SCHOOL OF ARTS, HUMANITIES AND MANAGEMENT

COURSE: B.COM GENERAL / BBA

SEMESTER: II

BUSINESS STATISTICS
 COURSE OBJECTIVES
1. To Impart knowledge of basic statistical concepts used in business.
2. To Enhance analytical thinking and analytical skills.
3. To Provides applications of statistical techniques for business decision making.
4. To develop the logical reasoning ability and interpretation of various statistical results.
5. To Comprehends statistical applications in the fields of Commerce, Economics and Management.

UNIT-I INTRODUCTION 12 HOURS

Meaning and Definition of Statistics- Collection and Tabulation of Statistical Data Presentation of Statistical
Data-Graphs and Diagrams.

UNIT-II MEASURES OF CENTRAL TENDENCY AND MEASURES OF VARIATION 12

HOURS
Measures of Central Tendency- Arithmetic Mean, Median, Mode, Harmonic Mean and Geometric Mean.
Measures of Variation- Standard Deviation -Mean Deviation-Quartile Deviation-Skewness and Kurtosis-
Lorenz Curve

UNIT-III CORRELATION AND REGRESSION ANALYSIS 12 HOURS

Simple Correlation-Scatter Diagram- Karl Pearson’s Correlation- Spearman’s Rank Correlation-
Regression- Meaning-Linear Regression, Sampling procedures - simple, stratified and systematic sampling.

UNIT- IV TIME SERIES 12 HOURS

Analysis of Time Series-Causes of Variation in Time Series Data -Components of Time Series- Additive
and Multiplicative Models- Determination of Trend By Semi Average, Moving Average and Least Square
(Linear Second Degree And Exponential) Methods Computation of Seasonal Indices By Simple Average,
Ratio to Moving Average, Ratio to Trend and Link Relative Methods.

UNIT-V INDEX NUMBERS 12 HOURS

Meaning and Types of Index Numbers-Problems in Construction of Index Numbers Methods of
Construction of Price and Quantity Indices- Test of Adequacy- Errors in Index Numbers- Chain Base Index
Numbers- Base Shifting -Splicing -Deflation -Customer Price Index and Its Uses- Statistical Quality
Control.

TOTAL : 60 HOURS
 UNIT 1 INTRODUCTION
Statistics:
The word “Statistics” has been derive from the Latin word “Status” or Italian word “Statista” or
German word “Statistika”. Each of these words means Political State. Initially, Statistics was
used to collect the information of the people of the state about their income, health, illiteracy and
wealth etc.
But now a day, Statistics has become an important subject having useful application in various
fields in day to day life.

The word Statistics has been used to convey different meanings in singular and plural sense.
When used as plural, statistics means numerical set of data and when used in singular sense it
means the science of statistical methods embodying the theory and techniques used for
collecting, analysing and drawing inferences from the numerical data.

Definition of Statistics:
‘‘Statistics are numerical statement of facts in any department of enquiry placed in relation to
each other’’. –A.I.Bowley
“Statistics may be defined as the science of collections presentation, analysis and interpretation
of numerical data”. - Croxton and Cowden
“Statistics are the classified facts representing the conditions of the people in a State…specially
those facts which can be stated in number or in tables of numbers or in any tabular or classified
arrangement.”—Webster.

Characteristics of Statistics:
a) Aggregate of facts/data
b) Numerically expressed
c) Affected by different factors
d) Collected or estimated
e) Predetermined purpose
f) Comparable
g) Systematic collection.

(a) Aggregate of Facts:

Simple or isolated items cannot be termed as Statistics unless they are a part of aggregate of facts
relating to any particular field of enquiry. For instance, the height of an individual or the price of
a particular commodity do not form Statistics as such figures are unrelated and uncomparable.
However, aggregate of the figures of births, deaths, sales, purchase, production, profits, etc., over
different times, places, etc., will constitute Statistics.

(b) Numerically Expressed:

Only numerical data constitute Statistics. Thus the statements like ‘the standard of living of the
people in Delhi has improved’ or ‘the production of a particular commodity is increasing’ do not
constitute Statistics. In particular, the qualitative characteristics which cannot be measured
quantitatively such as intelligence, beauty, honesty, etc., cannot be termed as Statistics unless
they are numerically expressed by assigning particular scores as quantitative standards. For
example, intelligence is not Statistics but the intelligence quotients which may be interpreted as
the quantitative measure of the intelligence of individuals could be regarded as Statistics.

(c) Affected by different factors:

Numerical figures should be affected by multiplicity of factors. This point has already been
elaborated in remark 3 above. In physical sciences, it is possible to isolate the effect of various
factors on a single item but it is very difficult to do so in social sciences, particularly when the
effect of some of the factors cannot be measured quantitatively. However, statistical techniques
have been devised to study the joint effect of a number of a factors on a single item (Multiple
Correlation) or the isolated effect of a single factor on the given item (Partial Correlation)
provided the effect of each of the factors can be measured quantitatively.

(d) Enumerated or Estimated According to Reasonable Standard of Accuracy:

The numerical data pertaining to any field of enquiry can be obtained by completely enumerating
the underlying population. In such a case data will be exact and accurate (but for the errors of
measurement, personal bias, etc.). However, if complete enumeration of the underlying
population is not possible (e.g., if population is infinite, or if testing is destructive i.e., if the item
is destroyed in the course of inspection just like in testing explosives, light bulbs, etc.), and even
if possible it may not be practicable due to certain reasons (such as population being very large,
high cost of enumeration per unit and our resources being limited in terms of time and money,
etc.), then the data are estimated by using the powerful techniques of Sampling and Estimation
theory. However, the estimated values will not be as precise and accurate as the actual values.
The degree of accuracy of the estimated values largely depends on the nature and purpose of the
enquiry. For example, while measuring the heights of individuals accuracy will be aimed in terms
of fractions of an inch whereas while measuring distance between two places it may be in terms
of metres and if the places are very distant, e.g., say Delhi and London, the difference of few
kilometres may be ignored. However, certain standards of accuracy must be maintained for
drawing meaningful conclusions.

(e) Collected for a Pre-determined Purpose:

It is of utmost importance to define in clear and concrete terms the objectives or the purpose of
the enquiry and the data should be collected keeping in view these objectives. An attempt should
not be made to collect too many data some of which are never examined or analysed i.e., we
should not waste time in collecting the information which is irrelevant for our enquiry. Also it
should be ensured that no essential data are omitted. For example, if the purpose of enquiry is to
measure the cost of living index for low income group people, we should select only those
commodities or items which are consumed or utilised by persons belonging to this group. Thus
for such an index, the collection of the data on the commodities like scooters, cars, refrigerators,
television sets, high quality cosmetics, etc., will be absolutely useless.

(f) Comparable:
From practical point of view, for statistical analysis the data should be comparable. They may be
compared with respect to some unit, generally time (period) or place. For example, the data
relating to the population of a country for different years or the population of different countries
in some fixed year constitute Statistics, since they are comparable. However, the data relating to
the size of the shoe of an individual and his intelligence quotient (I.Q.) do not constitute Statistics
as they are not comparable. In order to make valid comparisons the data should be homogeneous
i.e., they should relate to the same phenomenon or subject.
 (g) Collected in a Systematic Manner:
The data must be collected in a very systematic manner. Thus, for any socio-economic survey, a
proper schedule depending on the object of enquiry should be prepared and trained personnel
(investigators) should be used to collect the data by interviewing the persons. An attempt should
be made to reduce the personal bias to the minimum. Obviously, the data collected in a
haphazard way will not conform to the reasonable standards of accuracy and the conclusions
based on them might lead to wrong or misleading decisions.

WHAT THEY SAY ABOUT STATISTICS — SOME DEFINITIONS “STATISTICS AS

STATISTICAL METHODS”
1. Statistics may be called the science of counting. —Bowley A.L .
2. Statistics may rightly be called the science of averages. —Bowley A.L.
3. Statistics is the science of the measurement of social organism, regarded as a whole in all its
manifestations. —Bowley A.L .
4. “Statistics is the science of estimates and probabilities.” —Boddington
5. “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.” —King
6. Statistics is the science which deals with classification and tabulation of numerical facts as the
basis for explanation, description and comparison of phenomenon.”—Lovin
7. “Statistics is the science which deals with the methods of collecting, classifying, presenting,
comparing and interpreting numerical data collected to throw some light on any sphere of
enquiry.”—Selligman
8. “Statistics may be defined as the science of collection, presentation, analysis and interpretation
of numerical data.” —Croxton and Cowden
9. “Statistics may be regarded as a body of methods for making wise decisions in the face of
uncertainty.”—Wallis and Roberts
10. “Statistics is a method of decision making in the face of uncertainty on the basis of numerical
data and calculated risks.”—Prof. Ya-Lun-Chou
11. “The science and art of handling aggregate of facts—observing, enumeration, recording,
classifying and otherwise systematically treating them.”—Harlow

IMPORTANCE OF STATISTICS:

In recent days, we hear talking about statistics from a common person to highly qualified
person. It only show that how statistics has been intimately connected with wide range of
activities in daily life. They realize that work in their fields require some understanding of
statistics. It indicates the importance of the statistics. A.L.Bowley says, “Knowledge of
statistics is like knowledge of foreign language or of algebra. It may prove of use at any
time under any circumstances”.
1. Importance to the State or Government;
In modern era, the role of state has increased and various governments of the world also take
care of the welfare of its people. Therefore, these governments require much greater
information in the form of numerical figures. Statistics are extensively used as a basis for
government plans and policies. For example-5-years plans are framed by using reliable
statistical data of different segments of life.
 2. Importance in Human Behavior;
Statistical methods viz., average, correlation etc. are closely related with human activities
and behavior. For example-when a layman wishes to purchase some article, he first enquiries
about its price at different shops in the market. In other words, he collects data about the
price of a particular article and aims at getting idea about the average of the prices and the
range within which the price vary. Thus, it can be concluded that statistics play an important
role in every aspect of human activities and behavior.
3. Importance in Economics;
Statistics is gaining an ever increasing importance in the field of economics. That is why
Tugwell said, “The science of economics is becoming statistical in its method.” Statistics and
economics are so interrelated to each other that the new disciplines like econometrics and
economic statistics have been developed. Inductive method of generalization used in
economics, is also based on statistical principle. There are different segments of economics
where statistics are used-
(A) Consumption- By the statistics of consumption we can find the way in which
people in different group spend their income. The law of demand and elasticity of
demand in the field of consumption are based on inductive or inferential statistics.
(B) Production- By the statistics of production supply is adjusted according to
demand. We can find out the capital invested in different productive units and its
output. The decision about what to produce, how much to produce, when to
produce is based on facts analyzed statistically.

(C) Distribution- Statistics play a vital role in the field of distribution. We

calculate the national income of a country by statistical methods and compare it
with other countries. At every step we require the help of figures without them. It
is difficult to move and draw inferences.
4. Importance in Planning;
Importance in Planning for the proper utilization of natural and manual resources, statistics
play a vital role. Planning is indispensable for achieving faster rate of growth through the
best use of a nation’s resources. Sometimes said that, “Planning without statistics is a ship
without rudder and compass.” For example- In India, a number of organizations like national
sample survey organization(N.S.S.O.), central statistical organization (C.S.O.) are
established to provide all types of information.
5. Importance in Business:
The use of statistical methods in the solution of business problems dates almost exclusively
to the 20th century. Or now days no business, large or small, public or private, can prosper
without the help of statistics. Statistics provides necessary techniques to a businessman for
the formulation of various policies and planning with regard to his business. Such as-
(A) Marketing- In the field of marketing, it is necessary first to find out what
can be sold and them to evolve a suitable strategy so that goods reach the ultimate
consumer. A skillful analysis of data on population, purchasing power, habits of
people, competition, transportation cost etc. should precede any attempt to establish
a new market.
(B) Quality Control- To earn the better price in a competitive market, it is
necessary to watch the quality of the product. Statistical techniques can also be used
to control the quality of the product manufactured by a firm. Such as - Showing the
control chart.
 (C) Banking and Insurance Companies- banks use statistical techniques to
take decisions regarding the average amount of cash needed each day to meet the
requirements of day to day transactions. Various policies of investment and sanction
of loans are also based on the analysis provided by statistics.
(D) Accounts writing and Auditing- Every business firm keeps accounts of
its revenue and expenditure. Statistical methods are also employed in accounting. In
particular, the auditing function makes frequent application of statistical sampling
and estimation procedures and the cost account uses regression analysis.
(E) Research and Development- Many business organizations have their own
research and development department which are responsible for collection of such
data. These departments also prepare charts groups and other statistical analysis for
the purpose.

SCOPE OF STATISTICS:

In early stages, the scope of statistics was very limited. It was confined mainly to the
administration of government and was, therefore, called the ‘Science of Kings’. But in modern
time, the scope of statistics has widened usually all those facts come in the purview of statistics,
which are expressed in quantitative terms directly or indirectly. That is why Croxton & Cowden
observed, “Today there is hardly a phase of endeavor which does not find statistical devices at
least occasionally useful.” It is not unfair to say, science without statistics bears no fruit and
statistics without science have no root.” The applications of statistics are so numerous that it is
often remarked, “Statistics is what statisticians do.” Now let us examine a few fields or areas in
which statistics is applied.

1.Statistics and the State: in recent years the functions of the state have increased
tremendously. The concept of the state has changed from that of simply maintaining law and
order to that of a welfare state. Statistical data and statistical methods are of great help in
promoting human welfare. The government in most countries is the biggest collector and user of
statistical data. These statistics help in framing suitable policies.
2. Statistics in Business and Management: with growing size and increasing
competition, the problems of business enterprises have become complex. Statistics is now
considered as an indispensable tool in the analysis of activities in the field of business, commerce
and industry. The object can be achieved by properly conducted market survey and research
which greatly depends on statistical methods. The trends in sales and production can be
determined by statistical methods like time-series analysis which are essential for future planning
of the phenomena. Statistical concepts and methods are also used in controlling the quality of
products to satisfaction of consumer and the producer. The bankers use the objective analysis
furnished by statistics and then temper their decisions on the basis of qualitative information.
3. Statistics and Economics: R.A.Fisher complained of “the painful misapprehension
that statistics is a branch of economics.” Statistical Data and methods are of immense help in the
proper understanding of the economic problems and in the information of economic policies. In
the field of exchange, we study markets, law of prices based on supply and demand, cost of
production, banking and credit instruments etc. The development of various economic theories
own greatly to statistical methods, e.g., ‘Engel’s law of family expenditure’, ‘Malthusian theory
of population’. The impact of mathematics and statistics has led to the development of new
disciplines like ‘Econometrics’’ and ‘Economic Statistics’. In fact, the concept of planning so
vital for growth of nations would not have been possible in the absence of data and proper
statistical analysis.
4. Statistics and Psychology and Education: Statistics has found wide application in
psychology and education. Statistical methods are used to measure human ability such as;
intelligence, aptitude, personality, interest etc. by tests. Theory of learning is also based on
Statistical Principles. Applications of statistics in psychology and education have led to the
development of new discipline called ‘Psychometric’.
5. Statistics and Natural science; Statistical techniques have proved to be extremely
useful in the study of all natural sciences like biology, medicine, meteorology, botany etc. for
example- in diagnosing the correct disease the doctor has to rely heavily on factual data like
temperature of the body, pulse rate, B.P. etc. In botany- the study of plant life, one has to rely
heavily on statistics in conducting experiments about the plants, effect of temperature, type of
soil etc. In agriculture- statistical techniques like ‘analysis of variance’ and ‘design of
experiments’ are useful for isolating the role of manure, rainfall, watering process, seed quality
etc. In fact it is difficult to find any scientific activity where statistical data and methods are not
used.
6. Statistics and Physical Science: The physical sciences in which statistical methods
were first developed and applied. It seems to be making increasing use of statistics, especially in
astronomy, chemistry, engineering, geology, meteorology and certain branches of physics.
7. 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. 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 methods.
8. Statistics and Computer: The development of statistics has been closely related to the
evolution of electronic computing machinery. Statistics is a form of data processing a way of
converting data into information useful for decision-making. The computers can process large
amounts of data quickly and accurately. This is a great benefit to business and other
organizations that must maintain records of their operations. Processing of row data is
extensively required in the application of many statistical techniques.

FUNCTIONS OF STATISTICS:

Statistics performs the functions of making the numerical aspects of facts simple, precise,
comparable and reliable. In fact, the various functions performed by statistics are the basis of its
utility. R.W. Burgess says, “The fundamental gospel of statistics is to push back the domain of
ignorance, prejudice, rule of thumb, arbitrary and premature decisions, tradition & dogmatism
and to increase the domain in which decisions are made. Principles are formulated on the basis
of analyzed quantitative facts.”
1. Numerical and definite expression of facts:
The first function of the statistics is the collection and presentation of facts in numerical
form. We know that the numerical presentation helps in having a better understanding of the
nature of a problem. One of the most important functions of statistics is to present general
statements in a precise and definite form. Statements and facts conveyed in exact
quantitative terms are always more convincing than vague utterances.
2. Simplifies the data (condensation):
Not only does statistics present facts in a definite form but it also helps in condensing mass
of data into a few significant figures. According to A.E.Waugh, “the purpose of a statistical
method is to simplify great bodies of numerical data.”In fact, human mind cannot follow the
huge, complex and scattered numerical facts. So these facts are made simple and precise
with the help of various statistical methods like averages, dispersion, graphic or
diagrammatic, presentation, classification, tabulation etc. so that a common man also
understand them easily.
3. Comparison of facts: Baddington states
“The essence of the statistics is not only counting but also comparison.” The function of
comparison does help in showing the relative importance of data. For example- the pass % of
examination result of a college may be appreciated better when it is compared with the result
of other college or the results of previous years of the same college.
4. Establishment of relationship b/w two or more phenomena;
To investigate the relationship b/w two or more facts is the main function of statistics. For
example-demand and supply of a certain commodity, prices and wages, temperature and
germination time of seeds are interrelated.
5. Enlarges individual experiences: In word of Bowley
“the proper function of statistics indeed is to enlarge individual experience.” Statistics is like
a master key that is used to solve problems of mankind in every field. It would not be
exaggeration to say that many fields of knowledge would have remained closed to the
mankind forever but for the efficient and useful techniques and methodology of the science
of statistics.
6. Helps in the formulation of policies:
Statistics helps in formulating policies in different fields, especially in economic, social and
political fields. The government policies like industrial policy, export-import policies,
taxation policy and monetary policy are determined on the basis of statistical data and their
movements, plan targets are also fixed with the help of data.
7. Helps in forecasting:
Statistical methods provide helpful means in estimating the available facts and forecasting
for future. Here Bowley’s statementis relevant that, “a statistical estimate may be good or
bad, accurate or the reverse; but in almost all cases it is likely to be more accurate than a
casual observer’s impression.”
8. Testing of hypothesis:
Statistical methods are also employed to test the hypothesis in theory and discover newer
theory. For example-the statement that average height of students of college is 66 inches is a
hypothesis. Here students of college constitute the population. It is possible to test the
validity of this statement by the use of statistical techniques.

LIMITATIONS OF STATISTICS:

Newsholme states, “Statistics must be regarded as an instrument of research of great value but
having several limitations which are not possible to overcome and as such they need out careful
attention.”

1. Statistics does not study qualitative facts: Statistics means aggregate of numerical
facts. It means that in statistics only those phenomena are studied which can be expressed in
numerical terms directly or indirectly. Such as- (1) directly in numerical terms like age, weight
and income of individual (2) no directly but indirectly like intelligent of students and
achievements of students (3) neither directly nor directly like morality, affection etc. such type of
facts don’t come under the scope of statistics.
2. Statistics doesn’t study individual: According to W.I.King, “Statistics from their very
nature of subject cannot and will never be able to take into account individual causes. When
these are important, other means must be used for their study.” These studied are done to
compare the general behavior of the group at different points of time or the behavior of different
groups at a particular point of time.

3. Statistical results are true only on the average: The statistical laws are not
completely true and accurate like the law of physics. For example – law of gravitational forces is
perfectly true & universal but statistical conclusions are not perfectly true. Such as the average
age of a person in India is 62 years. It does not mean that every person will attain this age. On the
basis of statistical methods we can say only in terms of probability and not certainty.
4. Statistics as lack of complete accuracy: According to Conner, “Statistical data must
always be treated as approximations or estimates and not as precise measurements.” Statistical
result are based on sample or census data, are bound to be true only approximately. For example
– according to population census 2001, country’s population is 1,02,70,15,247 but can real
population may not be more or less by hundred, two hundred and so on.
5. Statistics is liable to be misused: Statistical deals with figures and it can be easily
manipulated, distorted by the inexpert and unskilled persons it is very much likely to be misused
in most of the cases. In other words, the data should be handled by experts. Thus it must be used
by technically sound persons.
6. Statistics is only one of the methods of studying a phenomenon; According to
Croxton & Cowden, “It must not be assumed that the statistical method is the only method to be
used in research; neither this method be considered the best attack for every problem.” The
conclusions arrived at with the help of statistics must be supplemented with other evidences.
7. Statistical results may be misleading; Without any reference, statistical results may
provide doubtful conclusions. For example – on the basis of increasing no. of prisoners in the
prison, it may be conclude that crime is increasing. But it may be possible that due to rude
behavior of police administration the number of prisoners is increasing but crime is decreasing.
Therefore, it is worth-mentioning that every science based on certain assumption and
limitations. This does not reduce the importance of the subject but lays emphasis on the fact that
precautions should be taken while dealing with statistical analysis and interpretations.

DISTRUST OF STATISTICS

For practical view point statistics is very useful and important science. We know that utility
of statistics lies not merely in data but in correct analysis and proper interpretation of data.
Several times due to ignorance and bias, people misuse this delicate tool of knowledge and it
creates distrust about data.

Opinion about distrust of statistics;

1stOpinion–Statisticians fully trust on the statistical conclusions because data is collected,

edited, analyzed and interpreted on the basis of statistical methods. Thus there is no reason to
doubt on it and said that “Figures don’t lie” or “Figures can prove nothing.”

2nd Opinion –The statistics is looked upon with a suspicious eye and is quite often
condemned as “Figures are tissue of flesh hood. Discardi remarks that there are three kinds
of lies- lies, damned lies and statistics or “There are black lies, white lies, multi-chromatic
lies and statistics is rainbow of lies.”

Many persons feel that data are false, confusing and incorrect and with their help truth can
be proved wrong and lies can be put as truth. Hence it is said that “Statistics can prove
anything” or “Statistics are like clay of which you can make God or Devil, as you please.”

In this context, the observation is worth quoting that “Statistician is the person who is deeply
involved in statistical data. He can freely play with them, misuse them and can cheat
common people. So he is just magician who shows the games of tricks of hand through
statistical data. His result can be surprising but not trustworthy.

COLLECTION OF DATA

Data are pieces of factual information that are recorded and applied for analysis. Data is a tool
which helps us to understand certain problems by providing us with information. They are a set
of values with qualitative and quantitative variable.

TYPES OF DATA
Data of broadly classified into two based upon who collected the data
Primary data
Primary data is the data collected by investigator himself for the first time for his own research
and analysis. It is also known as first-hand information. Primary data is collected using method
such as personal interview, survey etc..,.
Secondary data
Secondary data is the data which is already been collected and process by the person for the
purpose of his research. Journals, internal sources, journals, book etc..,. are sources of secondary
data.

PRIMARY DATA
1) Direct Personal Investigation
Direct personal investigation is the method in which the investigator directly
goes to the source to collect information.
Merits
(i) Information collected in this method is more authentic and accurate
(ii) There is high degree of accuracy in qualitative information
(iii) The original opinion or data shall be obtained.
Demerits
(i) This is a time consuming process
(ii) If the investigator is not intelligent enough to understand the mental state of the source
it may lead to wrong interpretation.
 (iii) It may result in personal bias.
2) Indirect Oral Investigation
Indirect oral investigation is when the investigator investigates a person close to the source.
This is done due to the reluctance of the original person.
Merits
(i) It saves time and labour
(ii) It is easy and convenient
(iii) It covers a wide range of area.
Demerits
(i) Information received may not be reliable
(ii) Person chosen for this purpose me not be suitable
(iii) It may be expensive as information is collected from various sources.
3) Information collected from local agencies
In this method investigator appoints a few agencies in various regions to cover various
fields of inquiry. This method is generally used by newspaper companies to get information from
various places in various topics such as sports, economics etc..,.
Merits
(i) Avoid area can be easily covered
(ii) This is a time saving method of collecting data
The cost of collecting data is less
Demerits
(i) Sometimes the information collected may contradict one another
(ii) The information can be less accurate
(iii) This method will be expensive and a full-time agent is hired in different places
4) Questionnaire method
Questionnaire method is the most famous method of collecting primary data .A
questionnaire is a set of questions device for conducting survey. The questionnaire is sent to
the respondent with the request to fill it and send it back within a specific time.
Merits
(i) This method is cheaper
(ii) The time consumed for this process is very less
(iii) This is an unbiased method of collecting data
Demerits
(i) Sometimes the respondent may provide wrong information
(ii) There is no type of personal motivation in this method
(iii) There are chances of ignorance or late reply from the respondents
SECONDARY DATA
1) Published sources
Certain government and non-government organisations publish various journals, research
papers, surveys etc which are very helpful and reliable. Some of them are mentioned below
(i) Publications of international bodies like UNO, WTO and WHO etc..,.
(ii) Publications of research institutes like ISI, NCERT, ICAR etc..,.
(iii) Government publications
(iv) Publications of commercial and financial institutions
(v) Publications of governmental organisations
(vi) Newspaper, journals and periodicals.
2) Unpublished sources
Unpublished sources cover all the sources where data is maintained privately by certain private
agencies or companies. The data collected by universities, research institutions also come under
unpublished sources.

CLASSIFICATION OF DATA
Connor defined classification as: “the process of arranging things in groups or classes according
to their resemblances and affinities and gives expression to the unity of attributes that may
subsist amongst a diversity of individuals”. The raw data, collected in real situations and
arranged haphazardly, do not give a clear picture.

Thus to locate similarities and reduce mental strain we resort to classification. Classification
condenses the data by dropping out unnecessary details. It facilitates comparison between
different sets of data clearly showing the different points of agreement and disagreement. It
enables us to study the relationship between several characteristics and make further statistical
treatment like tabulation, etc. During population census, people in the country are classified
according to sex (males/ females), marital status (married/unmarried), place of residence
(rural/urban), Age (0-5 years, 6-10 years, 11-15 years, etc.), profession (agriculture, production,
commerce, transport, doctor, others), residence in states (West Bengal, Bihar, Mumbai, Delhi,
etc.), etc.

Modes of Classification
There are four types of classification, viz.,
(i) Qualitative
(ii) Quantitative
(iii) Geographical
(iv) Chronological
(i) Qualitative classification: It is done according to attributes or non-measurable characteristics,
like social status, sex, nationality, occupation, etc. For example, the population of the whole
country can be classified into four categories as married, unmarried, widowed and divorced.
When only one attribute, e.g., sex, is used for classification, it is called simple classification.
When more than one attributes, e.g., deafness, sex and religion, are used for classification, it is
called manifold classification.
(ii) Quantitative classification: It is done according to numerical size like weights in kg or heights
in cm. Here we classify the data by assigning arbitrary limits known as class-limits. The
quantitative phenomenon under study is called a variable. For example, the population of the
whole country may be classified according to different variables like age, income, wage, price,
etc. Hence this classification is often called „classification by variables‟.

Variable: A variable in statistics means any measurable characteristic or quantity which can
assume a range of numerical values within certain limits, e.g., income, height, age, weight, wage,
price, etc. A variable can be classified as either discrete or continuous.
(1) Discrete variable: A variable which can take up only exact values and not any fractional
values, is called a „discrete‟ variable. Number of workmen in a factory, members of a family,
students in a class, number of births in a certain year, number of telephone calls in a month, etc.,
are examples of discrete-variable.
(2) Continuous variable: A variable which can take up any numerical value (integral/fractional)
within a certain range is called a „continuous‟ variable. Height, weight, rainfall, time,
temperature, etc., are examples of continuous variables. Age of students in a school is a
continuous variable as it can be measured to the nearest fraction of time, i.e., years, months, days,
etc

(iii) Geographical classification: It is done with respect to space or places, e.g., production of
cereals in quintals in various states, population of a country according to states, etc.

(iv) Chronological classification: It is done according to time, e.g., index numbers arranged over
a period of time, population of a country for several decades, exports and imports of India for
different five year plans, etc.

PRESENTATION OF DATA
In the previous topic we saw how data can be collected. As the data collected is generally
huge we need to comprise and deliver it in a presentable form. Generally there are three ways of
presenting presentation of data. They are
1) Textual or Descriptive Presentation
2) Tabular Presentation
3) Diagrammatic Presentation
Textual or Descriptive Presentation
When the data collected is presented in the form of a text it is called textual or descriptive
presentation. Generally this method cannot be used to present large data.
For example, in the 2011 census, the population of India was 1,21,08,54,977 comprising of 58,
64, 69,174 females and 62, 37, 24,248 males. The literacy rate is 74.0 4 percentage and density of
population is 382 person per square kilometer.
From the above example, we can see that the data is represented textually. One of the major
limitations of this method is that the readers must go through the entire text and get the required
information.

Tabular Presentation of Data

 When the data is presented in the form of rows and columns it is called tabular
presentation of data.
Example:

AREA FEMALE MALE TOTAL

URBAN 90% 89% 89.5%

RURAL 87% 88% 87.5%

TOTAL 88.5% 88.5% 88.5%

The about table represents the pass percentage of the examination conducted in
Tamilnadu it has three rows (urban, rural, total) and three columns (female, male, total). It is a
3×3 table where each small box is called the cell which gives information regarding the pass
percentage. This method is very significant as it enables us to use it for further statistical
treatment. This tabular representation is further classified into four
(i)Qualitative Classification
Qualitative classification is when the collected information is classified in the form of
attributes such as gender, nationality etc..,. The table given above is an example of qualitative
classification where the information is classified in the form of gender and location.
(ii) Quantitative Classification
When information can be measured quantitatively like age, income, marks etc..,.then,
such classifications are called quantitative classification
Example

MARKS FREQUENCY

0-10 5

10-20 10

20-30 20

30-40 15

40-50 10

(iii) Temporal Classification

Temporal classification is when classification is based on the basis of time like year,
months, days etc..,.

Example
 DAYS OF A PRODUCTION (no of
WEEK pairs of shoes)
MONDAY 2000
TUESDAY 1750
WEDNESDA 3000
Y
THURSDAY 2250
FRIDAY 1550
(i) Spatial Classification
Spatial classification is when the data classification is based on place like town,
city, district, state, country etc..,.
Example

STATE LITERACY RATE

TAMIL NADU 80.09%

ANDHRA PRADESH 67.02%

KARNATAKA 75.36%

KERALA 93.91%

Diagrammatic Presentation
In this method the data is represented diagrammatically and is very easy to understand
generally data is represented diagrammatically in three ways.
1) Geometric Diagram
This category consists of bar diagrams and pie charts
(i) Bar diagram
Bar diagram is a diagrammatic representation of data in equal spaced and
equalwidth rectangular bars for each class of data .The height or length of the bar
tells us about the magnitude of the class. Bar diagrams can be easily used for
comparison of data. Both qualitative and quantitative data can be represented in
bar diagram.
They can be further divided into two broad categories.
a) Multiple bar diagram
When there is a need to compare two set of data multiple bar diagram is used.
For example import and export, production and sale etc..,.
b) Component bar diagram
Component bar diagram also known as Sub diagrams are used to compare
different components of a particular class. For example, the various components such
as rent, medicine, education on which the monthly salary spend can be easily
understood from a component bar diagram.
(ii) Pie diagram
A pie diagram is similar to that of a component bar diagram but it is represented in
circle proportionally instead of bars. The values given in each class is converted into
percentage and then each figure is multiplied by 3.6 degree. (360/100 - 360 degree of a
circle divided into 100 parts) the values are then divided accordingly in the circle.
2) Frequency diagram
When the data is in the form of grouped frequency are usually represented by frequency
diagrams. Histogram, frequency polygon, frequency curve and ogive are types of frequency
diagram.
(i) Histogram
Histogram is a diagram which consists of rectangular bars whose area is
proportional to the frequency of a variable and whose width is equal to the class
interval.
(ii) Frequency polygon
A frequency polygon is another type of frequency distribution graph. In a
frequency polygon, the number of observations is marked with a single point at the
midpoint of each and every interval. Then the points are connected using a straight
line.
(iii)Frequency curve
The frequency curve is obtained by drawing a smooth freehand curve that passes
through the points of a frequency polygon closely as possible.
(iv)Ogive
Ogive also known as the cumulative frequencies are of two types. When the
cumulative frequencies are plotted against their upper limits respectively, then it is less
than ogive. When the cumulative frequencies are plotted against their lower limits
respectively, then it is more than ogive.
3) Arithmetic line graph
An arithmetic line graph also known as time series graph is a graph where the
time ( months, years, weeks) are plotted in the x axis and their respective values are
plotted in the y axis. It helps us in analysing trends and periodicity of data.
 UNIT 2 MEASURES OF CENTRAL TENDENCY AND
MEASURES OF VARIATION

Measures of central tendency are a statistical tool used to summarize data that depicts the central
value of the given data. These measures enable us to identify where most of the values fall. The
three most commonly used measures of central tendency are mean, median and mode. In this unit
you will learn about them extensively and also learn about some other partition values.

MEASURES OF CENTRAL TENDENCY

When working on a given set of data, it is not possible to remember all the values in that
set. But we require inference of the data given to us. This problem is solved by mean, median
and mode. Measures of Central Tendency, represent all the values of the data. As a result, they
help us to draw an inference and an estimate of all the values. They are also known as statistical
averages. Their simple function is to mathematically represent all the values in a particular set of
data. Hence, this representation shows the general trend and inclination of all the values.

An average provides a simple way of representation of all the individual data. It also aids in the
comparison of different groups of data. In addition to this, an average in economic terms can
represent the direction an economy is headed towards. Hence, it can be easily used to formulate
policies and bring about a reform for a better economy.

MEAN
ARITHMETIC MEAN
The arithmetic mean of a series of numbers is sum of all observations divided by the
total number of observations in the series.
Example:
 There are two brothers, with different heights. The height of the younger brother is 138
cm and height of the elder brother is 154cm. The average height of the two brother is total
height divided into two equal parts,
(138+154) ÷ 2 = 292 ÷ 2 = 146 cm
So 146 cm is the average height of the brothers. Here 154 > 146 > 138. The average value lies in
between the minimum value and the maximum value.
Thus if x1, x2, ..., xn represent the values of n observations, then arithmetic mean (A.M.) for n
observations is: (direct method)

There are two methods for computing the arithmetic mean: (i) Direct method (ii) Short cut
method.
Direct Method:
Example:
The following data represent the number of books issued in a college library is
selected from 7 different days 17,1 9, 22, 25, 15, 40, 21 find the mean number of
books.
Solution:

x̅ = 20 + 39 + 22 + 25 + 45 + 40 + 54 = 2 =
4 35
5
7 7
Hence the mean of the number of books is
35
Indirect Method:
In this method an assumed mean or an arbitrary value (A) is used as the basis of
calculation of deviations (di) from individual values. If di = xi – A

Example:
A student’s marks in 5 subjects are 95, 78, 88, 72,99. Find the average of his marks.
Let us take the assumed mean, A = 88

xi di= xi–
 88
95 7
78 10
88 0
72 -16
99 10
Tot 11
al

Solution:

= 88 + 11/5
= 88 + 5.5 = 93.5
The arithmetic mean of average marks is 93.5

Discrete Grouped data

If x1, x2, ...,xn are discrete values with the corresponding frequencies f1, f2, …, fn.
Then the mean for discrete grouped data is defined as (direct method)

In the short cut method the formula is modified as

Example:
Given the following frequency distribution, calculate the arithmetic mean
Marks 64 6 6 6 6 5
3 2 1 0 9
No. Of. Students 8 1 1 9 7 6
8 2
Solution:

x f fi di = xi – fi
i i xi A d
(A=62 i
)
64 8 512 2 16

63 18 1134 1 18

62 12 744 0 0

61 9 549 -1 -9

60 7 420 -2 -14

59 6 354 -3 -18

60 3713 -7