminal year of the Seventh Plan is
803 million" is a statistical statement.

(iv} Statistics are Enumerated or. Estimated Aq;ording to Reasonable Standards

of Accwucy. Facts and figures about any phenomenon can be derived in
two ways, viz., by actual counting and measurement or by estimate.
Estimates cannot be as precise and accurate as actual counts or
measurements. For example. an estimate that 5 lakh people witnessed the
Republic Day parade does not mean exactly 5 lakhs; it may be a few
 8 STATISTICAL METBon s

hu nd red s or tho usa nd s more or . On the oth er han d. if we cou

nu mb er of stu den ts in a cla ss les s. tha t the re are 60 stu den ts,nt the
and say th.is
fig ure wo uld be I 00 per cen In ma ny cas es. 10 0 per cen
t t
ac~ ura cy of ~u mb ~rs ma y be _a ccu f;t: ~ att ain . Th e' deg ree of acc uracy
difflcu t e an d obj ect of the
des ire d lar gel y dep end s up on enq uir y. For
the na ur ns eve n 1/ 10 th
exa mp le. in me asu rin g hei ght of
s of pe~ ~tw een two pla ces , say a cm. is
ma ter ial wh ere as in me asu rin g .sta De lhi anct
_di
Mu mb ai. even fraction of a_ kilo nce be ignored. He nce , in many
sta tis tic al stu die s mathe tic~ me tre can can not be att ain ed.
is im po rta nt tha t rea sonma } acc ur~ cy f acc ura cy sho uld However. it
abl e sta nd ar s O d . be att ain ed
oth erw ise nu mb ers ma y be alto get her mi sle a mg . ·

(v) Sta tist ics are Collected m

•
a
s
ste ma tic Ma nne r. Be for e
collecting
statist ics a sui tab le pla n of dat a Y h ld be pre par ed an
wo rk car rie d ou t in a sys tem ati col lec tio n,; ::a,_u lle cte d in a hap d th
haz ar~
ma nn er wo uld ver y likely lea d c ma nne ·
r. a co
to fallacious con e1usi·o ns ·
(vi) Sta tist ics are Co llec ted for
of collecting dat a mu st be dec a Pre det erm ine d Pu rpo se. Th e pur pos e
ided in advance. Th e pu rpo se
specific an d well-defined. A gen •sh ou ld be
era
example, if the objective is to col l sta tem ent of pu rpo se is no t eno ugh . For
lec
use ful pur pos e unl ess one kno t dat a on prices, it wo uld no t ser ve any
wh ole sal e or retail pri ces and wh ws wh eth er he wa nts to col lec t ?at a on
at are the rel eva nt com mo dit ies
in VIew.
(vii) Sta tist ics Sh oul d be pla
ced
fac ts are to be cal led sta tis tic tn Re lati on to Ea ch Oth er. If nu me ric al
s.
da ta are oft en com par ed per iod the y sho uld be com par abl e. Sta tis tic al
po pu lat ion of Ind ia at a par tic -w ise or reg ion -w ise . Fo r ins tan ce. the
ula
tha t of ear lie r yea rs or wit h the r po int of tim e ma y be co mp are d wit h
U.S .A.. the U.K .. Ch ina . etc . pop ula tio n of oth er co un tri es.
Va lid com par iso ns can be ma say the
the da ta are hom oge neo us, de onl y if
sub jec t an d on ly lik es are com , rel ate to the sam e ph en om en on or
i .e.
par ed wit h lik es. It wo uld be
to com par e the hei gh t of ele ph me ani ng les s
ant
In the abs enc e _of the abo ve chas wit h the hei gh t of hu ma n b~ ing s.
cal led sta tis tic s an d hen ce "all rac ter isti cs, nu me ric al da ta can
sta tist no t be
bu t all nu me ric al sta tem ent s of ics are nu me ric al sta tem en ts
fac ts are no t sta tis tic s ... of facts
It ma y be not ed tha t_ the sta
nu mb ers . oft en involving sum tist ici an' s job is to pre pa re me ani ngf ul
sta tis tic ian mu st pre sen t suc ma rie s of nu mb ers or oth er da ta. Th e
rec ipi ent of tho se dat a. h dat a in a form tha t is use
ful · to the
Sta tis tic al Me tho ds

Th e lar ge vol um e of num eri cal

sys tem ati c me tho ds wh ich ca.. inf orm atio n give •
1 be use d t s ns e to the nee d for
int erp ret the inf orm ati on effe
dev elo ped to me et thi s nee d. ctively. s~ i~ i~ se , pre sen t, ana lys e and
Bu t wh at are sta tist ica l me tho me tho ds are pri ma rily
ha s bee n def ine d differently ds? Th e ter m st
exa mi ned below: by different Wr it atlstics in thi
s sen se too
ers . A few def ini tio ns are
Pro f. AL . Bowley has given
"St ati stic s ma y be called the som e definition
science of cou !tln · At.. on~ pla ce he say s.
g. lbi s def ini tio n is too
 STATISTICS-WHAT AND WHY
9

) narrow because it covers only one aspect of tcience, namely, the collection
of data. Other aspects like analysis. presentation. interpretation. etc .. are
completely ignored. ·:
-:'1-t another place ..Bowley says. "Statistics may rightly be called · the
science of averages. This defmition also is not satisfactory because
ave:ages. are ?nly ~ne of the devices used in statistical analysis. The other
devices hke dispersion. skewness, correlation. etc. , are not at all covered by
this defmition.
Still another definition given by' the same author is "Statistics is the
science of the measurements of social organism, regarded as a · whole in
all its manifestations." Thfs definition again is inadequate because it
confines the application of statistics only to sociology, i.e., man and his
I activities. Bowley himself realised this when he remarked. "Statistics
cannot be confined to any one science."
Boddington defines Statistics as "the science of estimates and
probabilities." This definition is also incomplete because estimates and
probabilities are only a part of statistical methods.
According to Berenson and Levin, "The science of statistics can b e
viewed as the application of the scientific method in the analysis of
numerical data for the purpose of making rational decisions."
Croxton and Cowden have given a very simple and concise definition of
Statistics. In their View "Statistics may be defined as the collection.
presentation, analysis and interpretation of numerical data. " This definition
clearly points out four stages in a statistical investigation, namely: (i)
collection of data, (ii) presentation of data, (iii) analysis of data. and (iv)
interpretation of data.
However. to the above stages one more stage may be added and that
is the organisation of data. Thus, Statistics may be defined as the science
of collection, organisation. presentation, analysis and interpretation of
numerical data.

According to the above d efmition, there are five stages in a statistical

investigation:

(i) Collection. Collection of data constitutes the first step in a

statistical investigation. Utmost care mu~t be exercis~d in collecting data
because they form the foundation of statistical analysis. If data are faulty,
the conclusions drawn can never be reliable. The data may be available
from existing published or unpublished sources ~r else may be collected
b th i tigator himself. The first-hand collection of data is one of the
niost edif~~~~t and important tasks faced by a statistician. Therefore. like
all scientific ursuits, the investigator must take into account whatever
d ata h ave a lpready been collected by others. This would save the
.investigator from fioreseeable pitfalls. unnecessary lab our and d up1ication
·

of efforts.
.. . tion. Data collected from published sources a re genera lly
. (ri) Or~ants~ However. a large mass of figures that are collected
in organised orm. tl needs organisation. The first step in organising
from a surv~y f~equJ~rig The collected data must b e edited very carefully
a group of data i~ e_ · inconsistencies, irrelevant answers a nd wrong
s o that the omisswn~~rns from a survey may be corrected or a djusted.
computations in the re
 10 STATISTICAL METHO DS

After the data have been edited the next step is to classify th em.
The
purpo se of classif ication is to arrang e the data accord ing to some comro
charac teristi cs posses sed by the items consti tuting the data. The ~
step in organi sation is tabula tion. The as
purpos
th e data in colum ns and rows so that theree of tabula tion is ~o arra~g :
is absolu te clarity in
data presen ted.
(iii) Presen tation. After the data have been collected and
organised ~ey
are ready for presentation. Data presented in an orderly manne r facilita
statistical analysis. There are two different modes in te
which the collected data
may be presented:
(a) Diagra ms. and
(b) Graph s.
. (iv) Analys is After collection, organisation and presen tation the
next
1s that of analysis. The purpose of analysing data ls to dig out inform step
ation
useful for decision-making. A major part of this text is devoted to
the
metho ds used in analysing the presented data mostly in a tabula r
form.
Metho ds used in analysing the presen ted data are numer ous. rangin g
from
simple observation of the data to complicated, sophisticated and highly
mathe matica l techniques. However, in this text only the most commo
nly
used metho ds of statistical analysis are included, such as measu res
of
centra l tendency. measu res of variation, correlation, regression. etc.
(v) Interpr etation . The last stage in statisti cal investi
gation is
interp retatio n, i.e., drawin g conclu sions from the data collected
analys ed. The interp retatio n of data is a difficult task and necess itatesand
a
high degree of skill and experience. If the data that have been analys
ed
are not proper ly interpr eted, the whole object of the investigation may
be
defeat ed and fallacious cpnclu sion be drawn. Correc t interp retatio n
will
lead to a valid conclu sion of the study and thus can aid one in taking
suitab le decisio ns.
Since statisti cal metho ds help in taking decisions. statisti cs may lightly
be regard ed as "a body of methods for making wise decisions in the face
of
uricert ainty. *" A modified form of this definition is given by Prof.
Ya-Luri-Cho u in whose words, "Statistics is a method of decision-making
in
the face of uricertainty on the basis of numerical data and calculated Iisks".
It may be noted that over the past few decade s the prima iy empha
sis
on statist ics has been to develop proced ures that can be used to
with uncert ainty. After all, most decisions, regard ing resour ce allocatdeal
ion
in profit and non-pr ofit organi sation s are made under uncert
ainty
becau se the decisio n-mak er never knows exactly what is going to happe
n.
This moder n concep tion of the subjec t is a far cxy from the one usuall
y
held by layme n. Indeed even the pionee rs in statisti cal resear ch
have
adopte d it only within the past two decade s.

STAT ISTIC S : SCIENCE OR ART

Wheth er Statist ics is a science or an art is often a subjec t of debate
Scienc e refers to a system atised body of knowledge,. It studie s cause .
and
(".

• Wallis and Roberts : Statist ics-A New Approach.

STATISTICS-WHAT AND WH Y 11

effect relationship and attempts to make generalisations in the form of

scientific principles or laws. It describes objectively and avoids vague
judgm~nts as good ?r bad. Science, in short. is like a lighthou_se .that
gives hght to the ships to find out their own way but does not md1cate
the direction in which they should go. Art. on the other hand. refers to
the skill of handling facts so as to achieve a given objective. It is
concerned with ways and means of presenting and handling data. making
mferences logically and drawing relevant conclusions.
While a century ago there were some misgivings among natural
scientists as to whether statistics had the right to be recognised as a
distinct science, now almost all sciences are statistical. What this
suggests is that the design of scientific experiments and the evaluation of
their results make use of principles and practices growing out of the
science of statistics. However, statistics as a science is not similar to
exact sciences like Ph sics, Chemis . Zoolo . etc. This is because
s s ca he mena are enerall affect
w ic cannot always be measured accurately. In other words, the science
o1 statistics b its very nature is less precise than the natural sciences.
I s sc ence on y n a m1 e sense, viz., as a specialise branch
knowledge. More appropriate! statisflcs ma e scientific
Iiiethod becau se it is reaJly a tool which can be used in scientific
stua ies. Wallis and Roberts have rightly remarked that "St:_atistics is not a
oody of substanti e b bod taintflg-
knowlect e.
e science is knowledge, then art is action. Looking from this angle.
Statistics may also be regarded as an art. It involves the application of
given method to obtain facts, derive results and finally to use them for
appropriate action.

FUNCTIONS OF STATISTICS

The following are the important functions of the science of Statistics:

• It presents facts in a definite form.
• It simplifies mass of figures.
• It facilitates comparison.
• It helps in formulating and testing hypothesis.
• It helps in prediction.
• It helps in the formulation of suitable policies.

Definiteness Numerical expressions are convincing and, therefore. one

of the most important functions of statistics is to present general
statements in a precise and definite form. Statements of facts conveyed
in exact quantitative terms are always more convincing than vague
utterances. Statistics presents facts in a precise and definite form and
thus helps proper comprehension of what is stated. Consider, for
example, a statement: "The production of wheat in India in 1998-99 was
higher than that in 1997-98." The reader will not have a clear idea of
the situation from the statement. He would surely like to know what is
the extent of increase in wheat production. On the other hand if we
quantify the statement as, "The production of wheat for the year 1998-99
 12 STATISTICAL METHODS

was 69.1 million tonnes which is 9.5 per cent higher ~hat: in 19? 7-9 8"-
lt conveys a definite information. Similarly, statements hke 'There is a lot
of unemployment in India"; ''The population of India is growing at a very
fast rate" and ''The prices of various commodities are rising", etc. , ha~dly
convey any worthwhile information as they do not specify the numencal
dimensions involved.

Condensation Not only does statistics present facts in a defini~e . _form

but it also helps in condensing mass of data . into a few s1gmf1cant
figures. In a way, statistical methods present a meaningful overall
information from the mass of data. Thus, it is impossible for one to form
a precise idea about the income position of the people of India from a
record of individual incomes of the entire population. However, figures of
per capita income can be easily remembered by everyone.

Comparison Unless figures are compared with the others of the same
kind, the.y are often devoid of any meaning. For example, examine tbe
statement that "the. production of rice in _1999-2000 is likely to be more
as compared to 1998-99.". The reader would not get a clear picture frQIIl
the statement. But if we make a statement that the production of rice in
1999-2000 is likely to be 87.5 million tonnes as compared to 86.0 million
tonnes. in 1998-99, it conveys· a definite meaning.
'

Formulating and Testing Hypothesis Statistical methods are extremely

helpful in formulating 'a nd testir:i,g hypothesis and to develop new theories.
For example, hypothesis like whether a particular coin is fair or not,
whether chloromycetin is effective in curing typhoid, whether the credit
squeeze is effective in check;ing price increases, whether students have
benefited from the extra coaching, etc., can be tested by appropriate
statistical tools.

Prediction Plans and policies of organisations are invariably formulated

well in advance of the time of their implementation. A knowledge of
future trends is very helpful in framing suitable policies and plans.
Statistical methods provide helpful means of forecasting future events.
For example. if Cement Corporation of India has to decide how much
cement it sho.u ld produce in 1999, it must know the expected demand
for the year. It may use subjective judgment and make a guess. However,
a better method would be' to analyse the sales data of the past years or
arrange a statistical survey of the market to obtain necessary data for
estimating the sales volume for the next year.

Formulation of Suitable Policies Statistics provide the basic material

for framing suitable . policies, For example, data about population, its
clistiibution by a~e and sex and other socio-economic characteristics, the
rate of growth of population; migration, area, etc. . help in determining
the future needs such as food, clothing, housing, education, recreational
facilities, water, electricity, transportation system. Similarly, detailed
information on the unemployed persons like what types of qualifications.
skills. experiences they have would go a long way . in framing suitable
policy to tackle the problem of unemployment. It would be no exaggeration
to say that whether it be peace or war or any proble relating to
TATISTICS-WHAT AND WHY
13

anomic, sOcial or
political issue in the absence of adequate,
nd timely data it would be
difficult, rather impossiKle, to frame accurate
nolicies. AISo It suitable
may be pointed out that it is not only in the formulation
of appropriate policies but also in
seeing that they
implemented that statistics play a vital role. are properly
Robert W.
Burgess
has beautifully summed
up the functions of
Statistics as "The
fundamental gospel of statistics is to push back
domain of 1gnorance, rule of thumb, arbitrary or the
premature aeCIsio
traditions and dogmatism and to increase the domain in which decisiors
are made and principles are formulated on the basis of analysea
quantitative facts."

APPLICATIONS OF STATISTICS
The applications of statistics are so vast and ever-expanding that not
only is it difficult to define it but is also unwise to do so. Statistics
pervades all subject matter-its use has permeated almost every facet of
our lives. It is a tool of all sciences indispensable to search an intelligent
judgment and has become a recognised discipline in its own right. There
is hardly any field whether it be trade. industry or commerce, economics,
biology. botany, astronomy, physics, chemistry, education, medicine
sociology. psychology, or meteorology where statistical tools are not
applicable. In fact. greatest victory of mankind of the 20th century. that
of landing of Apollo II on the moon, would not have been a success in
of statistics are so
the absence of statistical help. The applications
numerous that it is often remarked "Statistics is what statisticians do."
It may be pointed out that in the last three decades there has been a
methods. This has been
virtual explosion in the use of statistical
particularly true in recent years with the advent and accessibility of high
speed digital computers which have the capacity to process large
amounts of information.
Let us examine in detail a few fields in which statistics is applied.

Statistics and the State

Since ancient times the ruling kings and chiefs have relied heavily on
statistics in framing suitable military and fiscal policies. Most of the
statistics such as that of crimes, military strength, population, taxes, etc..
that were collected by them were a by-product of administrative activity. In
recent years the functions of the State have increased tremendously. The
concept of a State has changed from that of simply maintaining law and
order to that of welfare State. Statistical data and statistical methods are
a

of great help in promoting human welfare. Statistics today are not

administrative activity-the State collects
exclusively a by-product of statistics help in framing suitable
statistics on several problems. These
of the Government whether they be
policies. All ministries and departments Food, Commerce, Posts and
Finance, Transport, Defence, Railways,
factual data for their efficient
Telegraph or Agriculture, depend heavily on
functioning. For example. the Transport Department cannot solve the
problem of transport in Delhi unless it knows how many buses are
is the total requirement and, therefore, how
operating at present, what
 14
STATISTICAL METHODS

many additional buses be

peace times, but added to the existing fleet. Not only during
In fact it is during the days of war also, statistics is indispensable.
impossible to fight a war successfully in the absence of
factual data about
Statistics enemy strength.
are
countries is the significant to the State that government in
so

biggest mOSt
data is of immense help collector
to many
and user of statistical
data. Such
Who lurther process it and institutions and research scholars
arrive at useful
decision-making. conclusions which help
Statistics and Business
With the
growing size and
ever-increasing competition, the problems o
business enterprises are
becoming
more statistics in decision-making. complex and they are using more and
methods in the solution of business problems However, the employment of
statüstical
20th century. In
earlier days when business belongs almost exclusívely to the
firms were firms were small. owners of the
dirertly engaged in almost all the areas of business
OWner of a small firm then
might act as the stores
activity. An
salesman. purchaser. etc. It was manager, accountant,
with the customers possible for him to make
and know exactly what personal contacts
growth in the size of business they wanted from him. With the
Owners firms it has often become
to maintain
personal contact with the thousands impossible for the
customers. Management has and lakhs of
become a specialised
upon to plan, organise, job and a manager is called
house. Since very little supervise and control the operations of the
perso'ial contact is possible with business
a moderm
business firm faces a much customers these days,
future operations than it greater degree of uncertainty
business was small. concerning
did when the size of
most of the
production
unless a very careful
these days is in
anticipation of demand and,
Moreover,
to make study of the market is made, the' firm therefore,
profits. Thus, a businessman who has may not be able
uncertainty can no longer adopt the method ofto deal in an atmosphere of
decisions. If he is to be trial and erTor in
deal successful in his
decision-making, taking
systematically with the
uncertainty itself
he must be able
by careful evaluation and
to
application ofstatistical
indeed runs on estiinatesmethods, concerning the business activities. Business
and probabilities. The
of a businessmnan's higher the degree of
estimates,
business. In recent years it has the greater is the success attendingaccuracy
become increasingly evident that on his
statistical methods have
valuable tools for provided the businessman with one statistics and
of his most
decision-making.
Business activities can
broadly be grouped under the
Production, following heads:
Sale
Purchase.
Finance,
Personnel
Accounting.
Market and Product Research,
and
Quality Control.
STATISTICS-WHAT AND WHY 15

With the help of statistical methods in respect of each of the above

areas abundant quantitative information can be obtained which can e
of immense use in formulating suitable policies: the information
be in the form
mighnt
of reports or computer printouts it
or mighht simply
consist of records that are kept in ledgers or other b0oks, or in fine
folders in a filing cabinet. The ability of the manager to extract pertinent
information from the data and use it in making decisions can have a
signiticant effect on his or her own future as well as that of the
OTganisation. For example, a marketing researcher in a large company
uses data of consumer buying habits to help develop new products. A
manager needs individual worker performance data to support promotion
decisions. A production manager looks at quality control data to decide
when t0 make adjustments in a manufacturing process. Statistical tables
and charts are frequently used by sales managers to present numerical
facts of sales. Similarly, in deciding what price of the commodities to fix.
statistics are of great help.
The techniques of time series analysis and business forecasting enable
the businessman to predict with a fair degree of accuracy the effect of a
large number of variables. In fact, statistics is so highly useful to business
that a prominent business executive and statistician said thirty years ago
that "When the history of modern times is finally written, we shall read it
as beginning with the age of steam and then progressing through the age
of electricity to that of statistics." This may only be a paradoxical
exaggeration on the part of an overenthusiastic statistician but the fact
remains that consciously or unconsciously a large part of modem business
is being organised around systems of statistical analysis and control. The
scientific management movement of this century has especially emphasized
the need for collecting facts and interpreting them carefully, as has its
currently popular offspring 'operations research'.
However, it should be remembered that though statistical methods are
extremely useful in taking decisions, they are not perfect substitute for
commonsense. A practitioner of business statistics must, therefore,
combine the knowledge of the business environment in which ne
operates and its technological characteristics with a heavy dose of
Commonsense and ability to interpret statistical methods to
non-statisticians.

Statistics and Economics

In the year 1890 Prof. Alfred Marshall, the renowned economist, observed
that "Statistics are the straw out of which I, like every other economist,
have to make bricks." This proves the significance of statistics in
economics. Economics is concerned with the production and distribution
of wealth as well as with the complex institutional set-up connected with
the consumption, saving and investment of income. Statistical data and
statistical methods are of immense help in the proper understanding of
the economic problems and in the formnulation of economic policies. In
fact, these are the tools and appliances of an economist's laboratory. For
example, what to produce. how to produce and for whom to
produce-these are the questions that need a lot of statistical data in the
absence of which it is not possible to arrive at correct decisions.
Statistics of production help in adjusting the supply to demand. Statistics
16 STATISTICAL METHODS

of Consumption enable us to find out the way in which people of

rerent strata of society spend their income. Such statistics are very
helptul in knowing the standard of living and taxable capacity of the
people. n the field of exchange we study markets, laws of prices based
on supply and demand, cost of production, banking and credit
instruments, etc. What shall be the price of a particular commodity if
its supply increases, or decreases? What price should a monopolist
charge in
order to reap the maximum These are the questions
which can best be answered with profits?
the help of statistics. In fact,
statistics are the very foundation-stone of the theory of exchange. In
distribution, too, statistics plays a vital role. How the national income
15 to be caleulated and how it is to be distributed. these are the
questions which cannot be answered without statistics. In reducing
disparities in the distribution of income and wealth statistics are of
immense help. Similarly,
in solving problems of rising prices. growing
population, unemployment, poverty, etc., one has to rely heavily on
statistics. In fact, most of the economic policies would be a leap in the
dark in the absence of
appropriate statistical information.
Statistical methods help
policies but also evaluating their in formulating
onlyeffect. appropriate economic
For example, in order to check
the ever-growing population, if emphasis has been placed on the family
planning methods, one can ascertain statistically the efficacy of such
methods in attaining the desired goal. Statistics plays such a n
important role in the field of economics that in 1926, Prof. R.A. Fisher
complained of "the painful misapprehension that statistics is a branch
of economics."
In recent years, econometrics which
statistical comprises the
methods to the theoretical economic methods is application
of
economnic research. Statistical methods of widely used in
collecting sampling are useful for
the basic data of economic studies. Statistical methodology also
indicatees the reliability of the data and the
them. The deviation of demand significance to be attached to
functions, the field in which the
application of econometrics was first made, continues to be of
interest to economists. major
Similarly, the production functions, cost functionns
and the consumption functions
present many difficult problems in the
analysis of which statistical tools are of immense use.
Thus, economists today are no longer content to
theorize in abstract
terms. citing statistics only as needed to
support their arguments. Instead
they utilise the excellent data now available to build a sound
foundation for their reasoning. Some of the uses of statisticsfactual
economics are as follows: in

.Measures of gross national product and input-output

greatly advanced overall economic knowledge analysis
and opened
have
new fields of study. up entirely
Finarcial statistics are basic in the field of
short-term credit, consumer finance and money and banking,
public finance.
Statistical studies of business cycles, long-term growth and seasonal
fluctuations serve to expand our
knowledge of economic instability
and to modify older theories.
.
Studies of competition, oligopoly and
comparisun of market monopoly require statistical
prices, cost and profits
of individual firms.
STATISTICS-WHAT AND WHY
17

Statistical surveys of prices essential

prices, pricing policy and price trends as wellstudying
are in the theories of
as their relationship to
the general problem of inflation.
Operatioal studies of public utilities require both statistical and
legal tools of analysis.
Analysis of population, land economics and economic geography are
basically statistical in their approach.
In solving various economic problems such as poverty, unemployment,
disparities in the distribution of income and wealth, statistical data
and statistical methods
play a vital role.
Statistics and Physical Sciences

Thephysical sciences, especially astronomy, geology and physics, were

among the fields in which statistical methods were first developed and
applied but until recently these sciences have not shared the 20th century
developments of statistics to the same extent as the biological and social
sciences. Currently, however, the physical sciences see to be making
increasing use of statistics, especially in astroriomy, chemistry.
engineering, geology, meteorology and certain branches of physics.

Statistics and Natural Sciences

Statistical techniques have proved to be extremely useful in the study of all

natural sciences like astronomy, biology, medicine, meteorology, zoology.
botany, etc. For example, in diagnosing the correct disease the doctor has
to rely heavily on actual data like temperature of the body, pulse rate,
blood pressure. Similarly, in judging the efficacy of a particular drug for
curing a certain disease experiments have to be conducted and the success
or failure would depend upon the number of people who are cured after
using the drug. In botany-the study of plant life-one has to rely heavily
on statistics in conducting experiments about the plants, effect of tempera-
ture, type of soil, etc. In fact it is difficult to find any scientific activity
where statistical data and statistical methods are not used.

Statistics and Research

Statistics is indispensable in research work. Most of the advancement in

knowledge has taken place because of experiments conducted with the
help of statistical methods. For exanmple, experiments about crop yields
and different types of fertilizers and different types of soils or the growth
of animals under different diets and environments are frequently designed
and analysed with the help of statistical methods. Statistical methods also
affect research in medicine and public health. In fact, there is hardly any
research work today that one can find complete without statistical data
and statistical methods. Also, it is impossible to understand the meaning
and implications of most of the research findings in various disciplines of
knowledge without having at least a speaking acquaintance with the
subject of statistics.
 STATISTICAL METHODS

Statistics and Other Uses

have discussed above the significance of statistics in sone important

ields. Besides these, statistics are useful to bankers, brokers, insurance
Companies, social workers. labour unions, trade associations, chambers
o commerce
neir andareto immenscly
supPporters the politicians. For in
interested example.
knowingthe politicians
their prospects and
of

Winning an election. By sampling a few voters prior to the election, the

percentage of the votes the candidate will receive in the election can be
worked out. This estimated percentage could be used to decide whether
a greater campaign effort is required to assure success. To take another
example. the banks have to make a very careful study of the cash re-
guirements otherwise they may find they are short of cash and their ex-
istence is at stake. Similarly, the premium rates of the life insurance
companies are based upon very careful study of the expectation of life.
These references to statistical applications are not intended to be
exhaustive, but they simply suggest the diversity of applications of the
underlying methods and ideas of statistics. In fact, the applications of
statistics are so numerous that statistics today has risen from the
science of Statecraft to the science of universal applicability. It is
instrumental in enhancing human welfare and is such a master key
that enables to solve the problems of mankind almost in every field.
Most people make use of statistics consciously or unconsciously in
taking decisions. Statistical knowledge is, in fact, essential for a goad
citizen. century ago, H.G. Wells very aptly pointed Out that
"Statistical thinking will one day be as necessary for efficient
citizenship as the ability to read and write."
It must be remembered that the statistical approach, though
universal initss underlying ideas, must be tailored to fit the
peculiarities of each concrete problem to which it is applied. It is
dangerous to apply statistics in a cookbook style. using the same
recipes Over and over without careful study of the ingredients of each
new problem.*
Also the reader must understand that statistics is not dry, abstract
and unrealistic pursuit followed by a small group of highly trained
mathematicians, but rather a vitally important part of the economic and
business life of the community. The usefulness of statistics to the reader
depends to a great extent on his ability to use his imagination in
applying this tool to his own particular situation.

LIMITATIONS OF STATISTICS

Despite the usefulness of statistics in many fields. impression should not

be carried that statistics are like magical devices which always provide
the correct solution to problems. Unless the data are properly collected
and critically interpreted there is every likelihood of drawing wrong
conclusions. Therefore. it is also necessary to know the limitations and
the possible misuses of statistics. The following are the important
limitations of the science of statistics:

Wallis and Roberts: Statistics-A New Approach, p. 12.

 STATISTICS-WHAT AND WHY 19

Statistics does not Deal with Individual Measurements Since statistics

deals with aggregates of facts, the study of individual measurements lies
outside the scope of statistics. Data are statistical when they relate to
measurement of masses. not statistical when they relate to an individual
item or event as a separate entity. For example, the wage earned by an
individual worker at any one time taken by itself is not a statistical
datum. But the wages of workers of a factory can be used statistically.
Similarly, the marks obtained by one student of a class or his height are
not the subject-matter of the study of statistics but the average marks or
the average height has statistical relevance.

Statistics Deals only with Quantitative Characteristics Statistics are

numerical statements of facts. Such characteristics as cannot be

expressed in numbers are incapable of statisticial analysis. Thus,
qualitative characteristics like honesty, eficiency. intelligence, blindness
and deafness cannot be studied directly. However, it may be possible_to
analyse such problems statistically by expressing thea numerically. For
example. we may study the intelligence of boys on the basis of the
marks obtained by them in an examination.

Statistical Results are True only on an Average The conclusions

obtained statistically are not universally true-they are true only under
certain conditions. This is because statistics as a science is less exact as
compared to natural sciences.

Statistics is only one of the Methods of Studying a Problem Statistical

tools do not provide the best solution under all circumstances. Very often. it
is necessary to consider a problem in the light of a country's culture.
help in studying such
religion and philosophy. Statistics cannot be of much suplemented by other
problemns. Hence statistical conclusions should be
evidenoes.
Státistics can be Misused* The greatest limitation of statistics is that
At is liable to be misused. The of statistics may arise because of
misuse
several For example, if statistical conclusionss
reasonns. are based on
incomplete information, one may arrive at fallacious conclusions. Thus
the argument that drinking beer is bad for longevity because 99 per cent
of the persons who take beer die before the age of 100 years is
statistically defective, since we are not told what perceritage of persons
who do not drink beer die before reaching that age. Statistics are like
as to establish right or
clay and they.can be moulded in any manner so One of the
wrong conclusions. In this context,
W.I. King pointed out,
shortcomings of statistics is that they do not bear on their face the label
Moreover, any Tom, Dick and Harry cannot deal with
of their quality. to draw sensible conclusions
statistics. lt requires experience and skill
from the data; otherwise, there is every likelihood of wrong interpretation.
The very fact that it may lead to fallacious conclusions in the hands of
inexperienced people limits the possibility of mass popularity of such a

* For an excellent account of how statistics can be used and misused please
refer to Reichmern, W.J. : The Use and Abuse of Statistics, Oxford University
Press. London.
20 STATISTICAL METHODS

useful science. Also, statistics cannot be used to full advantage in the

absence of proper
understanding of the subject to which it is applied.
DISTRUST OF STATISTICS

By distrust of statistics we of confidence in statistical

mean lack
statements and statistical methods. It is
often commented by people,
"Statistics can prove anything." "There are three types of lies-lies,
damned lies and statistics-wicked in the order of their naming." Or as a
Paris banker stated: "Statistics are like miniskirts, they cover up the
essentials but give you the ideas." The following three main reasonis
account for such views about statistics:

igures are convincing and, therefore, people are easily led to be-
lieve them.
They can be manipulated in such a manner as to establish fore-
gone conclusions.
(ii) Even if correct figures are used they may be presented in such a
manner that the reader is misled. For example, note the following
statement: ""The profits of firm A are Rs. 40,000 for 1999-2000 and
that of B Rs. 50,000 for the same period." On the basis of this
intormation only one would form the opinion that firm B is decid-
edly better than A. However, if we examine the amount of capital
invested in both the firms, the quality of work done, ete.. we
might reach a different conclusion. Hence, while making use of
statistics one should not only avoid outright falsehood but also be
alert to detect possible distortion of truth.
The various ways in which statistics are often misused shall be
discussed in detail in a subsequent chapter. Suffice here to know that
Statistics neither proves anything nor disproves anything. It as only a
tool, ie.. a method of approach. Tools, if properly used, do wonders and.
if misused, prove disastrous. The same is true of statistical tools. If used
properly, they help in taking wise decisions and if misused they can do
more harm than good. But the fault does not lie with the science of
Statistics as such. A few interesting examples can be cited to illustrate
the point. Medicines are meant for curing people, but if a wrong
medicine is take or an excessive dose of a medicine is taken a person
may die. We cannot blame the medicine for such a result. Similarly, if a
child cuts his finger with a sharp knife, it is not the knife that is to
blame, but the person who kept the knife at a place that the child could
get it. These examples help us in emphasising that if statisuual facts are
misused by some people it would be wrong to blame the science as
such. It is the people who are to be blamed. In fact, statistics are like
clay of which one can make a God or Devil as he pleases.

STATISTICAL METHODS Vs. EXPERIMENTAL METHODS

Man acquires knowledge from a variety of sources. In early times, it was

believed that acquiring knowledge was a matter of chance and its sources
were unknown. But the tremendous advance in human knowledge that
has taken place in the last two centuries is mainly due to the adoption
STATISTICS-WHAT AND WHY 21

of systematic methods and not just a matter of chance. Such methods as

are systematically used in enlarging knowledge are known as scientific
methods.
There are two primary methods employed for advancing knowledge,
experimental methods and statistical methods. Experimnental
namely,
methods are the best known scientific methods and have been historically
most fruitful. Under this method, cause and effect relations are often
established or investigated within a controlled set-up in the laboratory.
The experimental methods, however, can be adopted only in the physical
it
and natural sciences like Physics, Chemistry, Astronomy, etc., wherein
is possible to isolate individual causes and specific effect for closer
observation and analysis. In most cases quantitative as well as qualitative
aspects of a physical phenomenon are also measurable. In social sciences
like Economics. Political Science, Sociology. etc., it is difficult to apply
experimental methods in much as the various forces affecting a
as
particular phenomenon cannot be studied in isolation nor are they
measurable with precision in all cases. For example, if one were to
specify the significance of various causes determining the price of wheat
in India, the application of experimental methods would require the
others and measurement of the
study of causal factor in isolation from determine the
intensity of its effect-an impossible task. In order
to
its price, it would be
effect of a change in supply of wheat on
attitude of traders to change
necessary to ensure that tastes of people,
in supply, disposable funds of people, etc., can be studied in isolation.
However, these factors are so inextricably bound up with each other
that it would be very difficult to isolate any one of them for
experinental purposes.
However, it would be wrong to ignore altogether those fields. Here
resort may bbe
experimental methods cannot be' applied. In such cases
had to statistical methods. In applying statistical methods a problem is
studied, systematically as in the experimental methods, but the system
used. is not the same. Here we allow all forces to operate since they
cannot be kept constant. We then record the variations in the forces and
the result.
try to determine the part played by each in influencing
Undoubtedly, this method is ordinarily more difficult than experimental
method and the results are not as accurate but they are decidedly better
than no results. Pointing out the importance of statistical methods,
Croxton and Cowden have remarked, "Without an adequate understandingg
of statistics the investigator in the social1 sciences may frequently be like
the blind man groping in a dark closet for a black cat that isn't there.
The methods of statistics are useful in an ever-widening range of human
activities in any field of thought in which numerical data may be had."
However, it should be noted that the distinction between the
experimental methods and the statistical methods is somewhat formal and
arbitrary and should not be taken as anything rigid and definite. In
practice, the scientists often combine elements of both experimental and
statistical approaches. As a matter of fact, most important of the
statistical methodis originated in the fields of Physics and
Astronomy-fields which we usually considered to be 'exact' sciences. On
the other hand, even the social scientist can and does use a certain
amount of controlled study in his investigation. It may also be pointed out
that the statistical methods is not the only method employed in research
 STATISTICAL METHODS
22

number
the best the carpenter has a
problems. Just
nor
approach to as
also the
of tools each appropriate for a different sort of operation, so of
researcher can avail techniques
himself of various which are the tools
his trade and each of which is appropriate to a specific type of situation.
Which technique or techniques should be applied in a particular
of investigation. Just as
situation would primarily depend upon the object to spoil the work,
the choice of a wrong tool by the carpenter is likely
the choice of a wrong method by the statistician would similarly lead to

wrong conclusions.

STATISTICS AND cOMPUTERS

It is difficult to overstate the importance of the computer to present-day

statistics. The moderna electronic computer is capable of performing
millions of calculations in mere seconds. This is of great benetit to
business and other organisations maintaining record of their operations.
The development of statistics has been closely related to the evolution
of electronic computing machinery. Statistics is a form of data
useful for
processing. a way of converting data into information
decision-making.
As statistical theories become more complex, it becomes more difficult
to perform the calculations needed to apply to these theories. So, in
one sense, the development of statistical theory and electronic
computers reinforce each other. As statisticians devise new ways of
describing and using data for decisiorns, computer scientists respond
with newer and more efficient ways of performing these operations.
Conversely, with the evolution of more powerful computing techniques.
people in statistics are encouraged to explore new and more sophisticated
methods of statistical analysis.
Today more and' more people are having direct contact with computers.
However, the output from a computer is only as good as the data input.
Garbage in. garbage out' is an adage familiar to computer users. This
warning applies equally to statistical analysis. Statistical decisions based
on data are no better than the data used.
Some people have an impression that the study of statistics
necessarily involves the study of computers also. However, this is not
true-the computer science and statistics are different disciplines.
Needless to say that the computer is an extremely useful tool which
can be applied to the solution of statistical and many other types of
problems. The computer has made it possible to undertake statistical
studies that involve the compilation and analysis of large masses of
data and several variables. The computations can be performed easily
and quickly with the help of computer particularly when standard or
packaged programmes are available.
The computations required in the solution to several practical business,
economic and other type of problems involving volumes of data of varied
type are very tedious and lengthy.
In this text-book no further reference to computers is made for the
reasons given below:
.The illustrations and problems given in this text are simple, not 1long
or complicated and can easily be solved with the help of simple
arithmetic.
STATISTICS-WHAT AND WHY
23

Solving problems is a part of learning process. Statistical methods

cannot be learned nor the logic of techniques be assimilated if the
computer does all or most of the work.
. The book provides knowledge of several statistical tools which are of
vital use in decision-making and as such devoted entirely to
statistics.
It may be suggested that in any practical situation in which a problem
is too complex involving lot of computations, computer help be taken.
However, no computer, howsoever latest and sophisticated it may be, S

capableof formulating the problem-it is only a person who can do that.

While making computations involved in the study of various statistical1
tools the students are advised not to use calculators as still in most
Indian universities* and universities in other parts of the under-developed
and developing world the use of calculators is not permitted in the
examination-at the most slide rules are allowed. The logic of this
is accustomed right from the beginning to do
suggestion is simple-if one
calculations on calculator he will find it difficult even to add 2+2 what to
speak of division. multiplication, underroots, etc. However, every student
should at least see the calculator and know its use.

GLOSSARY

Attributes: Qualitative observation of elementary units are called attributes. They

may often be expressed numerically.
Data: Data refers to any group of measurements that happen to interest us.
These measurements provide information the decision maker uses.
gualitative Data: Quantiative Data reflect non-numeric features or qualities of
experimental units.

guantitative Data: Data that possess numerical properties are known ass
quantitative data.
Statistics: Statistics is the use of data to help the decision-maker reach better
decisions.
Variable: A variable is a characteristic that may take on different values at
different times, places or situations.

*It may be pointed out that students want to use calculators in the
examination and the matter is also taken up with the university authorities.
The universities find it difficult to supply calculators to all examinees and
poor students find it difficult to buy and hence even to those who can afford.
calculators are not allowed. If this is done, those who cannot afford would be
put to a disadvantage and injustice would be done to them. Now with the
price of calculators going low more and more universities are allowing the use
of calculators to the students in the examination. However, even while using
the calculators, students should not forget to recheck the caleulations.