Page 24 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Statistical Methods in Economics

Notes Definition

According to Conner, “Classification is the process of arranging things (either actually or notionally)
in groups or classes according to their resemblances and affinities and gives expression to the unity
of attributes that may subsist amongst a diversity of individuals.”
From the above definitions it may be said that a group or class has to be determined on the nature of
the data and the purpose for which it is going to be used. For example, the data on household may be
classified on the basis of age, income, education, occupation, expenditure etc.

“Classification is the process of arranging data into sequences and groups according
to their common characteristics or separating them into different but related parts.”

Features of Classification
On the basis of the above dicussion, the chief features of classification can be summarised as under—
(i) Classification may be according to attributes, characteristics or measures, (ii) The basis of
classification is unity in diversity, (iii) Classification may be actual as notional.
Chief Objects of Classification

Classification helps the investigator and the investigation in a number of ways. The following are the
objects of classification. These objects also suggest the importance of classification.
(1) Classification presents the facts in simple form: The process of classification helps in arranging
the data in such a way that the large mass of irrelevant looking data becomes simple and easy
to understand, avoiding unnecessary details, making logical sense.
(2) Classification points out similarities and dissimilarities clearly: Since classification is done
on the basis of characteristics and similarity of data, it helps the investigator in poining out
clearly the similarities and dissimilarities so that they can be easily grasped.
(3) Classification facilitates comparison: By classification of data, comparison becomes easier,
inferences can be drawn logically and confidently and facts can be located with much ease.
(4) Classification brings out relationship: The cause—and effect relationship can be located with
the help of classification.
(5) Classification prepares basis for tabulation: The importance of classification also lies in the
fact that it prepares the ground on the basis of which tabulation can be done.
Methods of Classification

The methods of classification are divided broadly into four types:
(I) Qualitative Classification: Here, classification is done in accordance with the attributes or
characteristics of the data. Such classification is generally done where data cannot be measured.
Under this classification method, the presence or absence of an attribute is the basis of
classification. Qualitative classification can be done in two ways:
(1) Two-fold or Dichomous Classification: This type of classification is based on the presence
or absence of an attribute and the data gets classified in two groups/classes—one,
possessing that attribute and two, not possessing that attribute. For example, on the basis
of marital status, the data can be divided into two classes, one, married and two, unmarried.
On the basis of literacy there can be two classes, one, literate other non-literate.
(2) Manifold Classification: Here, the bases of classification are manifold, i.e., more than one
attribute. In this method, classes/groups are further classified into sub-classes and sub-
groups. For example, population/sample is first classified on the basis of sex, then for each
sex (male or female) marital status forms two sub-classes then further these sub-classes are
classified as per their literacy state. This can be explained in simple was as below:

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