UNIT 1

Introduction To Statistics

Meaning:

“Statistics”, that a word is often used, has been derived from the Latin word
‘Status’ that means a group of numbers or figures; those represent some
information of our human interest.

We find statistics in everyday life, such as in books or other information papers

or TV or newspapers.

Although, in the beginning it was used by Kings only for collecting information
about states and other information which was needed about their people, their
number, revenue of the state etc.

This was known as the science of the state because it was used only by the
Kings. So it got its development as ‘Kings’ subject or ‘Science of Kings’ or we
may call it as “Political Arithmetic’s”. It was for the first time, perhaps in Egypt
to conduct census of population in 3050 B.C. because the king needed money to
erect pyramids. But in India, it is thought, that, it started dating back to Chandra
Gupta Maurya’s kingdom under Chankya to collect the data of births and
deaths. TM has also been stated in Chankya’s Arthshastra.

But now-a-days due to its pervading nature, its scope has increased and
widened. It is now used in almost in all the fields of human knowledge and
skills like Business, Commerce, Economics, Social Sciences, Politics, Planning,
Medicine and other sciences, Physical as well as Natural.

Definition:

The term ‘Statistics’ has been defined in two senses, i.e. in Singular and in
Plural sense.

“Statistics has two meanings, as in plural sense and in singular sense”.

In plural sense, it means a systematic collection of numerical facts and in

singular sense; it is the science of collecting, classifying and using statistics.

A. In the Plural Sense:

“Statistics are numerical statements of facts in any department of enquiry placed

in relation to each other.” —A.L. Bowley
“The classified facts respecting the condition of the people in a state—
especially those facts which can be stated in numbers or in tables of numbers or
in any tabular or classified arrangement.” —Webster

These definitions given above give a narrow meaning to the statistics as they do
not indicate its various aspects as are witnessed in its practical applications.
From the this point of view the definition given by Prof. Horace Sacrist appears
to be the most comprehensive and meaningful:

“By statistics we mean aggregates of facts affected to a marked extent by

multiplicity of causes, numerically expressed, enumerated or estimated
according to reasonable standard of accuracy, collected in a systematic manner
for a predetermined purpose, and placed in relation to each other.”—Horace
Sacrist

The characteristics are stated in following paragraphs:

1. Statistics are Aggregate of Facts:

Only those facts which are capable of being studied in relation to time, place or
frequency can be called statistics. Individual, single or unconnected figures are
not statistics because they cannot be studied in relation to each other. Due to
this reason, only aggregate of facts e.g., data relating to I.Q. of a group of
students, academic achievement of students, etc. are called statistics and are
studied in relation to each other.

2. Statistics are Affected to a marked Extent by Multiplicity, of Causes:

Statistical data are more related to social sciences and as such, changes are
affected to a combined effect of many factors. We cannot study the effect of a
particular cause on a phenomenon. It is only in physical sciences that individual
causes can be traced and their impact is clearly known. In statistical study of
social sciences, we come to know the combined effect of multiple causes.

For example, deterioration of achievement score in academic sphere of some

students may not be only due to lack of interest in school subjects, but may also
due to lack of motivation, effective teaching methods, attitude of the students on
school subjects, faulty scoring procedure, etc.

Similarly scores on memory test of a group certainly depend on meaningfulness

of learning materials, maturation of the students, methods of learning,
motivation, interest of the students, etc.

3. Statistics are Numerically Expressed:

Qualitative phenomena which cannot be numerically expressed, cannot be
described as statistics e.g. honesty, goodness, ability, etc. But if we assign
numerical expression, it maybe described as ‘statistics’.

4. Statistics are Enumerated or estimated according to Reasonable

Standards of Accuracy:

The standard of estimation and of accuracy differs from enquiry to enquiry or

from purpose to purpose. There cannot be one standard of uniformity for all
types of enquiries and for all purposes. A single student cannot be ignored while
calculating I.Q. of 100 students in group whereas 10 soldiers can be easily
ignored while finding out I.Q. of soldiers of whole country.

Similarly we can ignore ten deaths in a country but we cannot ignore even a
single death in a family. The amount of time and resources at disposal also
determine the amount of accuracy in estimates.

5. Statistics are Collected in a Systematic Manner:

In order to have reasonable standard of accuracy statistics must be collected in a

very systematic manner. Any rough and haphazard method of collection will not
be desirable for that may lead to improper and wrong conclusion. Accuracy will
also be not definite and as such cannot be believed.

6. Statistics for a Pre-determined Purpose:

The investigator must have a purpose beforehand and then should start the work
of collection. Data collected without any purpose is of no use. Suppose we want
to know intelligence of a section of people, we must not collect data relating to
income, attitude and interest. Without having a clear idea about the purpose we
will not be in a position to distinguish between necessary data and unnecessary
data or relevant data and irrelevant data.

7. Statistics are Capable of being Placed in Relation to each other:

Statistics is a method for the purpose of comparison etc. It must be capable of

being compared, otherwise, it will lose much of its value and significance.
Comparison can be made only if the data are homogeneous.

Data on memory test can be compared with I.Q. not with salary status of
parents. It is with the use of comparison only that we can depict changes which
may relate to time, place, frequency or any other character, and statistical
devices are used for this purpose.
B. In the Singular Sense:

“Statistics refers to the body of technique or methodology, which has been

developed for the collection, presentation and analysis of quantitative data and
for the use of such data in decision making.” —Ncttor and Washerman

“Statistics may rightly be called the science of averages.” —Bowleg

“Statistics may be defined as the collection, presentation, analysis, and

interpretation of numerical data.” —Croxton and Cowden

Stages of Investigations:

1. Collection of Data:

It is the first stage of investigation and is regarding collection of data. It is

determined that which method of collection is needed in this problem and then
data are collected.

2. Organisation of Data:

It is second stage. The data are simplified and made comparative and are
classified according to time and place.

3. Presentation of Data:

In this third stage, organised data are made simple and attractive. These are
presented in the form of tables diagrams and graphs.

4. Analysis of Data:

Forth stage of investigation is analysis. To get correct results, analysis is

necessary. It is often undertaken using Measures of central tendencies,
Measures of dispersion, correlation, regression and interpolation etc.

5. Interpretation of Data:

In this last stage, conclusions are enacted. Use of comparisons is made. On this
basis, forecasting is made.
Some Modern Definitions:

From the above two senses of statistics, modern definitions have emerged
as given below:

“Statistics is a body of methods for making wise decisions on the face of

uncertainty.” —Wallis and Roberts

“Statistics is a body of methods for obtaining and analyzing numerical data in

order to make better decisions in an uncertain world.” —Edward N. Dubois

So, from above definitions we find that science of statistics also includes the
methods of collecting, organising, presenting, analysing and interpreting
numerical facts and decisions are taken on their basis.

The most proper definition of statistics can be given as following after analysing
the various definitions of statistics.

“Statistics in the plural sense are numerical statements of facts capable of some
meaningful analysis and interpretation, and in singular sense, it relates to the
collection, classification, presentation and interpretation of numerical data.”

Nature of Statistics

Nature of Statistics – Science

Science, by definition, is a systematic body of knowledge which studies the

cause and effect relationship and endeavors to find out generalization. In
simpler terms, it explains the facts. Further, the primary features of science are:

• It is a systematic study of any subject

• It takes a fact and tries to establish the relationship between cause and
effect
• Also, the laws of science are universal in nature
If we take the various statistical methods in consideration, we can define
statistics as a science in which we study:

• Numerous methods of collecting, editing, classifying, tabulating and

presenting facts using graphs and diagrams
• Several ways of condensing data regarding various social, political, and
economic problems.

This is done to establish a relationship between various facts. Also, it helps in

analyzing and interpreting problems and forecast them too.

However, unlike the pure sciences like physics, chemistry, etc., statistics is not
an exact science. We can call it a science of scientific methods. Statistics help
other sciences to derive their own laws.

Further, statistical knowledge is not for its own sake but for the sake of other
knowledge. Tippet defines statistics as, “A science, where the statistical method
is a part of the general scientific methods and based on the same fundamental
ideas and processes.”

Nature of Statistics – Art

If Science is knowledge, Art is action or the actual application of science. While

Science teaches us to know, Art teaches us to do. Further, Art has the following
characteristics:

• It is a group of actions which solve a problem

• It does not describe the facts but examines the merits and demerits and
suggests ways to achieve the objective

Based on these characteristics, we can define statistics as an art of applying the

science of scientific methods. As an art, statistics offer a better understanding
and solution to problems in real life as it offers quantitative information.

While there are several statistical methods, the successful application of the
methods is dependent on the statistician’s degree of skill and experience.

According to Tippet, “Statistic is both a science and an art. It is a science in

that its methods are basically systematic and have general application and art in
that their successful application depends, to a considerable degree, on the skill
and special experience of the statistician, and on his knowledge of the field of
application.”
Division or Classification of Statistics

Statistics is broadly classified into a few major categories as given below:

Descriptive Statistics

Descriptive statistics is all about numerical data. This data represents the
observations which are obtained either through counting or some other
measurement process.

The data can define an entire population or universe. Also, a sampling

procedure helps in deriving the data. In some cases, the data represents the raw
material of any subsequent statistical processing and have the potential to
answer specific questions or solve a specific problem itself.

Descriptive statistics also includes techniques like the collection and tabulation
of data, averages or measures of the central tendency, dispersion, index number,
skewness, etc. These techniques help in the summarization and description of
the primary features of the data. Further, it pays a lot of attention to the
characteristics of data which a user might otherwise overlook due to its sheer
size.

Applied Statistics

Applied Statistics concerns itself with the application of statistical methods and
techniques to specific problems in real life. Some such techniques are sample
surveys, quantitative analysis for business decisions, quality control, etc.

To give you an example, if a business wants to forecast the demand of a

particular product in the market, then the statistician uses methods like
extrapolation or least square. This is applied statistics.

Inferential Statistics

Statistics has some methods and techniques for drawing conclusions and
statistical inferences about certain parameters of the population based on the
estimates from the sample.

This is inferential statistics. Similarly, the hypothesis regarding the

characteristics of the sample is tested based on the population’s parameters.

There are numerous tests for this purpose. These tests lay down the possibility
of being true in individual cases. Further, the conclusions or statistical
inferences are not just guesses. Logical thought and fundamental theories of
science and mathematics back these conclusions.

Scope and Importance of Statistics

(i) Statistics in Planning:

Statistics is indispensable in planning—may it be in business, economics or

government level. The modern age is termed as the ‘age of planning’ and almost
all organisations in the government or business or management are resorting to
planning for efficient working and for formulating policy decision.

To achieve this end, the statistical data relating to production, consumption,

birth, death, investment, income are of paramount importance. Today efficient
planning is a must for almost all countries, particularly the developing
economies for their economic development.

(ii) Statistics in Mathematics:

Statistics is intimately related to and essentially dependent upon mathematics.

The modern theory of Statistics has its foundations on the theory of probability
which in turn is a particular branch of more advanced mathematical theory of
Measures and Integration. Ever increasing role of mathematics into statistics has
led to the development of a new branch of statistics called Mathematical
Statistics.

Thus Statistics may be considered to be an important member of the

mathematics family. In the words of Connor, “Statistics is a branch of applied
mathematics which specialises in data.”

(iii) Statistics in Economics:

Statistics and Economics are so intermixed with each other that it looks
foolishness to separate them. Development of modern statistical methods has
led to an extensive use of statistics in Economics.

All the important branches of Economics—consumption, production, exchange,

distribution, public finance—use statistics for the purpose of comparison,
presentation, interpretation, etc. Problem of spending of income on and by
different sections of the people, production of national wealth, adjustment of
demand and supply, effect of economic policies on the economy etc. simply
indicate the importance of statistics in the field of economics and in its different
branches.
Statistics of Public Finance enables us to impose tax, to provide subsidy, to
spend on various heads, amount of money to be borrowed or lent etc. So we
cannot think of Statistics without Economics or Economics without Statistics.

(iv) Statistics in Social Sciences:

Every social phenomenon is affected to a marked extent by a multiplicity of

factors which bring out the variation in observations from time to time, place to
place and object to object. Statistical tools of Regression and Correlation
Analysis can be used to study and isolate the effect of each of these factors on
the given observation.

Sampling Techniques and Estimation Theory are very powerful and

indispensable tools for conducting any social survey, pertaining to any strata of
society and then analysing the results and drawing valid inferences. The most
important application of statistics in sociology is in the field of Demography for
studying mortality (death rates), fertility (birth rates), marriages, population
growth and so on.

In this context Croxton and Cowden have rightly remarked:

“Without an adequate understanding of the statistical methods, the

investigators in the social sciences may be like the blind man groping in a
dark room for a black cat that is not there. The methods of statistics are
useful in an over-widening range of human activities in any field of thought
in which numerical data may be had.”

(v) Statistics in Trade:

As already mentioned, statistics is a body of methods to make wise decisions in

the face of uncertainties. Business is full of uncertainties and risks. We have to
forecast at every step. Speculation is just gaining or losing by way of
forecasting. Can we forecast without taking into view the past? Perhaps, no. The
future trend of the market can only be expected if we make use of statistics.
Failure in anticipation will mean failure of business.

Changes in demand, supply, habits, fashion etc. can be anticipated with the help
of statistics. Statistics is of utmost significance in determining prices of the
various products, determining the phases of boom and depression etc. Use of
statistics helps in smooth running of the business, in reducing the uncertainties
and thus contributes towards the success of business.

(vi) Statistics in Research Work:

The job of a research worker is to present the result of his research before the
community. The effect of a variable on a particular problem, under differing
conditions, can be known by the research worker only if he makes use of
statistical methods. Statistics are everywhere basic to research activities. To
keep alive his research interests and research activities, the researcher is
required to lean upon his knowledge and skills in statistical methods.

Functions of Statistics:

1. To Present Facts in Definite Form:

We can represent the things in their true form with the help of figures. Without
a statistical study, our ideas would be vague and indefinite.

The facts are to be given in a definite form. If the results are given in numbers,
then they are more convincing than if the results are expressed on the basis of
quality.

The statements like, there is lot of unemployment in India or population is

increasing at a faster rate are not in the definite form. The statements should be
in definite form like the population in 2004 would be 15% more as compared to
1990.

2. Precision to the Facts:

The statistics are presented in a definite form so they also help in condensing
the data into important figures. So statistical methods present meaningful
information. In other words statistics helps in simplifying complex data to
simple-to make them understandable.

The data may be presented in the form of a graph, diagram or through an

average, or coefficients etc. For example, we cannot know the price position
from individual prices of all good, but we can know it, if we get the index of
general level of prices.

3. Comparisons:

After simplifying the data, it can be correlated as well as compared. The

relationship between the two groups is best represented by certain mathematical
quantities like average or coefficients etc. Comparison is one of the main
functions of statistics as the absolute figures convey a very less meaning.

4. Formulation and Testing of Hypothesis:

These statistical methods help us in formulating and testing the hypothesis or a
new theory. With the help of statistical techniques, we can know the effect of
imposing tax on the exports of tea on the consumption of tea in other countries.
The other example could be to study whether credit squeeze is effective in
checking inflation or not.

5. Forecasting:

Statistics is not only concerned with the above functions, but it also predicts the
future course of action of the phenomena. We can make future policies on the
basis of estimates made with the help of Statistics. We can predict the demand
for goods in 2005 if we know the population in 2004 on the basis of growth rate
of population in past. Similarly a businessman can exploit the market situation
in a successful manner if he knows about the trends in the market. The statistics
help in shaping future policies.

6. Policy Making:

With help of statistics we can frame favourable policies. How much food is
required to be imported in 2007? It depends on the food-production in 2007 and
the demand for food in 2007. Without knowing these factors we cannot estimate
the amount of imports. On the basis of forecast the government forms the
policies about food grains, housing etc. But if the forecasting is not correct, then
the whole set up will be affected.

7. It Enlarges Knowledge:

Whipple rightly remarks that “Statistics enables one to enlarge his horizon”. So
when a person goes through various procedures of statistics, it widens his
knowledge pattern. It also widens his thinking and reasoning power. It also
helps him to reach to a rational conclusion.

8. To Measure Uncertainty:

Future is uncertain, but statistics help the various authorities in all the
phenomenon of the world to make correct estimation by taking and analyzing
the various data of the part. So the uncertainty could be decreased. As we have
to make a forecast we have also to create trend behaviors of the past, for which
we use techniques like regression, interpolation and time series analysis.
Limitations of Statistics

1. Qualitative Aspect Ignored:

The statistical methods don’t study the nature of phenomenon which cannot be
expressed in quantitative terms.

Such phenomena cannot be a part of the study of statistics. These include

health, riches, intelligence etc. It needs conversion of qualitative data into
quantitative data.

So experiments are being undertaken to measure the reactions of a man through

data. Now a days statistics is used in all the aspects of the life as well as
universal activities.

2. It does not deal with individual items:

It is clear from the definition given by Prof. Horace Sacrist, “By statistics we
mean aggregates of facts…. and placed in relation to each other”, that statistics
deals with only aggregates of facts or items and it does not recognize any
individual item. Thus, individual terms as death of 6 persons in a accident, 85%
results of a class of a school in a particular year, will not amount to statistics as
they are not placed in a group of similar items. It does not deal with the
individual items, however, important they may be.

3. It does not depict entire story of phenomenon:

When even phenomena happen, that is due to many causes, but all these causes
can not be expressed in terms of data. So we cannot reach at the correct
conclusions. Development of a group depends upon many social factors like,
parents’ economic condition, education, culture, region, administration by
government etc. But all these factors cannot be placed in data. So we analyse
only that data we find quantitatively and not qualitatively. So results or
conclusion are not 100% correct because many aspects are ignored.

4. It is liable to be miscued:

As W.I. King points out, “One of the short-comings of statistics is that do not
bear on their face the label of their quality.” So we can say that we can check
the data and procedures of its approaching to conclusions. But these data may
have been collected by inexperienced persons or they may have been dishonest
or biased. As it is a delicate science and can be easily misused by an
unscrupulous person. So data must be used with a caution. Otherwise results
may prove to be disastrous.

5. Laws are not exact:

As far as two fundamental laws are concerned with statistics:

(i) Law of inertia of large numbers and

(ii) Law of statistical regularity, are not as good as their science laws.

They are based on probability. So these results will not always be as good as of
scientific laws. On the basis of probability or interpolation, we can only
estimate the production of paddy in 2008 but cannot make a claim that it would
be exactly 100 %. Here only approximations are made.

6. Results are true only on average:

As discussed above, here the results are interpolated for which time series or
regression or probability can be used. These are not absolutely true. If average
of two sections of students in statistics is same, it does not mean that all the 50
students is section A has got same marks as in B. There may be much variation
between the two. So we get average results.

“Statistics largely deals with averages and these averages may be made up of
individual items radically different from each other.” —W.L King

7. To Many methods to study problems:

In this subject we use so many methods to find a single result. Variation can be
found by quartile deviation, mean deviation or standard deviations and results
vary in each case.

“It must not be assumed that the statistics is the only method to use in research,
neither should this method of considered the best attack for the problem.” —
Croxten and Cowden

8. Statistical results are not always beyond doubt:

“Statistics deals only with measurable aspects of things and therefore, can
seldom give the complete solution to problem. They provide a basis for
judgement but not the whole judgment.” —Prof. L.R. Connor
Although we use many laws and formulae in statistics but still the results
achieved are not final and conclusive. As they are unable to give complete
solution to a problem, the result must be taken and used with much wisdom.