Statistics for Management I ( Mgmt 1071 )Lecture Note Material 2015

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CHAPTER ONE: AN OVERVIEW OF INTRODUCTION TO STATISTICS

INTRODUCTION:
Statistics has become an integral part of our daily life. Every day we are confronted with some
form of statistical information through news papers, magazines and other forms of
communication. Such statistical information has become highly influential in our lives. Our
world and our lives are filled with counting and measuring. Statistics help us decide how best to
count and measure, how to represent numerical information – especially information about
groups – effectively and without misleading ourselves and others, and how to explore our ideas
about relationships among factors that affect quantitative data. Statistics allow us to summarize
large data sets in ways that let us make sense of what would otherwise be a morass of detail. It
let us test our ideas to see if possible explanations are rooted in reality or whether they are
impression created by the winds of chance. Statistics is often described as the art of decision
under uncertainty.

1.1. Definition of statistics

Dear student, you might think of statistics as something related to numerical measurements of
some attributes of interest. In fact in every day usage, the term statistics is often taken to mean
numerical facts. Since different people have different understanding of statistics, we can say
there are as many definitions as the number of people who have tried to define the term statistics.
Some of these definitions are given below.

 Statistics is a branch of mathematics that consists of a set of analytical techniques that can
be applied to data to help in making judgments and decisions in problems involving
uncertainty.
 Statistics is a scientific discipline consists of procedures for collecting, describing,
analyzing and interpreting numerical data.
 Statistics is a body of principles and methods concerned with extracting useful
information from a set of numerical data.

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 In general, statistics can be defined in two senses. These are statistics in plural sense (as
statistical data) and singular sense (statistical method).

In the plural sense, statistics are collection of facts or figures. This meaning of statistics is
widely used when reference is made to facts and figures on a certain characteristics. In this sense
the word “statistics” serves simply as “data”. Statistics are the raw data themselves. Like, sales
statistics, labor statistics, statistics of births, statistics of deaths, statistics of students, statistics
of imports and exports, employment statistics, accident statistics, population statistics,
economic statistics, agricultural statistics, statistics of business firms of imports and exports,
index numbers that help us understand a variety of business and economic situations, etc.

 Statistics are aggregates of numerically expressed facts or figures collected in a systematic

manner for a pre-determined purpose. According to this notion, Prof. Horace Secrist gives
the following definition: “Statistics refer to the aggregates 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.”

 But every numerical facts or figures or data may not be statistics. In order for the numerical
data, to be identified as statistics it must fulfill/possess certain identifiable characteristics.
Some of these characteristics are described as follows:

i. Statistics should be aggregates of facts

 Single and isolated figures/ facts are not statistics for the simple reason that such figures are
unrelated and can’t be compared. According to this aspect, to be Statistics, data must be in
aggregate (mass) and also the individual elements within the aggregate should relate to a
common phenomenon so that they can be compared to one another.
 Example:1) If a person says that he earns Birr 100,000 per year it would not be considered
as statistics. On the other hand, if we say that the average salary of a professor at a university
is Birr 100, 000 per year then it should be considered as statistics since the average has been
computed from many related figures such as yearly salaries of many professors.
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2) Marks of one student in one subject will not called Statistics. But, if we consider the marks of
all the students in the class in a particular subject, they will be called 'Statistics.'
3) National income of a country for a single year is not statistics but the same for two or more
years is statistics.
ii. Statistics should be affected to a marked extent by multiplicity of causes

 Statistics are most commonly used in social sciences it is natural that they are affected by a
large variety of factors, i.e. there are various causes for the changes in the data. Putting
differently, Statistics are not as such caused by a single factor (force), rather they are
outcomes of a number of (multiple) factors (forces) operating together.

Example 1) The marks of the students depend upon, the intelligence of students; their
capacity and desire to work etc. 2) Data on expenditure of households are affected by a
number of factors like income, taste, season, culture, etc. 3) Sale of a product depends on
a number of factors such as its price, quality, competition, the income of the consumers,
and so on.
iii. Statistics should be numerically expressed

All Statistics are expressed in numerical figures only. Quantitative statements cannot be
called statistics. Nevertheless, the converse of this statement is not in general true. That is,
statements expressed in terms of numbers may not necessarily be Statistics as there is a
possibility for them not to meet the other requirements of the definition given above.
Example: 1) Ethiopia is showing a rapid economic growth- is not statistics. The economy
of Ethiopia is growing at an average rate of 10% per year –is statistical statement
2) The statement 'A student writes very good English' is not Statistics. But if marks of the
whole class in 'English' are given they will be called 'Statistics.'

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iv. Statistics should be enumerated or estimated according to reasonable standards of

accuracy

Numerical statements can either be enumerated, in which case they are supposed to be
accurate and precise or else they can be estimated by some expert observers, in which case
100% accuracy is unlikely to be attained. In the process of estimation, reasonable standards
of accuracy must, however, be attained. However much a person tries, it is not possible to
attain perfect accuracy whether we actually measure or estimate the characteristic.
But a certain standard of accuracy should be set up according to the problem under
consideration. The estimate for the cost of big project may be correct up to Birr 1, 000, 000
but for household expenses it should be correct up to Birr 2000.
v. Statistics should be collected in a systematic manner

 If data are collected in haphazard manner, then results to be obtained are likely to lead to
fallacious conclusions. Therefore, it is essential that Statistics must be collected in a
systematic manner so that they may confirm to reasonable standards of accuracy. There
should be a method in the manner of collection, and then only the figures will be reliable
and useful.
vi. Statistics should be collected for a predetermined purpose

Statistics collected without any predetermined purpose do not serve any useful purpose.
Therefore, the purpose of collecting Statistics should be defined clearly before they are
collected. Meaning, figures (Statistics) should be collected in view of some goal or
target. Moreover, the data should be collected in such a manner that it meets the
predetermined needs. Unless we know the purpose, the data collected may not be
sufficient. Besides some unnecessary information may be collected which will be a
waste of time and money.

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vii. Statistics should be placed in relation to each other

For numerical facts to be called Statistics they should be comparable either period wise or
region wise, or in reference to some other means of comparison. That means the
comparison of facts and figures may be conducted regarding the same characteristics over
a period of time from a single source or it may be from various sources at any one given
time. However, these comparisons must relate to the same phenomenon or subject so that
likes are compared with likes and oranges are not compared with applies.

 As an example, suppose that the marketing head of a given supermarket in Dessie town
wants to know the average expenditure of households in the city, among other things, so as to
revise his marketing strategy. To achieve his objective, the head collects data on expenditure
from a sample of 1000 households’ selected using stratification. Moreover, the head used the
interview approach to gather the required information. Thus, the data collected by the
marketing head are Statistics as they fulfill all the requirements of the definition.

 First, the data is collected from 1000 households. Hence, it forms an aggregate.

 Second, data on expenditure are affected by a number of factors like income, taste, season,
culture, etc.

 Third, expenditure of households, as they are expressed in terms of currency, is clearly

numeric values.

 Fourth, as far as expenditures are expressed to the nearest, say birr, the degree of accuracy
is more than satisfactory.

 Fifth, since the investigator uses stratified sampling technique and also the interview data
collection method it is reasonable to say that the data is collected in a systematic or
scientific manner. The record fulfilled requirements as the investigator has a pre-
determined end or goal, which is revising his marketing strategy, based on the average
expenditure level and other qualitative and quantitative variables.

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 Finally, it is obvious that expenditure of households can be analyzed (compared) be it region

wise or period wise.

Additional examples of statistics include:

 Daily exchange rates in a country
 Monthly unemployment rate in a country
 Scores of students for a test
 Number of students registered in a university for each year
 Initial capital of investment for investors
 Number of employees by sex and department in an organization
In singular sense, Statistics is defined as the art and science of collecting, analyzing, presenting,
and interpreting data. Statistics is a science that deals with the method of data collection, data
organization, data presentation, data analysis and interpretation of results. It refers to a subject
matter that is concerned with extracting relevant information from available data sources with
the aim to make sound decisions. According to this meaning, statistics is concerned with the
development and application of methods and techniques for collecting, organizing, presenting,
analyzing data and interpreting results.
Particularly in business and economics, the information provided by collecting, analyzing,
presenting, and interpreting data gives managers and decision makers a better understanding of
the business and economic environment and thus enables them to make more informed and better
decisions.
In general Statistics teaches us how to summarize, analyze, and draw meaningful inferences
from data that lead to improved decisions making. These decisions that we made help us to
improve the running; for example, a department, a company, the entire economy, etc.
Dear learner you study statistics for several reasons:

 Data are available everywhere.

 You may be called on to conduct research in your field of study. To accomplish this, you
must be able to design experiments; collect, organize, analyze, and summarize data; and
possibly make reliable predictions or forecasts for future use. In such a case you use

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statistics since statistical procedures are basic to research. You must also be able to
communicate the results of the study in your own words.

 You can also use the knowledge gained from studying statistics to become better
consumers and citizens. For example, you can make intelligent decisions about what
products to purchase based on consumer studies, about government spending based on
utilization studies, and so on.

 No matter what your career, you will make professional decisions that involve data.
Understanding of statistical methods will help you make these decisions effectively.

 Statistical techniques are used to make many decisions that affect our lives

 Like professional people, you must be able to read and understand the various statistical
studies performed in your fields. To have this understanding, you must be knowledgeable
about the vocabulary, symbols, concepts, and statistical procedures used in these studies.

1.2. Classifications of statistics

Depending on how data can be used and the scope of the decision, statistics is divided in to two
main areas or branches: descriptive and inferential statistics.

1. Descriptive Statistics: Methods of organizing, summarizing, and presenting data in an

informative way. It consists of the collection, organization, summarization, and presentation
of data (it describes the situation as it is).
It is concerned with describing or summarizing the most important features/characteristics of
the collected data without going beyond the data themselves, i.e., with no any attempt to
conclude anything that goes further than the data themselves. The methodologies of
descriptive statistics include the method of data organization like classification, tabulation
and constructing frequency distributions and methods of data presentation like diagrammatic
and graphic displays and calculations of certain indicators of data like measure of central
tendency and measure of dispersion or variation.

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 In descriptive statistics the statistician tries to describe a situation. Consider the national
census conducted by the Ethiopia government every 10 years. Results of this census give
you the average age, income, and other characteristics of the Ethiopia population. To
describe such a data you can use tables, charts, graphs or summary statistics like averages,
percentages, or measures of dispersion.

Additional examples include

 Presenting the starting salaries of 1000 Management graduates in different organizations.
 From sample we have 40% of the employee suggest positive attitude toward the
management of the organization.
 From 500 management graduates in this year 70% were females.
 In Ethiopia the minimum monthly salary is 600 Birr.
2. Inferential Statistics: The methods used to determine something about a population on the
basis of a sample. It consists of making inferences or generalizations from sample to
population, hypothesis testing, determining relationships among variables, and making
predictions. It is based on probability theory.
In general, it is concerned with drawing statistically valid conclusions about the
characteristics of the population based on information obtained from sample. In this form of
statistical analysis, descriptive statistics is linked with probability theory in order to
generalize the results.
For example, the average income of all families (the population) in Ethiopia can be estimated
from figures obtained from a few hundred (the sample) families. Here, the statistician tries to
make inferences from samples to populations. Inferential statistics uses probability, i.e., the
chance of an event occurring. Probability theory is used in the insurance industry and other
areas.
Examples:
The accounting department of a large firm will select a sample of the invoices to check for
accuracy for all the invoices of the company.
Wine tasters sip a few drops of wine to make a decision with respect to all the wine waiting
to be released for sale.

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There is a strong association between smoking and lung cancer

The chance of winning Ethiopian national lottery in any day is 1 out of 167000.

1.3. Basic Terminologies in Statistics

As a subject (science), Statistics has its own terms and terminologies. Knowing these terms and
terminologies is fundamental in understanding the Statistical methods and concepts. To that end,
this section presents the meaning of the most commonly used Statistical terms. It is important to
define terms like the following to understand inferential statistics

A population consists of all subjects (human or other) that are being studied or population is a
group with common characteristics. For example; all households in a certain location, all
financial institutes in a country, all students in a university, all employees in an organization, and
all account receivables in an organizations are population. It is the totality of all subjects/objects
possessing certain common characteristics under study that are being studied.

Most of the time, due to the expense, time, size of population, medical concerns, etc., it is not
possible to use the entire population for a statistical study; therefore, researchers use samples.

A sample is a group of subjects selected from a population systematically. Therefore it is some

part of the population or the subset or sub group of the population.

If the subjects of a sample are properly selected, most of the time they should possess the same
or similar characteristics as the subjects in the population.

Variable is a characteristic or an attribute of a population that assumes or takes different values.

For example if you want to study on employees in an organization then age, sex, service year in
the organization, beginning monthly salary, contract type, education level, current monthly
salary and field of study of the employees are variables.

Elementary unit: An elementary unit is a specific person, business, product account, and so on,
with some characteristic to be measured or categorized.

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Survey: Survey or experiment is a device of obtaining the desired data.

Statistical Design: Statistical design is a process that involves a decision problem and choosing
an approach to solving the problem. It is a guide that indicates how an investigation is going to
be channeled.

Frame: It is the listing of all elementary units in the population under study. Strictly speaking,
one cannot present frame for infinite population, as the units in an infinite population are infinite.

Data is a record value of a variable and usually it is a raw fact. It is collection of observes values
representing one or more characteristics of some objects. It is also called the measurements or
observations (values) for a variable.

Data set is a collection of data values.

Data value or Datum is each value in the data set. It is information taken from an object. It is
also known as an observation or an item or a case or a unit.

Parameter is summary value of a variable in the entire study population. Usually it is unknown
but it can be estimated. It may be expressed in average or proportion or percentage or dispersion.
For example; if you study about employees in an organization and if you are interested in the
variables current monthly salary and contract type of employees, then the mean monthly salary
of employees and the proportion of full time workers in the organization are example of
parameter.

Statistic is summary value of the study variable in the sample not in the entire study population.
Since the size of the sample is manageable compared to population size statistic is usually known
and it is estimated value of a parameter value. It is expressed as sample average, proportion,
percentage or numerical measures of spread.

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1.4. Stages in statistical investigation

According to the singular sense definition of statistics, a statistical investigation involves five
stages or steps: data collection, organization, presentation, analysis, and interpretation of results.

i. Data collection: the process of measuring, gathering, assembling the raw data up on
which the statistical investigation is to be based.
Data can be collected in a variety of ways; one of the most common methods is through
the use of survey. Survey can also be done in different methods, three of the most
common methods are:
 Telephone survey
 Mailed questionnaire
 Personal interview.

Activity: discuss the advantage and disadvantage of the above three methods with respect to
each other.

ii. Data organization: Summarization of data in some meaningful way, e.g. table form

iii. Presentation of the data: The process of re-organization, classification, compilation,

and summarization of data to present it in a meaningful form.
iv. Analysis of data: The process of extracting relevant information from the summarized
data, mainly through the use of elementary mathematical operation.
v. Inference of data/data interpretation: The interpretation and further observation of the
various statistical measures through the analysis of the data by implementing those
methods by which conclusions are formed and inferences made.

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1.5. Applications of Statistics

There is hardly any walk of life which has not been affected by statistics ranging from a simple
household to big business and the government. In today’s global business and economic
environment, anyone can access vast amounts of statistical information. The most successful
managers and decision makers understand the information and know how to use it effectively.
Hence in this modern time, statistical information plays a very important role in a wide range of
fields. Some of the diverse fields/areas where knowledge of statistics or statistical methodology
has extensive applications are as follows:

In scientific research
There is no any simple or advanced research going on without the use of statistics in one form or
another. Statistics are used extensively in medical, pharmaceutical, and agricultural research. The
effectiveness of new drug is determined by statistical experimentation and evaluation. In
agriculture, experiments about crop yields, types of fertilizer and types of soils under different
types of environment are commonly designed and analyzed through statistical methods and
concepts. In marketing research, statistical tools are indispensable in studying consumer
behaviour, effects of various promotional strategies and so on. In economics, it is used for
modelling functional relationship between or among variables. In education and agricultural
extension also it is used to study effect of certain training. Also in decision making, statistics
helps to enhance the power of the decision making in the faces of uncertainty by providing
sufficient information.

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In management
Modern business management is more a Science than an Art. Ever increasing global competition
mandates business managers to address uncertainty by using scientific methods and be objective
decision makers. Forecasting, planning, organizing and decision making; some of the key
activities of a manager intend better future for the business. The only certainty about the future is
its ‘uncertainty’. Even though one cannot eliminate uncertainty, it is possible to measure
uncertainty using Statistics: manager can make informed decisions by using Statistical methods
and Statistical thinking. This calls for unravelling the power of Statistics for managers. Broadly,
knowledge of statistics helps a manager to describe the problem, identify and evaluate alternative
courses of action, estimate error, monitor processes and take appropriate corrective actions to
achieve optimum results.
Both Descriptive and Inferential statistical methods find important place in business
management. To quote a few of the many applications across functions,
A marketing manager needs to gather and analyze a large amount of data pertaining to
market dynamics and target customers. Ideally, marketing strategy depends up on the
outcomes of a market research, which involves statistical methods for collecting and
analyzing data, application of sampling techniques and evaluating the effect of various
marketing strategies.
A production manager would ideally use statistical process control techniques to improve
productivity and quality. Knowledge and application of control charts, sampling
techniques and probability distributions ensures better processes and products. This also
leads to the reduction in production cost and higher profits.
A human resource manager would be interested in identifying the best approach to train
employees and evaluate the impact of training. There is a need to measure attrition and
understand the underlying factors.
For finance manager, crunching financial data and using financial techniques is an
integral part of day-to-day job. Knowledge of statistics enhances competency and
proficiency of a manager as a researcher and therefore provides an edge.

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In Operations Management
A critical aspect of production is quality. The quality of a final product is a function of the
quality of the product’s components. If the components don’t fit, the product will not function as
planned and likely cease functioning before its customers expect it to. For example, if a car door
is not made to its specifications, it will not fit. As a result, the door will leak both water and air.
Operations managers attempt to maintain and improve the quality of products by ensuring that all
components are made so that there is as little variation as possible. As you have already seen,
statisticians measure variation by computing the variance.

In Economics

Economists frequently provide forecasts about the future of the economy or some aspect
of it.
They use a variety of statistical information in making such forecasts. For instance, in
forecasting inflation rates,
Economists use statistical information on such indicators as the Producer Price Index, the
unemployment rate, and manufacturing capacity utilization. Often these statistical
indicators are entered into computerized forecasting models that predict inflation rates.

Example: Measuring indicators such as volume of trade, size of labor force, and standard
of living, analyzing consumer behavior, computation of national income accounts,
formulation of economic laws, etc. Particularly, the theory of regression analysis is
extensively used in the field of economics.

In Production

 Today’s emphasis on quality makes quality control an important application of statistics

in production.

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 A variety of statistical quality control charts are used to monitor the output of a
production process.

In Finance

 Financial analysts use a variety of statistical information to guide their investment

recommendations.
 In the case of stocks, the analysts review a variety of financial data including
price/earnings ratios and dividend yields. By comparing the information for an individual
stock with information about the stock market averages, a financial analyst can begin to
draw a conclusion as to whether an individual stock is over- priced or under-priced.
In Business

 Example: Estimating the volume of retail sales, designing optimum inventory control
system, producing auditing and accounting procedures, improving working conditions in
industrial plants, assessing the market for new products, etc.

In Quality Control

 Example: Determining techniques for evaluation of quality through adequate sampling, in

process control, consumer survey and experimental design in product development etc.
Realizing its importance, large organizations are maintaining their own Statistical quality
control department.

In Health and Medicine

 Example: Developing and testing new drugs, delivering improved medical care,
preventing diagnosing, and treating disease, etc. Specifically, inferential Statistics has a
tremendous application in the fields of health and medicine.

In Biology

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 Example: Exploring the interactions of species with their environment, creating

theoretical models of the nervous system, studying genetic evolution, etc.

In Auctorial Sciences

 Example: Determining premium rates for different insurance risks, designing pension
plans for private and public groups, measuring effectiveness of loss prevention and loss
control programs, etc.

In Engineering

 Example: Working out safer systems of flight control for airports, improving product
design and testing product performance, determining reliability and maintainability, etc.

In Psychology

 Example: Measuring learning ability, intelligence, and personality characteristics,

creating psychological scales and abnormal behavior, etc.

In Sociology

 Example: Testing theories about social systems, designing and conducting sample
surveys to study social attitudes, exploring cross-cultural differences, studying the growth
of human population, etc.
 Nevertheless, it has to be emphasized that no volume of Statistics can replace the
knowledge and expenditure of the specialist in one or more of the mentioned fields.
Rather, in all of the above areas and many others, statisticians work closely with other
scientists and researchers to develop new Statistical techniques, adapt existing
techniques, design experiments, and direct the analysis of surveys and studies.

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1.6. Uses / Function / Importance of Statistics

The main function of Statistics is to collect and present numerical data in a systematic manner so
that it may be analyzed in a scientific way. Statistics basically concentrates on the analysis of a
phenomenon in a scientific manner, without proving it. The analysis of data, which is the core
objective of Statistics, is important because it helps to avoid or replace arbitrary decisions,
dogmatism, rule of thumb, tradition, and it tries to increase the custom of making decision based
on analyzed quantitative facts. The following are the major functions/ uses of Statistics:

i. It simplifies mass of data (condensation)

It is common that the human mind is not capable of assimilating huge (mass of) facts and figures,
as they are complex to understand. Statistical methods simplify this complexity by making the
huge data easily intelligible and readily understandable. Meaning, Statistical methods provide the
necessary means to condense mass of data and present them with the help of simple figures such
as averages, ratios, variations, measures of skewness, coefficients, etc. More attractive and
understandable presentations of data are also made through the help of diagrams and graphs.

ii. It presents facts in a definite form (Definiteness)

Statistics presents facts in a precise and definite (numeric) form and thus helps proper
comprehension of what is to be stated. Facts (data) stated in quantitative terms are more precise
and simple to understand, analyze and interpret. To give an example, suppose that you read the
statement:“The average rainfall in 1995 is expected to be lower than that of 1994.” This
statement does not tell precise and complete information because it doesn’t present the quantified
rainfall in the year 1995. On the other hand, the statement may be presented as:

“The average rainfall in 1995 is expected to decrease by 5% from that of 5ml recorded in 1994.”
Clearly, since the rate of decrement in rainfall is quantitatively expressed (5%) it is possible to
have the precise expected rainfall in 1995 in quantitative form.

iii. It facilitates Comparison

The very reason for saying numerical data are more precise is that they are amendable for (lend
themselves to) comparison. By furnishing different suitable devices or tools for comparison, like
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averages and measures of dispersion, Statistics enables better understanding and appreciation of
the significance of a series of figures. Moreover, in most cases conclusions or decisions are
reached mainly based on the results obtained from different comparisons. For example, the
aggregate performance of students in two different sections (classes) can be judged by
comparing the average marks for the two classes.

iv. Predictions

One of the major reasons making Statistical methods so critical in Business is their prediction
function. Prediction is the process of making a scientific guess about the future value of a
variable. Statistical methods made it possible to predict the likely future value of a variable based
on its past trend. Time series and regression analysis are the most commonly used methods
towards prediction.

v. It helps in formulation of suitable policies

If carefully handled, Statistics plays invaluable role in the process of policy formulation.
Statistical data and Statistical methods help the government in formulating suitable methods help
the government in formulating suitable policies with respect to taxation, import-export,
budgeting and other socio-economic welfare programs.

vi. Formulating and Testing hypothesis

This function of Statistics refers to an aspect of inferential Statistics. In inferential Statistics,

hypothesis are formulated and tested to make conclusions and in some cases to develop new
theories. A Statistical hypothesis is usually a mathematical statement that states about the nature
(significance) of variables. In addition, Statistical methods help in testing the correctness of the
laws of the different branches of knowledge. Hypothesis testing is commonly used in the fields
of medicine, agriculture, economics and business.

vii. Determining functional relationships between two or more phenomenon

Statistical techniques such as correlation analysis assist in establishing the degree of association
between two or more variables. Example: the relationship between demand and price.

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1.7. Limitations of statistics

The fact that Statistics is applicable in almost all fields of study is not a guarantee for its
perfection. Of course, there is no perfect science in the globe. Statistical methods as well have
their own limitations. The following are the major limitations:

i. Statistics does not deal with individual items

This is to mean that Statistics deals only with aggregates of facts and no importance is attached
to individual items. For instance, age of a single student in a given class in a given year is not a
Statistical data. In contrast, the age of all students within a given class in a given year form an
aggregate and hence can be considered as data. Alternatively, the semester GPA of a single
student for 4 semesters also forms a Statistical data. In short, Statistical methods are suited only
to those problems or situations where group characteristics are desired to be studied.

ii. Statistics deals only with quantitatively expressed items

Another limitation of Statistics is that it deals with those subjects of inquiry that are capable of
being quantitatively measured and numerically expressed. Accordingly, such qualitative
characteristics as health, poverty, honesty and intelligence are not suitable for Statistical analysis
however; problems involving such qualitative variables are treated in Statistics indirectly. For
example, the variable health may be studied through death rate, which is a quantitative variable.
However, these are only indirect methods.

iv. Statistical results are not universally true

As it is often said, Statistical results are true only on the average. Meaning, the results obtained
from Statistical data analysis are not true for each member or item within the data for which the
analysis is made. Statistical statements or conclusions are not generally true or applicable to
individuals, but are applicable to the majority of cases.

v. Statistics is liable to be misused

Misuses of Statistics, unfortunately, are probably as common as valid uses of Statistics. In

reality, Statistical methods can be properly used by experienced or trained people, as it requires

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skill to draw sensible conclusions from data. It is actually this limitation that hinders the
possibility of mass popularity of such a useful and applicable science.

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