Posted by Anjali Kaur on Aug 25, 2020

Introduction to Statistics

Statistics play an important role in economics. Statistics mean quantitative information on facts and findings. In Singular sense, statistics may be defined as the collection, organization, presentation, analysis, and interpretation of data. In plural sense, statistics refer to information in terms of numbers or numerical data, such as population. Today, I will be providing an introduction to Statistics in economics. Let’s start.

What is Economics?

Economics is the study of how people and society choose to use scarce resources that have alternative uses to produce various commodities to satisfy their wants and distribute them among various persons for consumption purposes.

Scope of Statistics in Economics

1. Planning

Planning is a combination of vision, goals, objectives, strategies, policies, etc. Statistics help to get the necessary information about the planning. The success of planning depends upon the current and sound analysis of statistical data.

2. Economics

Statistical analysis is used in solving different economic problems such as production, consumption, investment, and distribution.

Tools like demand analysis, forecasting technique are used in economics.

3. Business

Statistics helps business to plan production, according to the taste of the customers. The businesses can also make the correct decisions about the location of the business, marketing the product, etc. based on statistical information.

4. State Management

For setting up different policies of the government, to get knowledge of the nation’s conditions, keeping records, and for distribution of resources in the various sectors through statistical tools.

Subject Matter of Statistics

It consists of 2 components:

Descriptive Statistics

It refers to those methods which are used for the collection, presentation as well as analysis of data. These methods relate to the estimation of central tendencies, dispersion, etc.

For example, estimating the average height of a student in a class.

Inferential Statistics

It refers to all such methods by which conclusions are drawn relating to the population on the basis of a given sample.

For example, if we estimate the average weight of the entire class (population), on the basis of the average weight of only a sample of students of the class.

Limitations of Statistics

  1. Statistics studies only such facts which can be expressed in numerical terms. It does not study qualitative phenomena like honesty, friendship, etc.
  2. Statistics studies only the aggregates of quantitative facts, it does not study facts related to any particular unit.
  3. Statistics cannot be used to compare data of diverse quality. Like the production of food grains versus the production of cloth.
  4. Most statistics findings are true only as averages. For example, if the per capita income of India is Rupees 50 thousand, that does not mean the income of each and every Indian is Rupees 50 thousand.
  5. Statistics can be used only by those persons who have special knowledge of the statistical methods.

This was just the introduction to statistics.

I hope it was helpful!

Read more about the Introduction to Economics & Introduction to Microeconomics.

Thanks.


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