MODULE-1

DEFINE STATISTICS
“Statistics is that which deals with the collection, classification and tabulation of numerical facts
as the basis for explanation, description and comparison of phenomena.”
It is a mathematical science including methods of collecting, organizing and analyzing data in
such a way that meaningful conclusions can be drawn from them.

EXPLAIN THE TYPES OR DIFFERENCE DESCRIPTIVE VS. INFERENTIAL

STATISTICS
There are two main branches of statistics: descriptive and inferential.
Descriptive statistics is used to say something about a set of information that has been collected
only.
In descriptive statistics, it deals with collection of data, its presentation in various forms, such as
tables, graphs and diagrams and findings averages and other measures which would describe the
data.
For Example:
 Industrial statistics, population statistics, trade statistics etc… Such as businessman make
to use descriptive statistics in presenting their annual reports, final accounts, bank
statements

Inferential statistics is used to make predictions or comparisons about larger group (a

population) using information gathered about a small part of that population.
In inferential statistics, it deals with techniques used for analysis of data, making the estimates
and drawing conclusions from limited information taken on sample basis and testing the
reliability of the estimates.
For Example:
Suppose we want to have an idea about the percentage of illiterates in our country. We take a
sample from the population and find the proportion of illiterates in the sample. This sample
proportion with the help of probability enables us to make some inferences about the population
proportion. This study belongs to inferential statistics
Explain the functions of statistics
1. Statistics simplifies mass data –
2. Statistics makes comparison easier -
3. Statistics brings out trends and tendencies in the data -
4. Statistics bring out the hidden relations between variables-
5. Decision making power becomes easier –

6. To collect and present facts in a systematic manner.

7. Helps in formulation and testing of hypothesis.

8. Helps in facilitating the comparison of data.

9. Helps in predicting future trends.

10. Helps to find the relationship between variable.

11. Simplifies the mass of complex data.

12. Help to formulate polices.

13. Helps Government to take decisions.

14. Statistics helps in providing a better understanding and exact description of a
phenomenon of nature.
15. Statistical helps in proper and efficient planning of a statistical inquiry in any field of
study.
16. Statistical helps in collecting an appropriate quantitative data.
17. Statistics helps in presenting complex data in a suitable tabular, diagrammatic and
graphic form for an easy and clear comprehension of the data.
18. Statistics helps in understanding the nature and pattern of variability of a phenomenon
through quantitative obersevations.
19. Statistics helps in drawing valid inference, along with a measure of their reliability about
the population parameters from the sample data.
The various functions performed by statistics in modern times are discussed under:
Simplification of Complex Facts/ Statistics simplifies mass data –: The foremost purpose of
the statistics is to simplify huge collection of numerical data. It is beyond the reach of human
mind to remember and recollect the huge facts and figures. Statistical method makes it possible
to understand the whole in the short span of time and in a better way.
The use of statistical concepts helps in simplification of complex data. Using statistical concept,
the manager can make decisions more easily. The statistical methods help in reducing the
complexity of the data and consequently in the understanding of any huge mass of data.

Comparison: Without using statistical methods and concepts, collection of data and comparison
can’t be done easily. Statistics helps us to compare data collected from different sources. Grand
totals, measures of central tendency, measures of dispersion, graphs and diagrams, coefficient of
correlation all provide ample scopes for comparison.
Comparison of data is yet another function of statistics, simplifying the data; it can be correlated
or compared by certain mathematical question like averages, ratios, coefficients etc.
In this regard Boddingtons opined that the object of statistics is to enable comparison to be made
between past and present results will a view to ascertain the reasons for changes which have
taken place and the effect of such changes in the future.

Relationship between Facts: Statistical methods are used to investigate the cause and effect
relationship between two or more facts. The relationship between demand and supply, money-
supply and price level can be best understood with the help of statistical methods.

Formulation and Testing of Hypothesis: The most theoretical function of statistics is to test the
various types of hypothesis and discover a new theory. For instance, by using appropriate
statistical tools we can test the hypothesis whether a particular coin is fair or not, whether Indian
consumers are brand loyal etc.

Forecasting: Statistical methods are of great use to predict the future course of action of the
phenomenon. It is only on the basis of statistical techniques that I planners in India prepare
future estimates for production, consumption, investment etc.
Enlarges Individual Knowledge: Statistical methods sharpen the faculty of rational thinking
and reasoning of an individual. It is a master-key that solves problems of mankind in every
sphere of life. Thus, Whipple has rightly opined statistics enables one to enlarge his horizon.

To Indicate Trend Behavior: Statistics helps to indicate trend behavior certain fields of
enquiry. The statistical techniques like Analysis of Time Series Extrapolation etc. are highly
used to know the trend behavior of the enquiry in question.

Classification of Data: Classification refers to a process of splitting up the data into certain parts
which helps in the matters of comparison and interpretation of the various features of the data.
This is done by the various improved techniques statistics.

To Measure Uncertainty: In most of the social fields, comprising of business, commerce,

economics, it becomes necessary to take decisions in the face of uncertainty and study the
change of occurrence of certain events and their effect on the polio adopted.

To Draw Rational Conclusion/Decision making power becomes easier -

With the proper application of Statistics and statistical software packages on the collected data,
managers can take effective decisions, which can increase the profit in a business.
In various fields of uncertainty like business and commerce, it is very much necessary to draw
rational conclusions on the basis of facts collected and analyzed. For this, the mind of the
decision maker should be free from any bias and prejudices.

Statistics brings out trends and tendencies in the data -After data is collected, it’s easy to
analyze the trend and tendencies in the data by using the various concepts of Statistics.

Statistics bring out the hidden relations between variables-Statistical analyses helps in
drawing inferences on data. Statistical analysis brings out the hidden relations between variables.
EXPLAIN THE COLLECTION OF DATA:
The first step in any enquiry (investigation) is collection of data. The data may be collected for
the whole population or for a sample only. It is mostly collected on sample basis. Collection of
data is very difficult job. The enumerator or investigator is the well trained person who collects
the statistical data. The respondents (information) are the persons whom the information is
collected. The interpretation of the ultimate conclusion and the decisions depend upon the
accuracy with which the data are collected. Unless the data are collected with sufficient care and
are as accurate as is necessary for the purposes of the inquiry, the result obtained cannot be
expected to be valid or reliable.
Before starting the collection of the data, it is necessary to know the sources from which the data
are to be collected.

TYPES OF DATA:
There are two types (sources) for the collection of data.
(1)Primary Data
(2)Secondary Data

Primary Data:
The primary data are the first hand information collected, compiled and published by
organization for some purpose. They are most original data in character and have not undergone
any sort of statistical treatment.
Example:
Population census reports are primary data because these are collected, complied and published
by the population census organization.

Secondary Data:
The secondary data are the second hand information which are already collected by some one
(organization) for some purpose and are available for the present study. The secondary data are
not pure in character and have undergone some treatment at least once.
Example: Economics survey of England is secondary data because these are collected by more
than one organization like Bureau of statistics, Board of Revenue, the Banks etc…
Methods of Collecting Primary Data:
Primary data are collected by the following methods:
•Personal Investigation:
The researcher conducts the survey him/herself and collects data from it. The data collected in
this way is usually accurate and reliable. This method of collecting data is only applicable in case
of small research projects.

•Through Investigation:
Trained investigators are employed to collect the data. These investigators contact the
individuals and fill in questionnaire after asking the required information. Most of the organizing
implied this method.

•Collection through Questionnaire:

The researchers get the data from local representation or agents that are based upon their own
experience. This method is quick but gives only rough estimate.

•Through Telephone:
The researchers get information through telephone this method is quick andgive accurate
information.

Methods of Collecting Secondary Data:

The secondary data are collected by the following sources:
•Official:
e.g. The publications of the Statistical Division, Ministry of Finance, the Federal Bureausof
Statistics, Ministries of Food, Agriculture, Industry, Labor etc…
•Semi-Official:
e.g. State Bank, Railway Board, Central Cotton Committee, Boards of EconomicEnquiry etc…
•Publication of Trade Associations, Chambers of Commerce etc…
•Technical and Trade Journals and Newspapers.
•Research Organizations such as Universities and other institutions.
DIFFERENCE BETWEEN PRIMARY AND SECONDARY DATA:
The difference between primary and secondary data is only a change of hand. The primary data
are the first hand data information which is directly collected form one source. They are most
original data in character and have not undergone any sort of statistical treatment while the
secondary data are obtained from some other sources or agencies. They are not pure in character
and have undergone some treatment at least once.

Primary data Secondary data

Collection purpose For the problem at hand For other problems

Collection process Very involved Rapid and easy

Collection cost High Relatively low

Collection time Long Short

Suitability Its suitability is positive It may or may not suit the

object of survey

Originality It is original It is not original

Precautions No extra precautions It should be used with

required to use the data extra case

Explain the Scope and importance of Statistics:

1. Statistics and war
2. Statistics and planning:
3. Statistics and economics
4. Statistics and business:
5. Statistics and industry
6. Statistics and mathematics
7. Statistics and modern science
8. Statistics, psychology and education
9. Statistics and war
1. Statistics and planning: Statistics in indispensable into planning in the modern age which is
termed as “the age of planning”. Almost all over the world the govt. are re-storing to planning
for economic development.

2. Statistics and economics: Statistical data and techniques of statistical analysis have to
immensely useful involving economical problem. Such as wages, price, time series analysis,
demand analysis.

3. Statistics and business: Statistics is an irresponsible tool of production control. Business

executive are relying more and more on statistical techniques for studying the much and desire of
the valued customers.

4. Statistics and industry: In industry statistics is widely used inequality control. In production
engineering to find out whether the product is confirming to the specifications or not. Statistical
tools, such as inspection plan, control chart etc.

5. Statistics and mathematics: Statistics are intimately related recent advancements in statistical
technique are the outcome of wide applications of mathematics.

6. Statistics and modern science: In medical science the statistical tools for collection,
presentation and analysis of observed facts relating to causes and incidence of dieses and the
result of application various drugs and medicine are of great importance.

7. Statistics, psychology and education: In education and physiology statistics has found wide
application such as, determining or to determine the reliability and validity to a test, factor
analysis etc.

8. Statistics and war: In war the theory of decision function can be a great assistance to the
military and personal to plan “maximum destruction with minimum effort.”
WHAT ARE THE LIMITATION OF STATSTICS
1. Statistical methods are best applicable on quantitative data.
2. Statistical cannot be applied to heterogeneous data.
3. It sufficient care is not exercised in collecting, analyzing and interpretation the data,
statistical results might be misleading.
4. Statistics laws are true on average. Statistics are aggregates of facts, so a single
observation is not a statistic. Statistics deal with groups and aggregates only.
5. It does not depict entire story of phenomenon
6. Only a person who has an expert knowledge of statistics can handle statistical data
efficiently.
7. Some errors are possible in statistical decisions. Particularly the inferential statistics
involves certain errors. We do not know whether an error has been committed or not.
8. Statistical results might lead to untrue conclusions by deliberate manipulation of figures
and unscientific handling.
OR
1. Does not study qualitative phenomenon.
2. Does not deal with individual items.
3. Statistical results are true only on an average.
4. Statistical data should be uniform and homogeneous.
5. Statistical results depends on the accuracy of data.
6. Statistical conclusions are not universally true.
7. Statistical results can be interpreted only if person has sound knowledge of statistics.

Statistics deals only with the quantitative characteristics: Statistics deals with facts which are
expressed in numerical terms. Therefore, those phenomena that cannot be described in numerical
terms do not fall under the scope of statistics. Beauty, colour of eyes, intelligence, etc., are
qualitative characteristics and hence cannot be studied directly. These characteristics can be
studied only indirectly, by expressing them numerically after assigning particular scores. For
example, we can study the level of intelligence of a group of persons by using intelligence
quotients (IQ’s).

Statistics does not deal with individuals: Since statistics deals with aggregate of facts, a single
and isolated figure cannot be regarded as statistics. For example, the height of one individual is
not of much relevance but the average height of a group of people is relevant from statistical
point or view. In this context, you may recall the definition given by Secrist here.

Statistical laws are not exact: Unlike the laws of natural sciences, statistical laws are not exact.
They are true under certain conditions and always some chance factor is associated with them for
being true. Therefore, conclusions based on them are only approximate and not exact. They
cannot be applied universally. Laws of pure sciences like Physics and Chemistry are universal in
their application.

Statistical results are true only on an average: Statistical methods reveal only the average
behaviour of a phenomenon. The average income of employees of a company will, therefore, not
throw much light on the income of a specific individual. They are therefore, useful for studying a
general appraisal of a phenomenon.

Statistics is only one of the methods of studying a problem: A problem can be studied by
several methods. Statistical methods arc only onc of them. Under all circumstances, statistical
tools do not provide the best solution. Quite often it is necessary to consider a problem in the
light of social considerations like culture, region, etc. Therefore, statistical conclusions need to
be supplemented by other evidences.

Statistics can be misused: The various statistical methods have their own limitations. If used
without caution they are subject to wrong conclusions. So one of the main limitations of statistics
is that, if put into wrong hands, it can be misused. This misuse can be, at times, accidental or
intentional. Many government agencies and research organisations are tempted to use statistics to
misrepresent the facts to prove their own point of view. Suppose you are told that during a year
the number of car accidents in a city by women drivers is 10 while those committed by men
drivers is 40. On the basis of this information, you may conclude that women are safe drivers. If
you conclude like that you are misinterpreting the information. You must know the total number
of drivers of both types before you could arrive at a correct conclusion.

For Example:
Suppose we interested to find the average age of MS students. We collect the age’s data by two
methods; either by directly collecting from each student himself personally or getting their ages
from the university record. The data collected by the direct personal investigation is called
primary data and the data obtained from the university record is called secondary data.

DEFINE MEDIAN.
The median is the middle number of a set of numbers arranged in numerical order. If the number
of values in a set is even, then the median is the sum of the two middle values, divided by 2.
h N 
Median =    2  C and
f

DEFINE MODE.
It is the value which occurs with the maximum frequency .The mode is the most frequent value
in a set.

h (f m  f 1 )
Mode =  
2f m  f1  f 2

Define Quartile : it is dividing the observations or data into 4 equal parts.

h 1  h 3 
(Q1) =    N  C and Q3 =    N  C
f 4  f 4 
DEFINITION: MEAN.
The mean is the sum of all the values in a set, divided by the number of values.

DEFINITION: RANGE. The range is the difference between the largest and smallest values of
a set.

DEFINE AVERAGE
Average is an attempt to find one single figure to describe whole of figures.
From above definitions it is clear that average is a typical value of the entire data and is a
measure of central tendency.
Characteristics of a typical average
 It should be rigidly defined and easily understandable.
 It should be simple to compute and in the form of mathematical formula.
 It should be based on all the items in the data.
 It should not be unduly influenced by any single item.
 It should be capable of further mathematical treatment.
 It should have sampling stability

Functions of an average
 To represents complex or large data.
 It facilitates comparative study of two variables.
 Helps to study population from sample data.
 Helps in decision making.
 Represents single value for a series of data.
 To establish mathematical relationship

Define Harmonic Mean

It is the total number of items of a value divided by the sum of reciprocal of values of variable.

Define Deciles
The deciles divide the arrayed set of observation into ten portions of equal parts or frequency
and they are some times used to characterize the data for some specific purpose. In this process,
we get nine decile values. The fifth decile is nothing but a median value. We can calculate other
deciles by following the procedure which is used in computing the quartiles.
Formula to compute deciles.

h 1  h  2 
D1     N  C , D 2     N  C
f  10  f  20 

Percentiles
Percentile value divides the distribution into 100 parts of equal frequency. In this process, we
get ninety-nine percentile values. The 25th, 50th and 75th percentiles are nothing but quartile first,
median and third quartile values respectively.
Formula to compute percentiles is given below:

h  25  h  26 
P25 =    N  C , P26 =    N  C
f  100  f  100 

Definition measure of dispersion: A measure of dispersion may be defined as a statistics

signifying the level of the scatteredness of items/observations around a measure of central
tendency.
Methods of measure of dispersion : Range, Standard deviation, Mean Deviation, Quartile
Deviation.

Range
‘Range’ represents the differences between the values of the extremes’. The range of any such is
the difference between the highest and the lowest values in the series.
The values in between two extremes are not all taken into consideration. The range is an simple
indicator of the variability of a set of observations. It is denoted by ‘R’. In a frequency
distribution, the range is taken to be the difference between the lower limit of the class at the
lower extreme of the distribution and the upper limit of the distribution and the upper limit of the
class at the upper extreme. Range can be computed using following equation.
Range = Large value – Small value
L arg e value  Small value
Coefficien t of Range 
L arg e value  Small value
Mean Deviation
Mean deviation is the average differences among the items in a series from the mean itself or
median or mode of that series. It is concerned with the extent of which the values are dispersed
about the mean or median or the mode.

Define standard Deviation

 fd 2   fd 
2

=h  
N  N 

Define Regression
Regression describes how an independent variable is numerically related to the dependent variable.
It predicts the value of the dependent variable based on the known value of the independent
variable, assuming that average mathematical relationship between two or more variables.
It is also used in understanding as which of the independent variables are related to the
dependent variable and also in exploring the types of these existing relationships

Difference b/w
Correlation Regression
Correlation is a statistical measure which Regression describes how an independent variable
determines co-relationship or association of two is numerically related to the dependent variable.
variables.
No difference in variables difference in variables
Its not used to measure impact of variables used to measure impact of variables
Not used to forecasting used to forecasting

Correlations are of three types:

 Positive Correlation
 Negative Correlation

Positive correlation.
In correlation, when values of one variable increase with the increase in another variable,
it is supposed to be a positive correlation.
Negative correlation
On the other hand, if the values of one variable decrease with the decrease in another
variable, then it would be a negative correlation.

Linear Correlation
When the change in one variable results in the constant change in the other variable, we
say the correlation is linear. When there is a linear correlation, the points plotted will be
in a straight line