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Introduction to Statistics
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Introduction to Statistics
1.1. INTRODUCTION
The word ?Statistics? has been derived from an Italian word ?statista? which means
?State? or ?Province?. Most of the researchers also believe that the word ?Statistics? comes from
the German word ?Statistik? which means ?Political State?. The word ?Statistics? was first
appeared in the famous book entitled, ?Elements of Universal Erudition? written by a
famous author ?J.F. Baran?.
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Here, the classification of data means to arrange the data according to some common
characteristics possessed by the individuals forming the data. After classification, the next step
in organization is tabulation of data. Here, the tabulation of data means to arrange the data
in rows and columns. The purpose of tabulation of data is to have clarity in the data presentation.
(iii) Presentation: We have collected and organized the data. Now, it is ready for
presentation. There are two different modes in which we can present the collected data.
(a) Graphs
(b) Diagrams.
(iv) Analysis: This is the fourth step of the statistical investigation. The ?analysis?
means to get important information useful for decision-making. We can analyse the collected,
organized and presented data by using statistical methods such as measures of central tendency,
measures of dispersion, moments, skewness and kurtosis, etc.
(v) Interpretation: This is the last stage of any statistical investigation. The word
?interpretation? means drawing conclusions from the collected, organized, presented and
analysed data. It is a difficult job and needs a high-degree skill. If the data has not been
properly interpretated, the conclusions obtained may be faulty. Properly interpretated data
will give valid conclusions which will help the researchers in suitable decisions.
Lastly us, Prof. Ya-Lun-Chou, has defined ?statistics? as:
?Statistics is a method of decision-making in the face of uncertainty on the basis of
numerical data and calculated risks.?
(iv) By using the techniques of time series, the businessman can predict the effect of a
large number of variables with a fair degree of accuracy.
II. In Economics
(i) Economics is concerned with the production and distribution of wealth, consumption,
saving and investment of income. For the proper understanding of the economic problems and
in the formation of economic policies, statistical methods can be effectively used.
(ii) In production, statistics can help us in adjusting the supply and demand management.
(iii) In consumption, statistics can enable us to find out the way in which people of
different starta of society spend their income. This will help us in knowing the standard of
living and paying capacity of the people.
(iv) In stock exchange, statistics can be used to make laws of prices based on supply and
demand.
(v) Financial statistics can be used in banking, short-term credit, consumer finance,
public finance, etc.
(vi) Statistics can be used for comparison of market prices, cost and profits of individual
firms.
(vii) By using statistical land legal tools, we can analyse operational studies of public
utilities.
(viii) Analysis of population, land economics and economic geography can be done by
solving using statistical approach.
(ix) Statistical data and statistical methods can play a vital role insolving various
problems such as poverty, unemployment, etc.
III. In Testing of Hypothesis: Statistical methods can be helpful in formulating and
testing of a hypothesis. For example, the hypothesis, like whether it would rain or not, whether
a certain drug is effective in curing swine flu, whether the credit squeeze is effective in checking
price increases, etc., can be tested by appropriate statistical tools.
IV. In Prediction Theory: Statistics tools can be used in framing suitable policies and
plans well in advance of the time of their implementation. This would help us in knowing the
expected demand for the coming years.
V. In Formulating Suitable policies: Statistics can provide us the basic material for
framing suitable policies. For example, by using statistics, we can obtain the data about
population, its distribution by age and sex, the rate of growth of population, etc. This data can
be used in determining the future needs such as food, clothing, housing, education, water,
electricity, transport, etc. Similarly, detailed information on the unemployed persons, their
skills, experiences, etc. can be helpful for framing suitable policies to tackle the problems in
future.
methods provide the necessary tools for forecasting the future. Hence, statistics is indispensable
in planning.
II. In Business (P.T.U. M.B.A. Dec., 2012): Statistical knowledge is very helpful to the
businessman. Using statistics, he formulates different policies and plans, which further helps
him in forecasting the future trends. With the help of statistical techniques, he estimates the
market fluctuations, changes in the demand conditions, etc. Hence, statistics can help a
businessman for becoming a successful businessman.
III. In Economics: There is a variety of economics problems such as consumption,
production, distribution of income and assets, poverty, unemployment, etc. These problems
are being solved by using and analysing the statistical data. Also, these problems are described,
compared and correlated using statistics. Using statistics in Economics, many economic laws
such as Engel?s law of consumption, Pareto?s law of distribution of income, etc., have
formulated. Similarly, statistical tools like index numbers have become barometers of
Economics.
IV. In Politics: By sampling a few voters prior to the election, observers work out the
percentage of the votes the candidate will receive in the election. The estimated percentage is
used to decide whether a greater campaigning effort is required to assure success.
V. In Natural Science: Statistical techniques are being used in the natural sciences
like Astronomy, Biology, Medicine, Meteorology, Zoology, Botany, etc. In diagosing the correct
disease, doctors rely heavily on actual data like temperature of the body, pulse rate, blood
pressure, etc. In judging the efficiency of a particular drug for curing a certain disease, doctors
conduct experiments upon the number of people who are cured after using the drug. In fact, it
is difficult to find any scientific activity where statistical data and statistical methods are not
used.
VI. In Banking: Almost all the banks use various statistical tools to make a very careful
study of the cash requirements without which they may find short of cash and their existence
is at sake.
VII. In Computers: The modern computers are capable of performing millions of
calculations in mere seconds. This is of great benefit to business and other organizations for
maintaing records of their operations.
VIII. In Administration: In ancient times, statistics was used to collect data relating
to manpower, crimes, income, etc., for formulating different policies. Now its role has became
mainfold. It has become indispensable for the administrators. It is being widely used for the
formulation and forecasting different policies and plans of the state administration.
IX. In Business Management: Management has become a specialised job and a
manager is called upon to plan, organize supervise and control the operations of the business.
Statistical tools like collection, classification, analysis and interpretation of data are essential
in business management. The success of modern business primarily depends on accurate
forecasting of the future demand and trends. For this, statistics is essential.
X. In Research: Statistics is indispensable in research work. One cannot think of
undertaking any research activities without using statistics. Most of the advancement in
knowledge has taken place because of experiments conducted with the help of statistical
methods. For example, statistical methods are being used to design and analyse the experiments
on different type of fertilizers, different types of soils, growth of animals under different diets
etc. Statistical methods also affect research in medicine and public health.
In fact, statistics of today has risen from the science of statecraft to the science of universal
applicability.
INTRODUCTION TO STATISTICS 5