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Statistics - Chapter 1

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24 views5 pages

Statistics - Chapter 1

Uploaded by

Muhammed Faisal K
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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MEANING OF ECONOMICS

Economics revolves mainly around what Alfred Marshall called "the study of man in
the ordinary business of life.” Economics is a social science of human behaviour
which aims at allocation of scarce resources in such a way that consumers can
maximise their satisfaction, producers can maximise their profits and society can
maximise social welfare.

In simple words, Economics is about making choice in the presence of scarcity.


According to Robbins, "Economics is the science which studies human behaviour as
a relationship between ends and scarce means which have alternative uses."

SCARCITY AND ECONOMIC PROBLEM

Meaning of Scarcity

In our daily life, scarcity means acute shortage of a certain commodity but in
economics, it means limitation of supply of a commodity in relation to its demand. It
is excess of demand over available supply, i.e., demand of resources > supply of
resources. When resources are less in relation to our wants, scarcity would arise.

Meaning of Economic Problem

Let us understand economic problem with the help of this chart comparing human
wants with resources.For example,
Thus, it is basically a problem of scarcity of resources on one hand and also that
resources can be put to alternative uses on the other hand.

Therefore an individual has to make a choice as to which wants (according to


priority/ intensity) should be satisfied with limited resources in order to get maximum
satisfaction.

DEFINITION OF ECONOMICS

Scarcity Definition

This definition considers economics as a science which studies human behaviour as


relationship between unlimited wants and scarce means. Lord Robbins in his book
'An Essay on Nature and Significance of Economics Science', published in 1932, has
defined Economics in these words :

"Economics is a science that studies human behaviour as a relationship between ends


and scarce means which have alternative uses"

According to Robbins, Economics is a science of choice. It deals with how the


resources of society should be allocated to the satisfaction of different wants.

Criticism: This definition does not relate to welfare and growth aspects.

STATISTICS IN ECONOMICS

What is the need of statistics in Economics?

We need to know more about economic facts in terms of numbers. Such economic
facts are also known as data. The purpose of collecting data about these economic
problems is to understand and explain these problems in terms of the various causes
behind them.

For example, when we analyse the hardships of poverty, we try to explain it in terms
of the various factors such as unemployment, low productivity of labour, backward
technology, etc.
We may, therefore, also try to find those measures that help to solve an economic
problem. In Economics, such measures are known as policies.

No analysis of an economic problem would be possible without data on various


factors underlying an economic problem. And that, in such a situation, no policies can
be formulated to solve it. This is the basic relationship between Economics and
Statistics.

Origin and Growth of Statistics

The term 'STATISTICS' has been derived from the Latin word 'STATUS', which
means political state. Germans have spelled it as 'STATISTIK'. The term 'Statistics'
was first used by German scientist Gottfried Achenwall in 1749. He is known as the
Father of Statistics. Many statisticians like Bowley, Edgeworth, Karl Pearson, Fisher
and others have added to the development of Statistics.

Statistics: Meaning

Today, Statistics is the base of every study. In a layman's language, Statistics means
'data' or facts in figures. Technically the word Statistics is used in two distinct senses
- Singular and Plural. Statistics in singular sense deals with various tools of statistical
analysis and in plural sense it deals with quantitative or numerical information. Let us
study these in detail.

Definition of Statistics in Singular Sense

In singular sense, Statistics refers to statistical methods. These methods are


regarding collection, organisation, presentation, analysis and interpretation of
data. So, in singular sense, Statistics is taken to mean as statistical methods

According to Croxton and Cowden,

"Statistics may be defined as a science of collection, presentation, analysis and


interpretation of numerical data".

The above definition of Statistics covers the following statistical methods:


1. Collection of Data. This is the first step in a statistical enquiry. So, data should
be collected by the investigator himself or obtained from - published or
unpublished sources.
2. Organisation of Data. After the collection of data, next step is to organise the
collected data. Data that are collected by an investigator need to be organised
according to the purpose of enquiry.
3. Presentation of Data. Data collected and organised are presented in some
systematic manner to make it clear for the user. Tables, diagrams and graphs etc.
can be used to present data.
4. Analysis of Data. The next step is the analysis of the presented data. Various
methods are used to analyse the data such as averages (mean, median, mode),
dispersion, correlation etc,
5. Interpretation of Data. It is the last step of the statistical methods. Interpretation
of data implies the drawing of conclusions on the basis of analysis of the data. On
the basis of this conclusion, certain decisions can be taken

Briefly, Statistics in singular sense means, data properly collected, organised,


presented, analysed and interpreted.

Stages Statistical Study Statistical Tools


Stage I Collection of Data Census or Sample
Techniques
Stage II Organisation of Data Array of Data and Tally Bars
Stage III Presentation of Data Tables, Graphs, and
Diagrams
Stage IV Analysis of Data Percentages, Averages,
Correlation, and Regression
Coefficients
Stage V Interpretation of Data Magnitude of Percentages,
Averages and the Degree of
Relationship between
different economic variables.
Definition of Statistics in Plural Sense

In the plural sense, Statistics means ‘numerical facts systematically collected’ as


described by the ‘Oxford Dictionary’. Thus the simple meaning of Statistics in Plural
sense is “data”. By data we mean quantitative facts that are used in Economics.

Characteristics of Statistics in Plural Sense

1. Statistics are aggregate of facts. Statistics are aggregate of facts. A single


observation is not Statistics, as Statistics means numerical facts collected.
2. Statistical data are affected to a great extent by a number of factors affecting
together. For example, Statistics of prices of T.V. sets are affected by various
factors e.g., supply, demand, taste and preferences, income, etc.
3. Statistics are numerically expressed. All Statistics are numerically expressed.
Qualitative expressions like good, bad, big, small, etc. do not constitute Statistics.
The statement will be called Statistics only if numerical data are given or
quantitative expression is Statistics, e.g., production of wheat in India has
increased by 20% between 2017 and 2019.
4. Statistics are enumerated or estimated according to a reasonable standard of
accuracy.
5. Statistics are collected in a systematic manner. Statistics should be collected
systematically. Statistics not collected in a systematic manner would lead to
misleading conclusions.
6. Statistics are collected for a predetermined purpose. The purpose of collection
of data should be decided in advance. Data collected without purpose will be
misleading and will not serve the purpose of statistical enquiry.
7. Statistics should be placed in relation to each other. For the purpose of
comparison, data collected must be homogeneous. It would be meaningless to
compare the heights of students with their pocket allowance because these data
are not homogeneous.

If the above discussed features are present, data are known as Statistics. Thus, all
Statistics are numerical statements of facts but all numerical statements of facts are
not Statistics.

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