DEFINITION, SCOPE,
IMPORTANCE AND
LIMITATIONS OF STATISTICS
CHAPTER
17.1INTRODUCTION
Ofus knowledge. We want to know about
ay life aroundus. We want to knowabout
neighbourhood. our society.the country. etc.
•ledgeis E»thof the quantitativekrnd and
non-quantitative kind. Although knowledge
both kinds is the knowledgeof the
pantitative kind is more precise. For example,
ve may know that a personis •tall' but it is
lore preciseto know the height of the person
feet and inchesor in centimetres.In fact.all
towledgein our times is pursued by numbers
Edtheir measurement. Numerical data are being
by scientists, economists.businesspeople,
vernmentofficials.bankersand admirustrators
express facts in support of their arguments.
importanceof such data is highlighted
statementthat don't count,
count". The use of numerical data is truly
espreadin our times. It is so widespreadthat
type of method to treat these data and
conclusionsfrom them has been evolved.
methodis knownas 'StatisticalMethod'or
y 'Statistics'.
MEANING OF STATISTICS
17.3 DEFINITIONOF S
plural sense) can be used to treat these data
draw conclusionsfrom them.
Thus,statisticsis definedin two
1. Statistics as Numerical Facts or Statisti
Data: In 'plural' sense, Statistics
numericalstatementsof factsin
with any field oi knowledge or in
Thus,in its plural sense,statistics
to information in terms of numerical
data. The numerical facts may
to any branch oi knowledge,Whethe relate
economics, physics, Chemistry,
sociology
public administration,medicineor
other branch. For instance,numenca!
may relate to income,employment,
expenditure, etc- puhlr
2. Statistics as Statistical Methods:In
'singular' sense,statistics refersto the
statistiQ
methods or techniques.It is a science
or body of knowledge which relates
the to
methodsof collection.classification
presentation. description, analysis
and
interpretation of numerical factsor data
 definitionsoi statistics in its
Kendall define statistics as
to a marked extent
Jatg affected
definesstatisticsas "Numerical
department Ofenguiry
Other."
two definitions statisticshas
aspectof quantitative
toted to each other affected by
cau«S.Suchdefinitionsof statistics
or a few aspectsOi statistio
helpfulWeAult, therefore,
atmprehensive definiticm of statistics.
plural HoraceSecristhas defimd
of facts affected to
as,
extent by multiplicity of causes,
enumeratedor estimated
'—ally expressed.
reasonablestandards of accuracy,
—dingto
systematicmannerfor a predetermined
andplacedin relation to each other."
definitionof Horace Secrist IS more
•vethan that given by Yule and
or AL Bowley.
Itshouldbe noted that althoughstatisticsare
t—ncalstatementsof facts. merely numerically
factsare not Statistics.These facts must
certaincharacteristics.Ihese are as follows:
StatisticsAre Ak%regate of Vacts:A single
numericalfact cannot be called statistics,
though fact numerically exprwv•d
and affectedby multiplicityoi causes,etc.
NOconclusion can be drawn trom a single
nurnericalfact. If this numerical fact is not
placedin relationto any other numerical
fact. it is not statistics. Statistics Should
aÆregatesOffactsand not one onlyas
factscanbe comparedand conclusions
canbe drawn from them. For example, if we
that tlu•reare 15(X)students in our
it has statisticalsignificance.But if it
is statedthat there are 200studentsin
ClassXII. 300 students in Class Xl and so
it makes statistical
2. Statistics Are Numerically Expressed:
Statistics are expressed in terms Of
numbers. Heights of students in a class
or their ages or some similar numerical
data are calledstatistics,Non-quantitative
(or qualitative) facts such as tall. short.
handsome. ugly, gentle. etc., are useful
informationbut are not called statistics,
3. Statistics Data Atfecte&-b+tuitiplicity
of Causes: There are several factors or
which Satstics are
not affectedby any single factor,but are
influencedby many factors.Datarelatingto
number of deativ in a town is statistics livre
are severalcausesof deaths like accident.
hunger,heat, etc. If data relatesto
onlyone cause.say accidentaldeaths, the
data will not be an aggregateof facts
4. Statistics Must be Enumerated or Estilnated
According to Reasonable Stand.»rds of
Accuracy:Since statisticsare needed to
draw certainconclusionsfrom them, it
is necessarythat they are reasonably
accurate-lhereiore, a reasonable degree of
accuracymustbe ensuredwhileCollecting
statishcaldata, Lackof accuraos•
can lead
to misleading conclustons. Statistics may
collectedeitherb•y•
enumerationor the same
mav be estimated.in enumeration,actual
countingis done. Estimatesare made on
the basisof some principles.
StatisticsAre Collectedin a Svstcm•tic
Manner.Statisticshas to be collectedin a
systernaticmanner. Haphazardlycollected
data do not servethe purposeof statistics.
mule collectingdata, there shouldbe a
clearlylaid-outplan. Withouta pian
data may not lead to cornst conclusions.
6. Statistics Are Collectedfor a "re-
determined Purpose:In order to
the faceswhich are necessary,it is essential
that the purpose for which data are
collectedis clearlylaid out. Factswhich
are not relevant for the purposeshould
not be collected.All the facts.which have
an influencv on the objectof study,must
be collected.Any informationcollected
without any definitepurposewillonlybe
a numericalvalueand notstatistics.
 7. Statistic.
other: Since dataon theageand height
these facts of persons.Although
to draw must be studied 'o deal Withthe affairs
«»nclusionsfromthem. For scopeof statisticshas now spreadto a
purpose,
The comparison biology.business.chemistry.
over geographicalmay be over or economics.education,
causes, etc. Unlessareas or over different physics.psychology,sociologyand
related to each numericaldata are other and
other and are comparable in thisbook,
Wc can thus see statistical methcxlsin the field oi
have the that all numerical facts which
put in the category canbe
charaeferiqtic* '7.5 IMPORTANCE OF STATI
STICs
are mere numbers, of statistics,Otherwisethey
all numericaldata •lhereforewe can say that Statisticshelps in grasping the
cannot canedstatisticsFutan
la of behaviourin socialsciences
17.3.2 Singular precisionto scientificinquiry In
Definition of Statistics economics.statistics plays a very the
In the singular sense. important
*'me of the areas in which statistics
or techniqueoi statisticsis a method VLA-rolein the study of economics plays
dealing are as
It involvescollection mth numericalfacts. ndcrstanditig.
facts presentingthem of data or numerical Statistics are important
analysing or condensing in a systematic manner, understandingthe performance
interpretingthem or drawing these data and then economy.It also providesus
them, conclusionsfrom data for comparing the impo
Thus, according to Croxton an economyWithitself over
"Statistics may be defined and Cowden. with other economies—un
as the collection, the statistics of aggregate
presentation,analysis and interpretation Of producti
spee,

For drawing appropriate employment,national incogy•,

conclusionsa theory oi statisticsas a distinct lges,etc„ are very useful.
branch Ofscientific method has Understanding the Importance
of
developed.For Sectorsot the Economy:It is V
the students it should be usefulto note that possible
whal understand the contribution of
is being learnt in this course is statisticalmethods
or tech dealing with quantitativedata. in an economy with the help of
statcst:cd
such as agriculture,manufactu
•,7.4SCOPE OF STATISTICS power, serviæs, etc., play their
role in overv
economy. To understand their
Statistics pervades all fields of life around important;
Statistics Of production. cmplovment.
us. It has becomean indispensabletool for etc,
these sedors ate very useful. Statistics
drawing conclusions and making decisions intersectOraJcomparisonand intertempon)
in various fields. Since the use of statistics comparison (comparison over time).Fot
makes our knowledge more precise, the use example.to analysethe problemof
of statistics is being spread to all fields of the economistswould like to know
study. Statistical methods enable us to draw magnitude Of poverty across rural
G)nclusionsfrom a vast varietyof data. We can urban areas of economy.
study the relationshipbetweenvarious aspects comparisonof poverty,on the ot}erZiuod,
of the subject.For example,we can study the wouldmean a changein the magnitude ot
relationship between age and height by studying —poverty over time.

STAT'STCS
 the
Of' diffe Study Of
trom agriculture is quantity data relating to prices and
much commodity, demanded or supplied
and Haryanaand of a
output. etc. or costs and quantityof
c«ttributionof the other much helps us in understanding the
I producqion States in
an and the fir-rn•.
ti00. Similarly,statistics
important
the share or
different help us different
and effect relationship
productionOf states of data such as price
country. in and demand.
This helps in the
dyingthe Role of Government Various economic formulation
and in the in Quantitative theories.
Formulationof
Policies: Governm of Economic
ent Problems: _statistics
the inmme in an collects u.nderstangqngthc
are in
of taxes. It also problems in of_gconomic
interest on these loans. i.nRance. we
quantitativeterms. for
It incurs can undérsiand the problem
iture on various Of unemployment,
activities price rise. etc. by
administration,defence, such ssrng them in
payment quantitative term*.
on loans, education. Of tistics IS Helpful
industry, etc. All support to is also helpful in in Research: stä{stics
this is in formulating evolvingnew ideas and
$+'rtant part of the economic economiclaws. Verifying
• tiö relating to these activitiesactivity. the behaviourof individualsis highly
,sernmentare essentialto understand of the dependent On CTntinued
the behaviour. This is donestudies Of such
of the government in the and analysing by collecting
functioning statistical data with the
an economy.These statistics are help Of statistical
helpfulin the formulation of also methods. For instance,
economistshave formulatedthe
of the government. economic demand, law of
showinginverserelationship
for Planned Development: between the price Of a commodity
its demand, in the light of the and
helpful in ensi.ring data about
—tilisation the resources-of prices and the quantities purchased at
—nwÆar_such-planning an
and ensuring
Etter utilisation of resources, statistics We can thus mncludethat statistics
playsan
dating@ihe.availability of resources and important role in the study Oi economics.
is Why Marshall.a leadingeconomistof That
freirdistributionaugng differentuses is the 20th
eseaL_5tatistics helps in evaluating century, Stated that •Statisticsare straw of
whichI, like e•tvryother
progressof various fiveyear plans. to makebricks'.
AS statisticalmethods are used for understanding
FetterComprehension of the Basic the functioning Ofan economy the basic
and laws of
Pnnciplesof Economics: Economics as economics,the inadequacyOfsome of the statistical
has evolved its own principles
a-subject methods also becomesevident as and when they
like supply, the are used in economics.Use of statistical methods in
relationshipbetween cost of production variousfields,therefore,bringsaboutimprovement
aid¯th-equantityof production, etc. in the statisticalmethod€ Improvementof statistical
Theseprinciples are supposed to be methods is also a gradual processof their evolution
unnersaland applicable in most situations. as they are used in variousfields.

17.6 LIMITArlONS OF STATISTICS
Though statistics i' of immense importarux,at
the same time it suffers fromvarious
limitationsare explainedbelow:
i. Statistio Is NotConcernedwithIndividual
Observation:As pointedout earlier,all
numericalfactsare not statistio Statistical
meth«i can used to study and
aggregate of facts. But it is not concerned
Withindividualvaluesor observations.
Statistics does not give any specific
or to any individual
value. For instance. in statistics we are
with monthly incomeof different
in a particular organusati€gland rwt
WithIncomeOia particlllar
2. Statisticsdoes noi AnalyseQualitative
Phenomenon: Statisticalmethods deal
with those objectswhichcan be measured
in quantitative terms. However.there are
certain qualitativephenomenasuch as
honesty, beauty, goodwill. integrity, etc..
which cannot be quantitatively measured.
Statisticalmethodscannot easily in
analysingthesequalitativephenomenon.
GeneralisationsAre True Only
on Average:Statisticalgeneralisations
arrived from statisticaldata are not
åCcuråtO;they are true Onlyon
In other words,they give us
Ongyapproximateresultsraiher than exact
results. For instance, if we say that food
productionhas beenincreasingat a rate keep these limitationsof statistics in mind.At
of 4 per cent per year for last ten years, it sametime,we shouldusc data in an
does not mean that productionhas been mannerand draw conclusionfrom them
increasingat this rate every year. The rate any biasor prejudice.
increasein p
more or less than 4
year may be
Use of To
4. losproper understanding
factsfor E*'tter
amount of
of study, some
needed.Expertiseis essentie%h
use of statistics and statistical
Otherwise. a vast
statistics or for drawing for
of misle
conclusions from them MisuQ•
is inde*d its greatest limitation.In
of Yule and Kendall, •Statistical
are most dangerous
tA'ts in the
inexp•rr.This is often done by
or business houses. Sometimes
•
manipulatestatisticsand distort
draw predetermin«d 'XMdu.sürtsto
Benjamin Disraeli,t!u•former
Minister of England. had once
statistie with superlative lies. may
an overstatement.It is also a
statisticsshould used to dr>ig
conclusionsfrom them and not
conclusionsto suit vested interest.
it may be noted that the fault dc-es
with statistics as a subject. The fault
with those vy•oplewho distort
to draw wrong mnclusions. Ihere is
wrong with the Statisticsas a subject.
words of King. " scienceof statistics
useful Serzwtt. but Only of great
t/tiF,e•who understand its proper ti9•,"
Thus, while using statistical method,

TEST YOURSELF QUESTIONS

Very Short Answer Questions (2 marks each)
1. Why are numbers important?
2. Is all knowledgebasedon numbersonly? (See sec. 17.1)
3. Define statistics. (See sec. 17.1)
4. The word•statistics' (See sec. 17.2)
is usedin two differentsenses.What are
5. Givethe pluraldefinitionOfstatistics. these? (See sec. 17.2)
(Seesec. 17.3.1)
 Angulardefinitionor statistB. (See see 173.2)
of data whichis not statistics.State why. See. 17.6, point i)
characteristicsof statistical data. (See sec 17.3.1)
the steps involved using statistical method? (See sec. 17.32)
tbtee areas in the study Of economics where statistics plays a vital role.
(Sec Sec 17.5)
the followingis an incorteetstatement?
numbers are Statistics.
are aggregateOffacts.T
StJtiStics
gatisticsshouldbueasonably accurate.T
Dataarisingfrom any one cause is statistics,F
Numberof deaths on roads in Delhi is high. Is it statistics?
is collectedfor a pury»e.
Statistics [Ans: (a),
gentionany two limitationsof statistics. (Sec Sec. 17.6)
AnswerQuestions (3 marks each)
Whatdo you understand by the word 'statistics'? (see sec. 17.2)
Whatare the characteristicsOi statistical data?
2 (See sec. 17.3.1)
numericaldata cannot be calledstatistics,but all statisticsare
callednumericaldata". Explain.
(See sec. 17.3.1)
•n •Statistics
is defined as aggregate Ofnumericalfacts."Give
examples.
(See sec. 17.3.1.point 1)
S. Statethe importance Of statistics in economics. (See See 17.5)
you agree with the view that "statisticsmeans superlative
lies"?
(See Sec. 17.6, point 4)
7. Explainsomeof the limitationsof statistiß. (See sec. 17.6)