Friday, 12 July 2013

Origin, Defination, Importance, Limitation and function of Statistics

Origin and Definition of Statistics
The term statistics is believed to have been derived from the Latin word “Statistic”. In early days, it was used only of the collection of the information of the population of the state military. But in the modern time it is used in almost all aspects of human related activities

Definition of Statistics

1. Statistics can be defined as the collection presentation and interpretation of numerical data.- Croxton and Crowed.

2. Statistics are numerical statement of facts in any department of enquiry placed interrelation to each other.- Bouly.

3. Statistics are measurement, enumerations or estimates of natural or social phenomena systematically arrangement to exhibit their inner relation.- Conner.

4. By Statistics we mean quantitative data affected to a marked extend by a multiplicity of causes. – Youle and Kendal.

5. The science of Statistics is essentially a branch of applied mathematics and can be regarded as a mathematics applied to observation data.- R.A fisher.
Statistics can be defined in two sense i.e singular and plural. In singular sense it may be defined as the various methods and techniques for attaining and analyzing the numerical information. Different economists have different view about statistics. According to Boddingtons Statistics is, “the science of estimates and probabilities”. The techniques and method means the collection of data, organization, presentation, analysis and interpretation of numerical data. The above definition covers the following aspects of statistics.

  1. Collection of data : The collection of data is the first step of statistical investigation. It must be collected very carefully. So, the data must be covered, if not the conclusion will not be reliable.
  2. Organization : The data may be obtained either from primary source or the secondary source. If the data is to be obtained from the primary source, then it needs organization. The data are organized by editing, classifying and tabulating them.
  3. Presentation : After the collection and organization of data, they are presented in systematic form such as table, diagram and graphical form. 
  4. Analysis : After the collection, organization and presentation of data, the next step is to analyze the data. To analyze the data we use average, correction, regression, time series etc. The statistical tools of analysis depend upon the nature of data.
  5. Interpretation : The last step of a statistical method is the interpretation of the result obtained from the analysis. Interpretation means to draw the valid conclusion.
Plural Sense
a plural sense, statistics means the aggregates of numerical facts collected systematically. The most popular and acceptable definition is given by Horace and Secrist. According to them, “Statistics means the aggregate of face affected to a market extent by multiplicity of course, numerically expressed, enumerated or estimated according to reasonable standard of accuracy collected in a systematic manner for pre-determined purpose and placed in relation to each other.” According to this definition statistics in plural sense should have following features: 
  1. Statistics are aggregate of facts : Single number or unrelated number can not be statistic. The facts and figures should be related to each other. For e.g.: the population of Nepal in 2058 is 23151423 not statistic. So to be a statistics there should be group of facts.
  2. Affected by multiplicity of causes : The aggregate of facts and figures should be affected by a set of causes. For e.g. the unemployment rate of country has increased by 5% are the last year due to the low economic growth, political instability civil markets. 
  3. Numerically express : All the statistics must be expressed in numerical form.
  4. Enumerated or Estimated according to reasonable standard of accuracy : For investigation, statistical data can be collected either by enumeration or by estimation. If the data are collected by enumeration the result will be exact and accurate. But if the enumeration is not possible data will be estimated but 100% accuracy is not possible in this method.
  5. They are collected for the pre-determined purpose : Before collecting the data objectives of enquiry should be clearly specified. The data collected without any pre-determined purpose may not be useful for enquiry. 
  6. Collected in a systematic Manner : Before collecting the data, well plan of data collection should be followed because haphazard collection of data may give error.
Scope  of Statistics:

1. Statistics and planning: Statistics in indispensable into planning in the modern age which is termed as “the age of planning”. Almost all over the world the govt. are re-storing to planning for economic development.

2. Statistics and economics: Statistical data and techniques of statistical analysis have to immensely useful involving economical problem. Such as wages, price, time series analysis, demand analysis.

3. Statistics and business: Statistics is an irresponsible tool of production control. Business executive are relying more and more on statistical techniques for studying the much and desire of the valued customers.

4. Statistics and industry: In industry statistics is widely used inequality control. In production engineering to find out whether the product is confirming to the specifications or not. Statistical tools, such as inspection plan, control chart etc.

5. Statistics and mathematics: Statistics are intimately related recent advancements in statistical technique are the outcome of wide applications of mathematics.

6. Statistics and modern science: In medical science the statistical tools for collection, presentation and analysis of observed facts relating to causes and incidence of dieses and the result of application various drugs and medicine are of great importance.

7. Statistics, psychology and education: In education and physiology statistics has found wide application such as, determining or to determine the reliability and validity to a test, factor analysis etc.

8. Statistics and war: In war the theory of decision function can be a great assistance to the military and personal to plan “maximum destruction with minimum effort.”

Statistics in business and management:

1. Marketing: Statistical analysis are frequently used in providing information for making decision in the field of marketing it is necessary first to find out what can be sold and the to evolve suitable strategy, so that the goods which to the ultimate consumer. A skill full analysis of data on production purchasing power, man power, habits of compotators, habits of consumer, transportation cost should be consider to take any attempt to establish a new market.

2. Production: In the field of production statistical data and method play a very important role. The decision about what to produce? How to produce? When to produce? For whom to produce is based largely on statistical analysis.

3. Finance: The financial organization discharging their finance function effectively depend very heavily on statistical analysis of peat and tigers.

3. Banking: Banking institute have found if increasingly to establish research department within their organization for the purpose of gathering and analysis information, not only regarding their own business but also regarding general economic situation and every segment of business in which they may have interest. 

4. Investment: Statistics greatly assists investors in making clear and valued judgment in his investment decision in selecting securities which are safe and have the best prospects of yielding a good income.

5. Purchase: the purchase department in discharging their function makes use of statistical data to frame suitable purchase policies such as what to buy? What quantity to buy? What time to buy? Where to buy? Whom to buy?

6. Accounting: statistical data are also employer in accounting particularly in auditing function, the technique of sampling and destination is frequently used.

7. Control: the management control process combines statistical and accounting method in making the overall budget for the coming year including sales, materials, labor and other costs and net profits and capital requirement. 

Importance and Limitation of statistics

Importance of Statistics
The importance of statistics can be defined in different parts i.e. statistics in planning in economics, in business etc because statistical methods are used in every economic related areas.
  1. Statistics in planning : Modern age is the age of planning every objective plan depends upon the correct and sound statistical data. Planning is the pre-determined sets of program and policies, which is formulated in order to meet the targeted objectives,. To formulate the plan and details study of the existing situation is needed which is possible only thorough the statistical tools.
  2. Statistics in Economics : Statistics is very essential to develop and prove the principles and laws of economics. It has great importance to understand the economics problems like production, consumption, distribution etc. as they can be solved by using statistical data.
  3. Statistics in business : For the smooth operation of the business, statistical information is very useful. It simplifies the complex situation of business. It helps to study about the situation of market demand, supply, price etc. Without a very careful study of market it is difficult to success in business. Therefore the statistics is very essential in business sector also.
Function of statistics
The function of statistics can be defined on the following points:
  1. Statistics simplify’s complexes
  2. Statistics express facts in definite form
  3. It facilities comparison
  4. It helps in formulating policies
  5. Statistics helps in forecasting 
Limitation of statistics
Statistics is extremely useful in economics field but it has some limitations in itself which are as follow:
  1. Statistics doesn’t deal with the individual : Statistics deals with aggregate of facts not with individual. Individual fact or figure is out of its scope. For e.g. if we say Ram’s height is 5 feet, is not statistics. For statistics we must say the height of Ram, Hari or any other folk is 5 ft. 
  2. Statistics doesn’t study qualitative phenomenon : Statistics study only quantitative statement of fact, numerical numbers, such as income, production etc. It never study qualitative statement such as intelligence, beauty etc
  3. Statistical laws are not exact :  Statistics gives result only on average. It is not 100 % reliable. Therefore it is the law of average.
  4. Statistics is liable to be misused : The greatest limitation of statistics is that, it must be used by exports only. If it is used by unskilled or inexperienced person, the result may occur wrong. 
  5. Statistics is only means :  Statistics is only the means, which provide a method of studying problem. But is should not be considered as the best because this method should be supplement by other techniques to derive conclusion


  1. Excellent.Thank u.It is use full.

  2. thank you for sharing the thought. it practically answered my assignments right this moment.

  3. This information given was very useful... Helped me a lot to understand stats. Well written n explained! :)