Page 9 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Unit 1: Definition of Statistics, Importance and Scope of Statistics and Its Limitations

According to King, “The Science of Statistics is the method of judging collective, natural or social Notes
phenomenon from the results obtained from the analysis or enumeration or collection or estimation.
According to Croxton and Cowden, “Statistics may be defined as the collection, presentation, analysis
and interpretation of numerical data.”
A. L. Bowley tried to define Statistics in this group also. He was of the opinion that, “Statistics
is the science of measurement of social organism, regarded as a whole in all its manifestations.”
According to Seligman, “Statistics is the science which deals with the methods of collecting, classifying,
presenting, comparing and interpreting of numerical data collected to throw some light on any sphere of
enquiry.”
On the basis of the above definitions it may be said that Statistics are numerical statements of
facts capable of analysis and interpretation and science of Statistics are a study of principles
and the method used in the correction, presentation and analysis of numerical data in any
sphere of enquiry.
1.2 Importance and Scope of Statistics

Scope of Statistics

The scope of statistics are concerned with the new dimensions in the definition of statistics. In other
words we can say—Are statistics a science or an art or both ? Science is concerned with the systematised
body of knowledge. It shows the relationship between cause and effects. So far as art is concerned, it
refers to the skill of collecting and handling of data to draw logical inference and arrive at certain
results. Statistics may be used as a science and as an art. In this regard the following definitions may
be given:
As per Netter and Wanerman—”Statistics methods are mathematical techniques used to facilitate the
interpretation of numerical data secured from groups of individuals.”
In the words of Paden and Lindquist—”Statistical methods are mathematical techniques used to facilitate
the interpretation of numerical data secured from groups of individuals.”
According to Kaney and Keeping—”Statistics has usually meant the science and art concerned with the
collection, presentation and analysis of quantitative data so that intelligent judgement may be made upon
them.”
According to Anderson and Bancraft—”Statistics is the science and art of the development and application
of the most effective method of collecting, tabulating and interpreting quantitative data in such a manner that
the fallibility of conclusions and estimates may be assessed by means of inductive reasoning based on mathematics
of probability.”

“Statistics are the straw out of which, I like every other economist have to make the
bricks.”

Importance Or Significance of Statistics

The importance of statistics is now being felt in almost every field of study. In fact, it is difficult to
mention a subject which does not have any relation with the science of statistics. As a matter of fact
statistical methods are common ways of thinking and hence are used by all types of persons. Suppose
a person wants to purchase a car and he goes through the price list of various companies and makers,
to arrive at a decision, what he really aims at is to have an idea about the average level and the range
within which the prices vary, though he may not know a word about these terms. No doubt to say
that statistical methods are so closely connected with the human actions and behaviour that all human
activity may be explained by statistical method. The importance of statistics can be shown in the
following heads:
Importance in Economics: In the study of economics the use of statistical methods are of great
importance. Most of the economic principles and doctrines are based on the study of a large number
of units and their analysis. By statistical analysis we can study the ways in which people spend their

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