## Note on Statistics

• Note
• Things to remember

### Origin and Development of Statistics

The word 'statistics' has been derived from the Latin word 'status', Italian word 'statista' and the German word 'statistik' because these word refers a political state of a nation. It was first used by Prof. Gottfried Achenwall (1719-1772), a professor in Marlborough in 1749 to refer to the subject matter as a whole. Achenwall defined statistics as "the political science of the several countries". In ancient days, the ruling chiefs or kings needed information regarding the military strength, population etc for framing military and fiscal policies. In recent days, statistics plays an important role in the fields or discipline like Economics, Science, Commerce, Planning, Medicine, etc.

### Definition of Statistics

The word statistics is defined in two ways:

#### 1. In Singular Sence (Statistical Methods)

Statistics as a subject in a singular sense is the science of counting, science of average and the science of the measurement of the social organism. Various writers such as A.L. Bowley, Boddington, Secrist, Ya-lunChau, Croxton, and Cowden have given the definition of statistics as statistical methods. But the definition given by Croxton and Cowden is more scientific and realistic and it forms the subject matter of our study.

According to Croxton and Cowden, "Statistics may be defined as the science of collection, presentation, analysis and interpretation of numerical data."

Explanation of Definition

• Collection of data:
Any statistical analysis is performed on the basis of the collected data. The methods of data collection like primary and secondary, census and sampling etc are related with this. The accuracy of the result basically depends on the accuracy of the collected data.

• Presentation of data:
After the collection of data, systematic arrangement of the data is essential. The collected data are scrutinized and edited from the raw data. They are organized and presented in tables in appropriate rows and columns. This process is known as the presentation of data.

• Analysis of data:
The processing of the data presented in the above step leads to an analysis of data. There are numbers of tools of analysis in statistics like average, correlation, regression, dispersion, index numbers, etc.

• Interpretation of data:
The results obtained from the analysis are finally interpreted and conclusions are drawn. It is an essential part of the work. Findings should not be interpreted wrongly so that a wrong conclusion is drawn.

#### 2. In Plural Sense (Statistical Data or Fact)

Numerical facts collected from various fields of study in a systematic manner for a predetermined purpose is called statistic or data. Different authors like Webster, Yule and Kendall, Boeley, and Horace Secrist have defined statistics as numerical data. However, the definition given by Horace Secrist is more comprehensive and exhaustive.

According to Horace Secrist," Statistics may be defined as the aggregate of facts affected to a marked extent by a multiplicity of causes, numerically expressed; enumerated or estimated according to a reasonable standard of accuracy, collected in a systematic manner for a predetermined purpose and placed in relation to each other."

Explanation of Definition

• Statistics are aggregates of facts:
Single and isolated figures are not statistics for the simple reason that such figures are unrelated and cannot be compared.

• Statistics are affected to a marked extent by multiple causes:
Data are generally affected by a number of factors related to it. It is generally not possible to identify a particular factor separately. For example, securing highest marks in an exam is affected by multiple causes like labor and devotion of the student, input of the college, evaluation style of the examiner, etc.

• They are numerically expressed:
Facts that are expressed in terms of numbers only are statistics. Thus, statistics are quantitative. For example, numbers can be used to measure the heights of students, so they can make statistics. The honesty of the students cannot be measured in numbers, so it cannot make statistics.

• Enumerated or estimated according to reasonable standards of accuracy:
Numerically expressed facts and figures are supposed to be accurate and precise. They are enumerated or estimated by experts. The degree of accuracy required in such enumeration or estimation depends on the purpose for which the statistics are collected. Hence, the degree of accuracy desired largely depends on nature, types and object of the inquiry.

• Collected in a systematic manner:
Data are collected in a systematic manner in order to ensure a fair degree of accuracy and to confirm the reasonable standard. Data collected in a haphazard manner would very likely lead to fallacious conclusions.

• Collected for a pre-determined purpose:
Statistics are collected to serve a particular purpose, which is usually predetermined. The purpose should be specific and well defined. If it is not so, then certainly their usefulness would obviously be negligible and efforts put in for collecting the data would go waste.

• Placed in relation to each other:
The data or statistics should be comparable, which means they should be able to be placed in relation to each other.

### Importance of Statistics

Statistical methods are used to attain specific values out of a given data, based on probability. However, we need to understand that the basic understanding of statistics is not enough for a successful interpretation of business statistics. The main importance of statistics in different fields is discussed below:

1. Statistics in economics:
We all know that the study of economy or economics depends on different variables, based on the economic data of a specific economy. This is just another way of saying that economics is completely based on the study of economic statistics. Economic statistics are used for calculating various factors such as GDP (Gross Domestic Product) and GNP (Gross National product), which are essential for knowing our exact economic condition. Statistics also alert us about any trend developing, which can be utilized for developing sound economic strategies.

2. Statistics in natural and social sciences:
For any of the natural sciences, experimentation is very important. Now, for the precise measurement of results, their tabulation, i.e. recording and comparison is required, which is nothing but a form of statistics. Similarly, in social sciences scenario, it is very important to consider all the data related to the subjects in observation. Since social science spectrums include a great number of subjects, mass data collection and assimilation is inevitable. This can be a really tedious task if not done using proper statistical channels.

3. Statistics in planning:
In order to make planning realistic in any economy, the objectives are set in quantitative terms. Statistics help in visualizing the target quantitatively and evaluating the achievements. This, in turn, helps in our decision making in every field which includes other finance decisions as well.

4. Statistics in Information Technology (IT):
As information technology also deals with organization and interpretation of numerical facts. In fact, most of the principles of information technology are based on concepts of statistics which is required in almost every field in which there is a requirement of interpretation on numeral facts.

Business forecasting, pricing, investment decisions, production control etc. for the business are possible only by means of the statistic. Thus, statistics acts as the best facilitator in the modern business age.

6. Statistics and pure science:
Statistics is also a helpful tool in science like biology, astronomy, and medical science. Francis Galton used regression analysis in biological science. In astronomy, the Theory of Gauss is developed by using the least square method of statistics for the study of the movement of stars and planets.

7. Statistics in banking sector:
The banking sector is very important for the general public. This sector, too, uses statistical data utilization approach for each functioning.The banking sector works on the money exchange system.They collect money from depositors and give money to people who want to borrow. All the while banks earn interest, a part of which they offer to the depositors.

### Limitations or Weakness of Statistics

Like other discipline, statistics is also not free from its limitations. Some major limitation of statistics are discussed below:

1. Statistics does not deal with an individual:
Particular numerical facts, individual data are not related to statistics. We do not use a singular form of data as a datum, but we always consider data or statistics. In this sense, we can also say that it does not deal with an individual. For example, a students marks in economics cannot be considered as statistics; but the marks obtained by all the students make statistics.

2. It is not suitable for the study of qualitative phenomenon:
A qualitative phenomenon like honesty, culture, love, hatred, etc which cannot be expressed numerically is not capable of direct statistical analysis. However, that phenomenon can be expressed indirectly in terms of numbers and analyzed in statistics.

3. Statistical relations are not exact:
Most of the statistical analyses are based on the collected date that may not be 100% correct. If the data are not correct, then the results obtained from such data cannot be expected to be 100% accurate. Thus, it just describes the phenomena on the average.

4. Statistics is liable to be misused:
Statistics must be analyzed and used by experts in the field of study. There is a great possibility of misuse of statistics, any person can misuse it. If misused by untrained, unskilled or dishonest person, it will give harmful results.

5. Statistics is only a means:
Statistics acts as a facilitator or a supporting subject to the other disciplines. It helps to analyze data and draw a conclusion from the findings. Thus, it is only a means.

Reference:

Kanel, Navaraj et.al., Principles of Economics-XI, Buddha Prakashan, Kathmandu

Kharel, Khom Raj et.al., Economics In English Medium-XI, Sukunda Pustak Bhawan, Kathmandu

• It was first used by Prof. Gottfried Achenwall (1719-1772), a professor in Marlborough in 1749 to refer to the subject matter as a whole.

The word statistics is defined in two ways

1. In Singular Sence (Statistical Methods)
2. In Plural sense (Statistical Data or Fact)

Importance of statistics

1. Statistics in economics
2. Statistics in natural and social sciences
3. Statistics in planning
4. Statistics in Information Technology (IT)
6. Statistics and pure science
7. Statistics in banking sector

Limitations of statistics

1. Statistics does not deal with an individual
2. It is not suitable for the study of qualitative phenomenon
3. Statistical relations are not exact
4. Statistical is liable to be misused
5. Statistics is only a means

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