Business Statistics - I

 Introduction to statistics

Origin of Statistics

The origin of the word Statistics has been traced back to the Latin word 'Status', the German word 'Statistik', and the French word 'Statistique'. All these words mean State - a political state. Thus, Statistics is closely linked with the administrative affairs of a state. 

In India, a system of collecting official and administrative statistics existed more than 2000 years ago. From Kautilya's 'Arthashastra', it is known that even in the period of Chandragupta Mourya (300 B.C), registration of births was in practice. From the book Ain-i-Akabari wrttien by Abul Fazal in 1596, it is known that during the period of Akbar, Statistical surverys were conducted.

No government can remain ignorant of facts and figures regarding defence force, population, food, financial resources, etc. Initially, such facts and figures were called Statistics. Subsequently, the crude methods of collecting facts underwent a change. As a result of this, the collection and analysis of facts became more scientific. Thus, the gradual improvement shown in the process of collecting and analysing facts resulted in the formation of an independent branch of science, called Statistics 

Meaning of Statistics

The word Statistics is usually used in two senses. They are - 

In plural form, it stands for numerical facts (facts expressed in numbers) pertaining to a collection of objects, a situation or a phenomenon. Thus, Statistics' relating to the strength of a college are "The strength of the college is 2,500 of which 800 are girls. 1.500 students inclusive of 500 girls, study in degree classes".

In singular form, it stands for the science of collection organization, analysis and interpretation of numerical facts or data.

Definition of Statistics in the Plural Sense

Prof. Horace Secrist defines Statistics as follows. 

"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 pre-determined purpose and placed in relation to each other." 

Definition of Statistics in the Singular Sense (As Science)

Many scholars have tried to define 'Statistics' in many ways. Each one of them has tried to give better definitions than the earlier ones. But, none of the definitions seems exhaustive. 

A. L. Bowley defined Statistics as 'The science of counting'. Afterwards, he re-defined it as 'The science of averages'. Both these definitions fail to give a complete notion of the science.

A L Boddington defined Statistics as 'The science of estimates and probabilities'. This is a short and precise definition. 

According to Croxton and Cowden, 'Statistics is the science of collection, presentation, analysis, and interpretation of numerical data.' Thus, Statistics contains the tools and techniques required for the collection, presentation, analysis and interpretation of data. This definition is precise and comprehensive. 

Characteristics of Statistics

According to Prof. Horace Secrist, the following characteristics of Statistics can be noticed. 

1. Statistics means an aggregate of facts. 

Facts can be analysed only when there are more than one fact. Single fact cannot be analysed. Thus, the fact 'Mr. Been is 180 cm tall", cannot be statistically analysed. On the other hand, if we know the heights of 40 students of a class, we can comment upon the average height, variation, etc. Hence, only a collection of many facts can be called Statistics. 

2. Statistics are affected to a marked extent by multiplicity of causes. 

The facts are the results of action and interaction of a number of factors. Thus, the statistics of yield of paddy is the result of factors such as fertility of soil, amount of rainfall, quality of seed used, quality and quantity of fertilizer used, etc. These factors, in tum, are the results of many other factors.

3. Statistics are numerically expressed. 

Only numerical facts can be statistically analysed. Therefore, facts such as 'Price decreases with increasing production' cannot be called statistics.

4. Statistics are enumerated or estimated according to reasonable standards of accuracy. 

The facts should be enumerated (collected from the field) or estimated (computed) with required degree of accuracy. The degree of accuracy differs from purpose to purpose. In measuring the length of screws, an accuracy up to a millimeter may be required, whereas, while measuring the heights of students in a class, accuracy up to a centimeter is enough. 

5. Statistics are collected in a systematic manner. 

The facts should be collected according to planned and scientific methods. Otherwise, they are likely to be wrong and misleading.

6. Statistics are collected for a pre determined purpose. 

There must be a definite purpose for collecting facts Otherwise, the facts become useless and hence, they cannot be called statistics. 

7. Statistics are placed in relation to each other. 

The facts must be placed in such a way that a comparative and analytical study becomes possible. Thus, only related facts which are arranged in logical order can be called statistics.

Functions of statistics

Important functions of statistics are

 1.     It simplifies complexity of the data.

Complex numerical data are simplified by the application of statistical methods. For instance, complex data regarding varying cost and prices of commodities of daily use can be reduced to the form of cost of living index number which can be understood easily.

 2.      It reduces the bulk of the data

Voluminous data could be reduced to a few figures such as averages, rates, coefficients, etc., which are easily understandable.

 3.     It adds precision to thinking

Statistics sharpens one’s thinking. While analyzing facts statisticians would be more logical than the others.

  4.    It helps in comparing different sets of figures

The imports and exports of country may be compared among themselves or they may be compared with those of another country.

 5.   It guides in the formulation of policies and helps in planning

Planning and policy making by the government is based on statistics of production, demand, etc.

  6.   It indicates trends and tendencies

Based on available information forecasting is done in marketing population growth, etc.

 7.   It helps in studying relationship between different factors.

Statistical methods may be used for studying the relation between production and price of commodities.