Read this article to learn about the Importance (why statistics are important) and Limitations of Statistics…
Importance of Statistics
Importance of statistics can be classified into different fields such as:-
1. Importance of Statistic in Economics:
The contribution of statistics to the field of economics is commendable. Nowadays, solving any financial problem is not possible without the use of statistical methods. The importance of stats in economics can be studied on the basis of the following points:-
(i) Importance in different divisions of Economics:
- Importance in consumption area.
- Importance in the field of production.
- Importance in the field of exchange.
- Importance in the field of distribution.
- Importance in the field of revenue.
(ii) Importance in monetary policy:
The success of the monetary policy is based on a few statistical facts. The reason is that all instruments adopted in monetary policy, such as bank rate, reserve rate, etc are based on all statistical rules.
(iii) Quantitative expression of economic problems:
The numerical expression of various problems, whether it is of population or unemployment or other economic problem, is necessary so that the economist is aware of the depth of that problem. For Example, by this statement, the population of India is growing rapidly, it is not possible to experience the problem of expanding the population completely.
But if it is said in the form of statistics, that the population of India increases by 1 crore 40 lakhs per annum and the total population of Australia is 1 crore 40 lakhs. Thus, if our population is increasing at par with the population of Australia every year, then we can easily experience the expansion of the population correctly.
2. Importance of Statistic in Trade, Industry, and Commerce (Business):
Nowadays industry and business have become so complex that many new problems have to be solved in order to achieve success in business. Use of statistical tools and methods to solve these problems has become extremely important.
Today’s business and workers and producers need to have a general knowledge of statistical methods and their use, only then can they solve problems based on facts and figures with skill and ability.
3. Importance of Statistic in the Field of Economics:
Statistics are of great importance in the field of economic planning. All the countries of the world are developing they’re economic by organizing economic activities.
4. Importance of Government Administration:
A few centuries ago, statistics was the science of rulers, because in the early period only kings (the rulers) had to collect data of government income and land system and the population more. Statistics are extremely important in governance management because
(i) The base of the budget is statistics.
(ii) To make laws and amend the old laws, it is necessary to get the help of material of the necessary statistical information.
(iii) Determination of various policies of the country and their success is evaluated on the basis of data.
5. Other Importance:
(i) Useful for agriculture and research.
(ii) Social importance.
(iii) Protection of past life and experience.
Limitations of Statistics
The limitation of statistical analysis can be described in various points:-
1. Study of Numerical Elements:
In statistics, only numerical elements are studied like- character, honesty, friendship, etc are not studied. These facts can also be placed under 3 topics:-
First, The facts that can be directly divided into numbers like the age of human beings, weight, income, and so on.
Second, are those quantitative facts that can be expressed indirectly by the digits like the intellectual level of the students can be estimated based on the score of the examination.
Third, those facts which cannot be expressed directly or indirectly by numbers like character, culture, etc.
2. Study of Statistical Groups:
Statistics studies the nature of groups. It does not take into consideration any individual’s properties and its individual properties.
For Example- while studying in relation to students, problems related to a particular student will not be studied but those problems will be studied which are collectively in front of the student society.
3. Full Knowledge of the rules of Statistics:
For statistical research it is necessary to have full knowledge of the rules of statistics, otherwise, no conclusion can be drawn from the given data.
4. Statistical rules are true in the long run:
For pure science, it is necessary that its rules are true and pure at all times. But the rules of statistics are true in the average form and they are also in the long run.
5. Uniformity of Digits:
The facts of statistics are essential to be simple and harmonious because the data of a different class cannot be compared. ForExample- Statistics of the height of trees cannot be compared to the data between the height of humans.
6. Average Truth:
The rules of statistics prove true in the long run and in the average form, are not completely true like the laws of physics. For Example- If it is said that Indians are poor, then this statement points to a trend. This does not mean that there is no rich in India.
So, it was our importance and limitations of statistics…