INTRODUCTION TO STATISTICS
Origin of Statistics
The word ‘Statistics’ comes from the latin word ‘status’ or Italian word ‘statista’ or German
word statistik’, all having the meaning -‘political state’. These terms were used in 15th
century. This is because the administration of the states required collection and analysis of
data relating to population and wealth. However, statistics was used for the first time in Egypt
in 3050 BC for conducting census of population and wealth for raising pyramids.
In India, during Mauryan regime, our country had an efficient system of collecting vital
statistics. The Ain-i-Akbari gives a detailed account of the administrative and statistical
survey conducted during the reign of Akbar.
During the 16th century, the astronomers Tycho Brahe and Johannes kepler used to record
the data relating to the movement of heavenly bodies and drew various inferences about the
movement of planets. During this period, G. Cardano - a great mathematician as well as a
gambler wrote a valuable treatise on the hazards of the game of chance and formulated
certain rules to reduce the chance of loss which later gave birth to the theory of probability.
During the 17th century, captain John Graunt of London (father of vital statistics) studied
statistics relating to birth and death. During this century Sir William petty prepared mortality
table and calculated the expectation of life at different ages.
During the 18th and 19th century, l.A.J. Quetlet put forward the concept of average man
whose action confirmed to the average results obtained from the society. Pierra Simon de
Laplace also published his work on the theory of probability during this period. It was during
the second half of 19th century and 20th century many new developments surfaced in the
field of statistics. Francis Galton pioneered the study of ‘Regression Analysis’. S. Jevon
developed the technique of Time Series, Karl pearson invented correlation Analysis. Sir
Ronald A. Fisher (father of statistics) developed many new models in different fields of
statistics.
Now, the domain of statistics has increased to a large extent and there is hardly any discipline
which does not apply the statistical methods to derive valuable conclusion. Statistics as a
science has grown tremendously over the last two decades primarily because of
(i) increase in demand for statistics: The demand for information has increased over the
years due to increase in size and complexity of modern business. Government also needs a lot
of information for better goverance. Further, the introduction of R.T.1 Act has doubly
increased the demand for statistics.
(ii) reduction in the cost of collection, classification and tabulation of data: Secondly, due
to technological development the time and cost required for collection and analysis of data
has considerably reduced. The development of computer and internet has made the task of
businessmen and administrators easy and simple.
No doubt, statistics has grown considerably over the years, but still we can’t say it is a fully
grown science because the list of unsolved problems are still huge and statistical research has
become more vigorous than ever.
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MEANING OF STATISTICS
The term ‘statistics’ is used in plural sense (i.e., as statistical data) and in singular sense (i.e.,
as statistical method).
In Plural sense it refers to numerical data collected and presented in a systematic manner in
order to fulfill certain objective. Some examples are the export of iron are from 2001 to 2011,
the figure of unemployment India during the last decade, etc.
In singular sense, statistics refers to a branch of knowledge which has some principles, rules
and methods. In short, it refers to statistical methods.
STATISTICS IN PLURAL SENSE AS STATISTICAL DATA
Statistics in plural sense refers to numerical data of any phenomena placed in relation to each
other. For example, numerical data relating to population, production, price-level, national
income, crimes, literacy, unemployment, houses, etc
Definitions of statistics in plural sense :
1.. According to Horace Secrist “By statistics we mean aggregate 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
predetermined purpose, and placed in relation to each other”
Characteristics of Statistics :
Form this above definitions, particularly the definition given by Horace Secrist, it is clear that
statistics should possess the following features.
1. Aggregate of facts: Statistics are aggregate of facts. A single figure cannot be called as
statistics because it cannot be compared to draw any conclusion out of it. For example, a
single height of 150 cm of a student of a particular class is not a statistics but a series relating
to the heights of group of persons would be called statistics since it facilitates the comparison
to draw conclusion.
2.Affected to a marked extent by multiplicity of causes : Usually, statistics data are
affected to a considerable extent by a number of forces operating together. For example, the
prices of a particular commodity are affected by number of factors such as supply, demand,
import, export, income distribution, taste etc.
3. Numerically expressed; All statistical facts are expressed in numbers. Qualitative
expressions like good, bad, young, old etc. do not constitute statistics as they can’t be
expressed numerically . But, when they are expressed by giving ranks or marks, they can be
termed as statistics.
4. Enumerated or Estimated : There are two ways of deriving figures relating to a particular
phenomenon- actual counting (enumeration) and estimation. If the scope of enquiry is
limited, data are collected by actual counting or measurement. For example, while measuring
the height of students of a class we have to be accurate in terms centimeters.
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If the scope of enquiry is very large, data are collected by estimation by using the powerful
techniques of sampling and estimation because the actual counting measurement mayor may
not be possible. For example, to find out the quantity of oil in a particular sea, data is
collected by estimation techniques.
5. Reasonable degree of accuracy: Statistical data are collected only with a reasonable
degree of accuracy. The degree of accuracy of estimated value largely depend on the nature
& purpose of the enquiry. For example, the difference of few kilometers may be ignored
while measuring the heights of students and the difference of few kilometers may be
ignored while measuring the distance between two places like Delhi and Kanyakumari.
6. Collected in a systematic manner: The collection of data should be systematic. For this
proper planning and deployment of trained personnel is essential. If the data are collected
haphazardly, it may lead to erroneous conclusion.
7. Pre-determine purpose: The purpose of collecting data must be decided in advance. If
Data are not collected with pre-determined objective, the whole efforts will be waste in terms
of money, time and result.
8. Placed in relation to each other: The basic purpose of collecting data is to make
comparison In order make genuine comparison the data should be homogeneous i.e., relate to
the same subject matter. For example population of India may be compared with the
population of other countries. But if the mark of a students and his parents income are placed
together it does not make any sense and hence cannot be termed as statistics.
Thus, in the absence of aforesaid characteristics, numerical data cannot be called statistics.
STATISTICS IN SINGULAR SENSE AS STATISTICAL METHOD
In singular sense, statistics refers to a branch of knowledge which has some principles, rules
and methods. In short, it refers to statistical methods.
I. According to Wallist and Roberts “Statistics is a body of methods for making decision in
the face of uncertainty”
2. According to Harlow “The science and art of handling aggregate of facts — observing,
enumeration, recording, classifying and otherwise systematically treating them.”
3. According to Croxton and Cowden “Statistics may be defined as the collection,
presentation, analysis and interpretation of numerical data.”
Thus, from the above definitions, we can conclude that statistics in singular sense refers to
statistical methods. These are the tools in the hands of a statistical investigator. They are the
general principles and techniques used in collection, classification, analysis and interpretation
of data. Statistical methods range from simple devices like average to the highly complicated
mathematical procedure such as correlation, regression, sampling, testing of hypothesis, etc.
Stages in Statistical method
A look at the above definitions clearly states that there are four stages in statistical methods.
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1. Collection of data: Collection of data is the first and most important phase in statistical
methods. Investigator should be properly trained to take special care in collecting data. The
relevant data are collected from various sources i.e., Primary or Secondary. Data are said to
be primary when these are collected originally by an investigator or agency. Data are said to
be secondary when these are collected from published or unpublished data which have
already been collected and processed by some other agency or person.
2. Organisation and presentation of data: The collected data should be presented in
concise form in order to facilitate easy understanding and analysis. Generally, data are
presented either in tabular form or in diagrams or charts. Under tabulation, classified data are
presented in the form of table with suitable Columns and Rows headings and sub headings.
3. Analysis of data : Analysis refers to going deep into the data to get information useful for
decision making. Analysis is the process of establishing the relationship between the
tabulated numerical data. While analysing, statistical measures such as averages, dispersion,
skewness correlation, regression, interpolation, extropalation etc. are used. Analysis provides
basis for interpretation.
4. Interpretation of data : The ultimate aim of every statistical enquiry is to draw valid
conclusion. For drawing correct conclusion a great-degree of skill and experience is
necessary. Analysis of data is the basis from which valid conclusion can be drawn.
FUNCTIONS OF STATISTICS
1. Simplification of large and complex data in understandable form: Statistics presents
large volume of complex data in meaningful and understandable form. A large mass of
complex data is condensed briefly with tables, charts and graphs so that they can be readily
understood and analysed. Thus, without the help of statistics it would be very difficult to
study and analyse a mass of raw data to draw valid conclusion.
2. Preciseness and definiteness: Statistics presents the facts in a precise and definite form.
For example, the statement that the total population of a particular city has increased from 40
lakhs to 8O lakhs during 1991-2000 is more precise and conclusive than the statement that
the total population of a particular city has increased during 1991-2000.
3. Comparison: Comparison enables us to understand the behaviour of data over a given
time period. Statistics helps comparison of two sets of data by applying the techniques of
average, standard deviation, co-efficient of variation, etc. For example, if the average marks
in CHSE (Commerce) of Ravenshaw and BJB College are put side by side, it becomes more
meaningful.
4. Enlarge knowledge and experience: Statistics provides opportunities to enrich
knowledge and experience with the help of statistical techniques and methodology. Like
other sciences, statistics enlarges an individual’s knowledge, experience and power of
reasoning. One can understand clearly and precisely such concepts as national income,
population, agricultural production, industrial production, and the like.
5. Formulation of policies: Statistics facilitates the formulation of various economic (e.g.
fiscal and monetary business) (Individual policy) and other policies (health and education) at
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state, national or global level. Business organisations also make use of statistics in the
formulation of policies in the area of finance marketing and personnel.
6. Formulation and Testing of Hypothesis: Hypothesis is a tentative proposition formulated
for empirical testing. We may take a hypothesis that a particular injection is effective against
dengu. This statement is called a hypothesis. To test this we have to inject a number of
persons and have to verify the result. Statistics not only helps to form hypothesis but also
applies techniques to evaluate the truthness of the statements.
6. Business forecasting: Forecasting refers to the process of predicting future events.
Statistics, by studying the trend of the data of past years, can predict the future occurence.
Statistics helps in forecasting through various techniques of Time series, Regression analysis,
extrapolation, etc. An automobile company can estimate the production of automobile for the
next year by analysing the sale of past years.
7. Establishes Relationship: The relationship between two or more variables can be
established with the help of statistics. The relationship between demand and supply,
production and consumption, cost and profit, etc. can be measured by statistics with the help
of correlation analysis and regression co-efficients.
8. Draw valid conclusion: The ultimate aim of every statistical enquiry is to draw a valid
conclusion. This is possible because statistics collects data systematically and present them in
suitable form. Consequently, it makes the researcher’s task easy for analysis and
interpretation of data. Therefore, rational and valid conclusion can be drawn.
9. Reduces uncertainty: The complexity of business, globalisation and the intensity of
competition has made the economic environment more uncertain. A business manager has no
option but to operate in this volatile environment. Statistics helps to reduce such uncertainty
through the application of various such as the theory of probability, linear programming, etc.
10. Enlarge and enrich human knowledge : Analysis of data and the outcome of the
interpretation have enlarged the domain of human knowledge. Apart from these, the
technique of statistics has enriched human mind.
Scope / Importance / Objectives of Statistics
Scope refers to the area where statistics can be used. Now-a-day almost in every field
statistics is applied and therefore its scope is so vast that it can not be defined. However the
application of statistics in some important areas are given below.
1. Statistics and the state: In the earlier days the rulers relied heavily on statistics for
framing suitable military and fiscal policy. The reliance on statistics by a state has now
become more as it has become a welfare state. It collects data on production, consumption,
population, defence, taxes, agriculture, transportation, etc.; and analyses these data to frame
policies for future.
II. Statistics and Economics: Improvement of statistical methods such as sampling,
probability, correlation and index number has made statistics and economics close friends.
Data on consumption help us to get an idea how people of different strata spend their income.
Data on production enables us to know whether our production and productivity match with
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other countries. An economist studies demand and supply, cost of production, prices,
competition, revenues and expenditure of a state, implication of tax reforms, etc. with the
help of statistics and thus helps in different economic problems.
III. Statistics and Business ; Statistical methods are widely used in business and trade for
Production and financial analysis, distribution, planning, market research and forecasting. A
business indeed runs on estimates and probabilities. The degree of uncertainty can be reduced
and rational decision can be taken by collecting and analysing past records.
A marketing manager uses data on consumer buying to help develop new products. A
production manager makes use of quality control data to make adjustment in production
process. With the help of time series a business man can predict, with greater degree of
accuracy, the future production and sale.
IV. Statistics and Research: Research work can not be undertaken without the help of
statistics. By analysing the collected data we can invent new product method of production
and marketing. For example, by conducting research on crop yield by using ‘fertiliser, we can
formulate ways to increase yield. Now, there is hardly any research field that does not make
use of statistical methods.
V. Statistics and Astronomy : The astronomers collect data on the movement of heavenly
bodies to analyse those and draw inferences. They apply statistical methods to go deep into
their study. They do a lot of measurements and apply the method of least square to arrive at a
conclusion, Thus, astronomy will be handicapped without statistics.
VI. Statistics and Mathematics: Statistics and mathematics depend on each other. They are
interdependent. Statistics takes several theories of mathematics to develop different statistical
methods. A knowledge on mathematics helps to understand different statistical methods such
as average, dispersion, correlation etc,. Thus, it is rightly said “sciences without statistics bear
no fruit, statistics without science have root”.
VII. Statistics and Biology; Karl Pearson is his “Grammar of Science” has written- “The
doctrine of heredity rests on statistical basis.” The authenticity of any biological statement
can only be verified with the help of statistics. For example, tall fathers have tall sons can
only be proved by taking sample and by measuring the height of both father and sons. A lot
of biological theory relating to different species have been developed through statistical
methods.
VIII. Statistics and Natural Sciences: The natural sciences such as physics, chemistry,
geology, engineering, medicine, botany, zoology, etc. heavily depend on statistics. For
example, a doctor examine various statistics relating to temperature, pulse rate, blood
pressure etc. before treating a particular patient. Similarly, in physics and chemistry we
undertake experiments, record the data and draw conclusion.
IX. Statistics and Education Statistics is extensively used in the field of education. Various
Statistics are necessary to adopt new course, to increase the strength of student, to compare
performance of students in different years, to evaluate faculty position, etc.,
X. Statistics and Common Man : Most of the people make use of statistical methods while
taking decision either knowingly or unconsciously. For example, before buying a refrigerator
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we are interest to know the price of different brands to have an idea about the price range and
the average price.
XI. Other users :
(a) Banker : A bank needs data on consumers, growth of deposit, growth of borrowing,
deposit credit ratio, bad debt, etc., to frame strategy for future.
(b) Insurance companies : Insurance companies need data relating to life table, premium
rate, numb of different policies, claim paid, etc., for making policy decisions.
(c) Stock Broker: Statistics is equally important for broker, speculator and investors. They
study the trend of share prices by analysing past data and accordingly undertake their
transaction
(d) Public utility services: Public utilities such as railway, waterworks, electricity companies
mal use of statistical data for smooth management of their affairs.
LAWS OF STATISTICS
Two important laws of statistics on which the whole theory of sampling is based are-( 1) Law
of Statistical Regularity, and (2) Law of Inertia of large number.
1. Law of statistical regularity: According to law of statistical regularity, if a large sample
is taken at random from a very large group of population, it is deemed to have the
characteristics of the very large group of population. Thus, this law holds good if the
following two conditions are met:
(a) Sample must be taken at random (b) Sample must be of large size.
2. Law of inertia of large number: According to law of inertia of large number, the larger
the size of sample, more accurate the results are likely to be.
Limitations of Statistics
In modern times, Statistics has come to occupy an important place. Despite various functions
and utilities, statistics suffers from the following limitations.
1. Study of Aggregates only / Ignores Individual item : Statistics studies only the
aggregates of quantitative facts. An isolated or single figure however important may be does
not come within the ambit of statistics. For example, the population of India is 110 crores is
not a statistical statement.
2. Considers the data which can only be expressed numerically: Statistics studies only
such facts as can be expressed in numerical terms. For example, intelligence, beauty, honesty
etc, not find a place in statistics unless they are converted to quantitative measurement by
assigning marks or ranks.
3. Statistical Laws are True only on Averages: Statistical laws are true only on an average
basis because the statistical figures are affected by & number of causes and it is not possible
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to study the effect of each of these forces separately. As such conclusions arrived at are not
perfectly accurate and the result is true under certain conditions.
4. Does not reveal the entire story: Statistics can not reveal the entire picture of a problem.
5. Misuse of Statistics is Possible:: Misuse of statistics is possible. Statistics, if not used by
expert or experienced person, is likely to be misused. A great deal of skill and experience is
necessary to draw valid conclusion. It may lead to fallacious conclusion in the hands of
inexperienced persons.
6. Sometimes statistics gives strange results: Statistics sometimes gives absurd results. For
example, in .a study 50 families the number of children per family may be 1.7 which is quite
absurd.
7. Homogeneity of Data: Quantitative data must be uniform and homogeneous. To compare
the data, it is essential that whatever statistics are collected, the same must be uniform in
quality. Data of different qualities and kinds cannot be compared. For example, production of
food grains cannot be compared with the production of cloth. It is because cloth is measured
in metres and food grains in tonnes..
8. Without Reference Results may Prove Wrong: In order to understand the conclusions
very well, it is necessary that the circumstances and conditions under which these conclusions
have been drawn are also studied, otherwise they may prove wrong. It may lead to the
conclusion that both the businesses have similar economic position, but it is not true.
9. Only Means and not a Solution: Some scholars are of the opinion that statistics are only a
means to the solution of any problem. It is not a solution to the problem. To check the misuse
of statistics, conclusions should be drawn impartially and without any selfish interest.
Otherwise, statistics may not become a proper means for the solution of any problem.
In short, while making use of Statistics, its limitations as discussed above, must always be
kept in mind
Nature of Statistics
Statistics as a science: Statistics is a science because it has principles, rules and methods
which have universal applicability. Science is a body of knowledge which contains certain
principles, methods and laws which have high degree of precision. These principles and rules
are universally true. For example, the formula of physics, chemistry or mathematics are very
precise and universally applicable.
Statistics as an Art: Art, on the other hand, is a skill acquired by experience. The more a
person practise, the more skillful he will be. For example, a dancer or a singer can be more
skillful if they practise more. It is also an Art because the skill of handling facts and figures is
necessary for the purpose of analysis and interpretation. Successful application of statistical
methods requires a considerable amount of skill and experience of the statistician.
Thus, statistics is a science as well as an Art.
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