SCOPE/SUBJECT MATTER OF STATISTICS

Now-a-days the scope of Statistics has spread to economics, business, industry,

physics, chemistry and various other fields of knowledge.

The scope/subject matter of statistics can be classified into the following two broad
categories.

> Statistical methods; and

> Applied Statistics

1. Statistical Methods

Statistical methods are the methods used in Statistics. These are the procedures used
in the collection, organisation, summarisation, analysis, interpretation and
presentation of data.

The important methods of Statistics are given below :

(a) Collection of data

(c) Presentation of data
(b) Organisation of data
(a) Analysis of data
(e) Interpretation of data

2. Applied Statistics

It is concerned with the application of statistical methods used in interpreting the data
and make decisions to solve economic problems. For example, it helps analyse data
on national income or agricultural production to make better economic decisions.
FUNCTIONS OF STATISTICS

Statistics performs very important functions to conduct a statistical enquiry. These

are:

1. Helps in understanding economic problem

Statistics is an indispensable/important tool for an economist that helps to understand

an economic problem. By using different methods, they can find the causes of these
problems through the analysis of numerical data.

2. Presentation of facts in definite form

Statistics helps an economist present economic facts clearly and precisely, making
them easier to understand. When economic facts are shown using numbers, they
become more exact and convincing than vague statements.

Saying that 310 people died in the recent earthquake in Kashmir, is more factual and
thus, a statistical data, whereas, saying hundreds of people died, is not statistical data.

3. Statistics helps in condensing mass data into a few numerical measures

The numerical measures help to summarise data. For example, it would be impossible
for you to remember the income of all the people in a data, if the number of people is
very large. Yet, one can remember easily a summary figure like the average income
that is obtained statistically.

4. Establishes relation between factors

Statistics is used in finding relationships between different economic factors.

Whether relationships exist or not can be easily verified by applying statistical
methods.

5. Helps in formulation of plans and policies

Sometimes, making plans and policies requires knowing future trends. Example, one
could use statistical tools to predict consumption based on data from past or recent
years obtained through surveys.
6. Helps in evaluation of impact of policies

Today, we rely more on statistics to analyse important economic issues like rising
prices, population growth, unemployment, and poverty. Statistics helps us find
solutions to these problems by evaluating the effectiveness of different measures.

7. Inter-sectoral and inter-temporal comparisons

Statistics helps us understand numerical data through inter-sectoral and inter-

temporal comparisons. Inter-sectoral comparisons involve comparing different
sectors of the economy.

IMPORTANCE OF STATISTICS

The role of Statistics is ever increasing in all fields of modern age. For example,

> Business policies are formulated on the basis of past data.

> We cannot think of economic planning without Statistics.

The importance of Statistics can be studied under the following heads:

1. Statistics in Economics

A number of economic problems can easily be understood by the use of Statistics. It

helps in formulation of economic policies, e.g., basic economic activities like
production, consumption etc. use Statistics.

The importance of Statistics in various parts of economics has been discussed as

follows :

(a) Statistics in consumption. Statistics in consumption helps us understand how

various groups of people spend their income.
(b) Statistics in production. Statistics plays a crucial role in comparing production
processes. By analysing production statistics, we can effectively adjust demand
and supply and determine the quantity of goods to produce.

(c) Statistics in distribution. Statistical methods are employed to address the

distribution of national income among different factors of production, such as land,
labor, capital, and entrepreneurship.

2. Statistics in Economic Planning

Economic planning sets goals for economic growth using scarce resources. Statistics
helps assess how well these plans are working through statistical methods.

3. Statistics in Business

Statistical tools play a very important role in major business activities. The producer
depends upon market research to estimate market demand and the market research is
based on Statistics.

4. Statistics in Administration

Formulation of a policy involves Statistics. The state gathers the facts relating to
population, literacy, employment, poverty, per capita income etc., with the help of
statistical methods and principles.

LIMITATIONS OF STATISTICS

The important limitations of Statistics are as given below :

1. Statistics does not study (deal with) individuals

Statistics studies the aggregate of facts. Study of an individual is not a part of subject
matter of Statistics.
2. Without reference, statistical results may prove to be wrong

In order to understand the statistical results clearly, it is also important to study the
conditions under which these conclusions are drawn, otherwise the results may prove
to be wrong.

3. Statistics deals with numerical facts only

Statistics are numerically expressed. Statistics does not study qualitative aspects. It
can be used for measuring quantitative data only. For example, honesty, wisdom,
health, sincerity etc, which are also important attributes to know the results or
conclusions of any study, do not form a part of Statistics.

4. Statistics are true only on an average

Statistical laws are not exact like the laws of physical sciences like physics, chemistry
etc. Statistical results are true only on an average. These represent only tendencies,
e.g., average wage of 700, does not mean that every worker is earning 700

5. Statistics needs special expertise

Statistics can be used by experts only. According to Yule and Kendall - statistical
methods are most dangerous tools in the hands of inexperts. It requires special
knowledge to use statistical tools otherwise results may be wrong or misleading.

6. Homogeneity of data is essential

It is essential that data must have the quality of uniformity and homogeneity to make
data comparable. For example, it would be meaningless to compare the production of
wheat with production of coal because these figures are of a heterogeneous character.

7. Prone to Misuse

Statistics can be misused. If statistical tools are not rightly used, the results may not
be true. The results may be manipulated according to suitability of one's own interest.
EXERCISES

2. Make a list of activities in a bus stand or a market place. How many of them are
economic activities?
3. The Government and policy makers use statistical data to formulate suitable
policies of economic development. Illustrate with two examples.
4. "You have unlimited wants and limited resources to satisfy them." Explain this
statement by giving two examples.
5. How will you choose the wants to be satisfied?
6. What are your reasons for studying Economics?
7. Statistical methods are no substitute for common sense. Comment with examples
from your daily life.