Ms S.Revathi,Published a Paper on the topic "Inequalities on Pwer Series With Real Coefficients and Univalent Function Theory"

 

Statistics: Uses, Functions and Limitations of the Statistics

Definition of Statistics

A.L. Bowley has defined "Statistics as the science of counting". Again he defined "Statistics as the science of averages". There are the narrow definitions because they cover only one aspect of Statistics. The first definition is limited only in counting. No doubt, counting is used in the collection of data. But counting alone is not statistics. The second definition includes only the averages which are related to the measures of central tendency. But there are other measures such as dispersion, skewness, correlation etc. which are not less important. So, the second definition is also not complete.

Importance of Statistics

In ancient times, statistics was considered only as a science which was used for collecting information about population, military strength, and wealth for framing administrative and fiscal policies. But in modern times, statistical methods are used in every sphere of life. Here we discuss the uses of statistics in planning, economics and business.

Statistics in Planning

Modern age can be considered as the age of planning. No work without well planning can be successful. So, most of the organizations are resorting to plan for efficient work and for formulating policy decisions. The success of the planning depends upon the correct and sound analysis of statistical data. For example: the water supply corporation will unable to face the problem relating to the supply of water in Kathmandu valley unless the population of Kathmandu, the quantity of water required per day, the quantity of water to be supplied and by which source additional quantity of water can be supplied if necessary, is known. These are the necessary information to be collected by Water Supply Corporation. This problem can be solved through the powerful statistical tools by making use of statistical data.

Statistics in Economics

There is a close relationship between Statistics and Economics. Statistical data and statistical methods have great importance in the proper understanding of the economic problems and the formulation of economic policy. Economic problems almost always involve facts that can be expressed numerically such as production, consumption, distribution of incomes, wages, expenditures, unemployment etc. The study of economic problems requires the use of statistical methods.

In the field of consumption, statistics helps to know how the people of different classes of society spend their incomes. This will enable us to have the idea about their purchasing capacity and their standard of living.

Study of production statistics tries to make a balance between supply and demand. With the proper statistical data, statistics of production helps in adjusting the supply according to the demand.

In the field of exchange, we study market prices based on demand and supply, cost of production etc. Effect in the price of commodity due to increase or decrease in supply, costs with the monopolist want to take for maximum profit etc. are the questions that can be answered with the help of statistics. Thus, exchange statistics helps in the commercial development of a nation.

Statistics have a greater importance in reducing the disparities in the distribution of incomes and wealth. The problem relating to the rising prices, rising unemployment, poverty etc. can be solved with the help of statistics.

Besides the economic policy, statistics has made a lot of development in economic theory. Economic laws such as Malthus's theory of population, Engel's law of family expenditure etc. were propounded after statistical tests. The importance of statistics in the study of economic problems has resulted a new branch known as "Econometrics."

Statistics in Busines

For smooth functioning, the need of statistical information depends upon the size of the business. When the size of the business is very small, only a single person can directly engage in all the areas of business activities. He can contact the customers personally and has almost all information about the business. No technique for the supply of information is necessary. When the size of the business increases, a single person cannot contact the customers personally and look after all the business activities. He cannot get the information relating to business in the same manner as in case of small size business. Unless a very careful study of the market is made, it is difficult to have success in business. Statistics helps in formulating policies regarding the business with valid forecasts about the future with the help of tendencies based on past records.

Functions of Statistics

Important functions of statistics are given below:

1.                  Statistics simplifies complexity: Statistic consists of aggregate of numerical facts. Huge facts and figures are difficult to remember. The complex mass of figures can be made simple and understandable with the help of statistical methods. Statistical techniques such as averages, dispersion, graph, diagram etc. make huge mass of figures easily understandable. So, the function of statistics is to reduce the complexity of the huge mass of figures to a simpler form.

2.                  Statistics presents fact in a definite form: One of the important functions of statistics is to present the general statements in a precise and definite form. The conclusion stated numerically is definite and hence more convincing than the conclusions stated qualitatively. This fact can readily be understood by the following example: "The population of Nepal is 1981 has been increased than in 1971". There will be no clear idea about this statement. Everybody wants to know to what extent the population of Nepal has increased. But the statement that "the population of Nepal has increased from 11555983 in 1971 to 15022839 in 1981" is a definite form.

3.                  Statistics facilities comparison: The science of statistics does not mean only counting but also comparison. Unless the figures are compared with other figures with the same kind, they are meaningless. Statistical methods such as averages, ratios, percentages, rates, coefficients etc. offer the best way of comparison between two phenomena which will enable to draw valid conclusion. So, statistics helps in the comparison of two phenomena. For example: The statement that "the per capita income of Nepal is $160" is not so clear unless it is compared with the per capita income of any other country.

4.                  To help in formulation of policies: Statistics helps in formulating the policies in different fields mainly in economics, business etc. The government policies are also framed on the basis of statistics. In fact, without statistics, suitable policies cannot be framed. For example: The quantity of food grains to be imported in a particular year depends upon the expected internal production and the expected consumption. That is if the expected wheat production in the particular year be 701 thousands metric tons and that of consumption 710 thousand metric tons so we must import 9 thousand metric tons of food grains.

5.                  Statistics helps in forecasting: While preparing suitable policies and plans, it is necessary to have the knowledge of future tendency. This is mostly in case of industry, commerce and so on. Statistical methods provide helpful means in forecasting the future by studying and analyzing the tendencies based on passed records. For example: Suppose a businessman wants to know the expected sales of T.V. for the next year, the better method for him would be to analyze the sales data of the past years for the estimation of the sales volume for the next year.

6.                  Statistics helps in formulating and testing hypothesis: Statistical methods are helpful not only in estimating the present forecasting the future but also helpful in formulating and testing the hypothesis for the development of new theories. Hypothesis like 'whether a particular fertilizer is effective for the production of a particular commodity' 'whether a dice is biased or not' can be tested with the help of statistical tools.

Limitations of Statistics

Besides the importance of statistics in every field of life, it has some limitations. The following are the main limitations of statistics are:

1.                  Statistics does not deal with individuals: A part of the definition of statistics is that it must be the aggregates of facts. That is, it deals only with the mass phenomena. A single item or the isolated figure cannot be regarded as statistics. This is a serious limitation of statistics. For example: the mark obtained by a student in English is 75 does not constitute statistics but the average of a group of students in English is 75 forms statistics.

2.                  Statistics does not study qualitative phenomena: The science of statistics studies only the quantitative aspect of the problem. Statistics cannot directly be used for the study of qualitative phenomena such as honesty, intelligence, beauty, poverty etc. however, some statistical techniques can be used to study such qualitative phenomena indirectly by expressing them into numbers. For example: the intelligence of the boys can be studied with the help of marks obtained by them in an examination.

3.                  Statistical laws are not exact: 100% accuracy is rare in statistical work because statistical laws are true only on the average. They are not exact as, are the laws of Physics and Mathematics. For example: the probability of getting a head in a single toss of a coin is ½. This does not imply that 3 heads will be obtained if a coin is tossed 6 times. Only one head, 2 times head or all the times head or no head may be obtained.

4.                  Statistics is only a means: Statistical methods provide only a method of studying problem. There are other methods also. These methods should be used to supplement the conclusions derived with the help of statistics.

5.                  Statistics is liable to be misused: The most important limitation of statistics is that it must be handled by experts. Statistical methods are the most dangerous tools in the hands of inexpert. Since statistics deals with masses of figures, so it can easily be manipulated by inexperienced and skilled persons. Statistical methods if properly be used, may conclude useful results and if misused by inexpert, unskilled persons, it may lead to fallacious conclusion. We have the following example consisting the result concluded by an inexpert and unskilled person.