Define statistics and explain its importance in economics
Answers
Definition of Statistics
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.
In 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.”
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