Page 10 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Statistical Methods in Economics
Notes
4 LOVELY PROFESSIONAL UNIVERSITY
income over food, rent, clothing, entertainment, education etc. For example, if the law of demand is
to be analysed then we have to make an idea about the effect of price changes on demand both for an
individual and for a market. For this purpose a large number of data and figures would be collected.
On the basis of the available information, the demand schedule can be prepared and then the law of
demand can be formulated. We thus find that in the field of economics, the use of statistics is
indispensable.
Importance in Business Management: Business managers are required to make decision in the face
of uncertainty. Modern statistical tools of collection, classification, tabulation, analysis of interpretation
of data have been found to aid in making wise decisions at various levels of managerial functions.
These tools are relied upon in arriving at correct decision in all these aspects —sales forcasting, price
situations, credit position, quality control, inventory control, investment planning, tax planning are
some of the areas where statistical techniques help the business management in present and future
planning. On the basis of the above discussion it is clear that the use of statistical data and techniques
is indispensable in almost all the branches of business management.
Role of Statistics in planning: Today planning cannot be formulated without statistics. The problems
like over production, unemployment, low rate of capital formation etc. which are the major
characteristics of developing countries can be understood with the help of statistical data. National
Sample Survey Scheme was started to collect statistical data for use in planning in India. Economic
planning is done to achieve pre-determined objectives and goals. They have to be expressed in
quantitative terms. We, thus, find that in the field of economic planning the use of statistics is
indispensable.
Statistics in Commerce: Statistics plays a very important role in the development of commerce. The
statistical data on some macro variables like income, investment, profits etc. are used for the
compilation of national income. Economic barometer are the gifts of statistical methods and
businessmen all over the world make extensive use of them. The increasing application of the statistical
data and the statistical techniques in accountancy and auditing are supported by the inclusion of a
compulsory paper on statistics both in the Charted Accountant’s and the Cost Accountant’s
examinations. Various branches of commerce utilise the services of statistics in different forms. Cost
Accounting is entirely statistical in its outlook and it is with the help of this technique that the
manufacturers and the producers are in a position to decide about the prices of various commodities.
We, thus, find that the science of statistics is of great importance to commerce.
Utility of Bankers, Brokers, Insurance Companies etc: Bankers, Stock Exchange Brokers, insurance
companies, investors and public utility concerns all make extensive use of statistical data and technique.
A banker has to make a statistical study of business cycles to forecast a probable boom. On the basis
of this study a banker decides about the amount of reserves that should be kept.
Statistics are important from the view-point of stock exchange, brokers and investors. They have to
be conversant with the prevailing money rate at various centres and have to study their future trends.
Likewise insurance companies cannot carry on their business in the absence of statistical data relating
to life tables and premium rates. As a matter of fact insurance has been one of the basic branches of
commerce and business which has been making use of statistics.
Importance to State: Statistics are very important to a State as statistics help in administration. In all
the fields where the State has to keep accurate records and information, statistical systems are adopted.
For example, for making the economic plan the State has to collect data or information, it has to
estimate the figures of National Income to find out the real position of the country. For this purpose,
the state needs statistics for carrying on these works. The state also needs data about the roads,
transport and communication, financial affairs, internal and external trade etc.
Importance to Research: Statistical methods and techniques happen to be useful in gathering the
public opinion on various problems facing the society. In the field of Industry and Commerce
statisticians carry on different types of researches. No researcher, without the use of statistics, can
fulfil his targets. Today, the study of statistical method is not only useful but necessary for research.
To conclude, statistical methods and techniques have been used in almost all the spheres. Statistical
methods are essential to understand the effect to determining the factors of economic development