CHAPTER - 1

INTRODUCTION

1.1. Origins and Historical Development of

Statistics
.
Statistics as subject is barely a century old. In ancient time
the word statistics was used as the collection of data for the
purpose of taxation and military conscription. In this sense,
statistics is as old as the human society itself.

The word 'statistics' seems to have been derived from

the Latin word 'status' or the Italian word 'statista (meaning
statesman)' or the German word 'statistik' or the French word
'statistique', each of which means a 'political state'. History tells us
that in ancient times, the Pharaohs, the Hebrews, the Chinese, the
Roman and the Greek rulers used to collect information about
population, land, wealth, total number of employees, soldiers etc. to
have the idea of the manpower of the country for formulation of
administrative setup, fiscal, new taxes, levis and military policies of
the government. In Indian subcontinent, an efficient system of
collecting official and administrative statistics existed even
more than 2000 years ago. From Kautilya's Arthashastra it is
known that even before 300 B.C., during the reign of Chandra Gupta
Maurya (324-300 B.C.), a very good system of collecting 'vital
statistics' and registration of births and death was in vogue. In
'Ain-I-Akbari' written by Abul Fazl (1596-97), we find that during
Akbar's reign (1556-1605 A.D.) Raja Todarmal, the land and
revenue, minister maintained a very good record of land and
agriculture statistics. To formulize the commercial and
industrial policy of state, Colbert of France introduced a
'Politico-Economic policy known as Mercantilism in the fifteenth
century. Through this policy, the economic activities of the
individuals are brought under the control of the state. This
necessitated the elaborate and systematic collection of statistical
data on trade, commerce and industry. . Birth, death, divorce,
crime etc. vital statistics were systematically coilected in England
and studied by some mathematician, notably John Graunt (1020
1674), Edmund Halley and William Petty (1623-1687) in the middle
of the seventeenth century. John Graunt intensively worked with
the vital statistics and came to a conclusion that the population of
a country could be estimated from the birth and death statistics.
He is known as the father of vital statistics for his fundamental
works. Edmund Halley first constructed
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a complete life table and made remarkable develop Ist

in the field of insurance. Their works were published in
the name of Political arithmetic Information regarding
population, industrial and agriculture statistics were
collected in Germany at the end of the 18th century, in order to
have an idea of the relative strength of different German state. In
Germany statistical works were done in the name of Universal
statistics'. A German professor Gottfried Ackenwall (1719-1772)
in 1749 gave the first definition of statistics as a subject.
He defined statistics as 'the political science of
several countries'. Another definition of statistics was
found in 1770 by Baron in the famous book "Elements of
Universal Erudition". Here statistics was defined as
"the science that teaches us what is the political
arrangement of all the modern states of the known world".
At that time statistics served as an overall picture of a
country. That is why it was also known as the Science of
Kings'. Today statistics as subject, originated from two
quite dissimilar field väz. Political arithmetic or Science
of kings and the theory of probability. The game of
chance is associated with the theory of probability
developed mainly by the famous gamblers and
mathematicians of Italy, France and Germany like Pascal
(1623-1662), Fermat (1601 - 1665), Chareliar-de-Mere J.
Bernoulli, De-Moivre (1667 - 17540), Laplace
(1759-1827Gauss (1771 - 1855) from the mid of the
seventeenth century. But the notable development of
statistics was started from the early of nineteenth
century by the Englist Statistician Galton (1822 - 1921),
K. Pearson (1857-1936), WS Gosser (1876 1937), RA. Fisher
(1890 - 1962) and others. Statistics got recognibon as an
independent discipline from the first quarter of the twentieth
 century. h 1911, Karl Pearson Founded the First University
Statistics Department at University
College, London. He is
the founder of the first Statistical journe "Biometrica" in
1901. Although the first stone of statistics was laid down K. Pearson
but RA. Fisher, known as the father of the modern statisacs
placed statistics on a very sound footing by applying
it to war diversified field such as genetics biometry, education,
agricuiture Today, statistics appears as an important branch of
scientific knowledge

e different sensere
1.2. Meaning of Statistics The word
Statistics is used in three different
senses
1) Statistics as a
singular, 2)
Statistics as a
plural,
3) Statistics as a plural of statistic 1.2.1.
Statistics as a singular. Like physics chemistry,
mas statistics as singular is considered as a
separate scientific discipline
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Example
1.2.1.
(i) Dr. M.Rahman is a professor of
statistics, (ii) Mr. Zaman is a student of
statistics, (iii) An introduction to Statistics is a
book of statistics.

In these three examples, the word statistics is used as a

singular. As a subject statistics has been defined as: Definition
1.1. Statistics is that branch of knowledge that deals with the
collection, organization, classification, presentation,
summarization, analysis, and interpretation of statistical data in
any field of inquiry. ..

1.2.2. Statistics as a plural. By statistics, we mean a set

of numerical data relating to any field of inquiry. In early
stage, the word statistics was used in this sense. Example
1.2.2.
(i) Statistics of daily production of a
factory;
(ii) Import-export statistics of Bangladesh for the year
2005-2006; 3 (ii) Statistics of daily sales of a store etc. are
some examples of
statistics ás plural. An important definition of
statistics as plural was given by Secrist as : Definition
1.2. By statistics we mean aggregate 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
pre-determined purpose, and places in relation to each
other. Here any set of data or information may be referred to
as statistics. Example 1.2.3. The daily rainfall statistics for the
last one-week is given in the following table:
Day Sunday Monday Tuesday Wednesday Thursday Friday
Saturday Rainfall
50 L 48 | 52 | 49 42 74 60 in mm

12 Statistics as plural of statistic. Any numerical value

describing a characteristic of a sample is called a statistic.
Example 1.2.4. Er(i) Sample mean x,
(ü) Sample variance
s? etc.
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a OD

60

If only one such measure is obtained, it is called

statistic in the form.
15 The daily sales of a store for last five days are Tk. 5000
m Example 1.2.5. The daily sales of as
6500.00, 6500.00, 7000.00. The average sale of the store
for last five is Tk.6000.00. This average is calculated from a
sample and it is called statistic. Any function of a random
sample is also called a statistic. Its value is used as an
estimate of population parameter.

* 1.3. Definition of
Statistics
It is very difficult to define a fast growing subject like
statistics. In 1935 W.F. Willcox listed over a hundred
definitions of statistics and the list was even then far from
being exhaustive. Some definitions are old and narrow
while others are modern and more comprehensive. Here we
shall cite some old and modern definition of statistics. As
mentioned before, first definition of statistics was given a
German professor Gottfried Ackenwall in 1749 and a
second definition was given by Biron in 1770. These two
definitions are old and too narrow. Here statistics is
restricted to political state only. Today the subject statistics
originated from two quite dissimilar field viz. political state
and probability theory. According to Professor R.A. Fisher,
"The science of statistics is essentially a branch of applied
mathematics and may be regarded as mathematics applied to
observational data." Here statistics is considered as a
branch of applied mathematics.
Croxton a
on and Cowden gave a more comprehensive definition
 of statistics.
em Statistics may be defined as "the science,
which deals
esentation, analysis and interpretation of
numerical
According to them Statistics may be
de with the collection, presentati
data. This definition clearly points
out fours excludes the organization of data
statistics is considered here as a brand In
recent times, modern statistical tr
developed in decision-making in the
enquiry. So a modern and more compreh
be given by "Statistics is a branch of scie
body of techniques and methodology a
classification, organization,
presentation an
y points out four stages in a statistical investigation
but tion of data and the inferential statistics. Moreover,
e as a branch of science only. n statistical theories and
techniques have been king in the face of
uncertainty in any field of nore
comprehensive definition of statistics may
branch of scientific knowledge refers to
the ethodology developed for the
collection, fesentation and analysis of
statistical data
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and for the use of such data in decision-making in the face of

uncertainty in any field of enquiry". Now a day's statistics is
not only a branch of science; its different methods and
techniques have been successfully applied in almost all branches of
knowledge. As a result, a number of new disciplines such as Econometrics,
Tachometry, Biometrics, Biostatistics, Psychometrics,
Sociometry etc. have been developed from statistics. Today
Statistics collects, classifies, organizes, analyses data and
takes decisions in the faces of uncertainty in any field of
enquiries. So the definition of statistics cited above can be
taken as an acceptable and exhaustive one. Actually,
different statistical methods and techniques are the ways
of knowing new facts in any field of knowledge.

1.4. Business Statistics This is an elementary book on

business statistics. The book is designed to serve as a
textbook for the basic course in statistics taught in
different departments of business school. Now we shall define
business statistics. Business statistics may be defined as
"Statistical methods and techniques used to analyze data
collected from various fields of business and management
is called business statistics”. Business and management
related data are also called business statistics in the plural
sense. The main purpose of this book is to familiar the business
students with the most commonly used statistical methods
of analysis and enable them to use b iness data effectively
in making decision.

1.5. Uses of Statistics The uses of statistics are unlimited.

It is much harder to name a field in which statistics is not
being used. Today, statistical tools are used in every
spheres of life such as trade, industry and commerce,
economics, biology, botany, astronomy, physics,
chemistry, education, medicine, sociology, public
administration, psychology, meteorology, agriculture etc. Here we
shall discuss uses of statistics only in business.
1.5.1. Statistics in Business. Statistics is very important in
business and commerce. The data collected from the field of business
and commerce are called business statistics. History tells us that
in order to control the business and economic activities of individual
the west, European countries used to collect the business statistics
during the period of mercantilism in the fifteenth century by state.
Today, in the era of free market economy, business
enterprises are big and competitions are high. The domain
of
Business
Statistics

ies. Management has

become
roanize, supervise and
ul manager must use
 the ble of making
business
level

business is enshrouded by risks and uncertainties. Managemer

a specialized job. A business manager has to plan, organize,
super control the operation of the enterprise. A successful manager mu past
and present statistical records and capable of making decision, which
can reduce the risk and uncertainty to minim Different statistical
methods are very important tools. for, organization in
business and commerce. The important statistis techniques which are
used in business and commerce are descrir statistics such
as different types of diagrams and graphs, differen measures
of central tendency and dispersion, correlation and regression
analysis, time series analysis and business forecasting, index
numbers and statistical inference etc. Statistical tools like
control chart, sampling inspection plan etc. are being
enormously used in controlling the quality of the product in
industry by the modern management. Statistics is so
important in business that many business organizations maintain
their own statistical section. In the words of Ya-Lun-Chou,
"In business, statistics has already made radical changes in
maintaining and improving output in selecting and promoting
personal, in efficient use of materials in projecting long-term
capital requirements and forecasting sales, in estimating
consumer's preferences, and in various other phases of
business research and management. It is not an
exaggeration to say that today nearly every decision in
business is made with the aid of statistical data and
statistical methods”.
1.5.2. Function of statistics. The following are the
important functions of statistics:
a) It presents facts in a definite form; b) It
implies mass of data; c) It facilitates
comparison; d) It helps in formulation and
test of hypothesis; e) It helps in prediction;
and f) It helps in the formation of
policies.

tistics

? every sphere of
human
wing are some of its
1.6. Limitation of Statistics Although statistics has
wide applications in every sphere of knowledge, it is
not free from limitations. The following are important
limitations:
1. Statistics does dot deal with individuals. It only deals w
values. For example, the production of a factory
for a partic a store for a particular day, national income
of a country" year are meaningless unless, they are
compared with other sit
deals with aggregative Ta particular day, sale of
particular
 ich other similar
figures.
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2. Statistics cannot deal with qualitative characteristics.

Statistics are numerical statements of facts. Thus qualitative
characteristics such as honesty, poverty, intelligence, efficiency,
blindness, deafness, culture, etc., cannot be studied directly.
However, it may be possible to analyze such problems statistically
by expressing them numerically. For example, che score
obtained in a test can be used to study the efficiency of an
employee. 3. Statistical results are true on an average.
Statistical conclusions are not universally true; they are true only
under certain conditions. This is because statistics as a science is
less exact as compared to natural sciences like physics and
chemistry.
4. Statistics can be misused. The greatest limitation of
statistics is that it is liable to be misused. As the saying goes
"Statistical methods are the most dangerous tools in the hands of
the inexpert". The use of statistical tools by inexperienced and
untrained persons might lead to fallacious conclusions. As
King says, "Statistics are like clay of which one can make a
God or Devil as one pleases". So it requires statistical skill and
experience to draw sensible conclusion from the data; otherwise
there is every chance of making wrong interpretation. In
conclusion we want to cite two important remarks made by
two Statisticians. According Bowley "Statistics only furnishes
a tool, necessary though imperfect, which is dangerous in the
hands of those who do not know its use and its deficiencies".
It is not the subject of statistics that is to be blamed but those
people who twist the numerical data and misuse them either
due to ignorance or deliberately for personal interest. As
King points out. "Science of Statistics is the most useful
servant but only of great value to those who understand its
proper use".

Question
s
. 1. What is the meaning of the word Statistics? Discuss with
suitable
examples. 2. Briefly discuss origin and historical
development of Statistics. 3. Define Statistics as a subject and cite
some ot its limitation. 4. What is Statistics? Bring out clearly the
importance of statistics in
business. 5. What do you mean
by business statistics?
Define Statistics. Discuss the main function and limitations of
statistics.