Here we discuss the Importance, Scope, and Limitations of Statistics. The scope of Statistics was limited in ancient times as the government used statistics for the purpose of administration alone.
Scope and Limitations of Statistics
Gradually, the subject became more and more popular and its application has become more extensive. Now is hardly any field of human activity where statistics are not used.
Now is used by economists, businessmen, scientists, administrators, etc.
What is the Scope of Statistics?
The Importance and Scope of Statistics can be very well appreciated as the researcher follows:
1. Statistics help in economic planning
Statistical data and different techniques of statistical analysis are the very countries are useful in solving economic problems.
All economic plans of a formulated on the basis of statistical data. The success of the plan is also evaluated with the help of statistics.
Economic problems such as production, consumption, wages, price profits, unemployment, poverty, etc. can be expressed numerically.
The study of production statistics enables us to make a balance between supply and demand. By the proper use of statistics, the supply can be adjusted according to demand.
The study of consumption statistics enables us to have some idea about the purchasing capacity and living standard of the different classes of the people of the society by analyzing their consumption patterns.
2. Statistics in business and management
Statistics are very useful to businessmen. It helps businessmen in formulating policies regarding business and forecasting future trends.
Modern business has its roots in the accuracy and precision of the estimates and statistical forecasting regarding the future demand for the product, market trends and so on Correct estimation and decision making of the businessmen depend upon his experience and proper use of statistical methods.
According to Wallis and Roberts, “Statistics may be regarded as a body of methods for making a wise decision in the face of uncertainty.”
3. Statistics in administration
Efficient administration cannot be perceived without statistics. Statistics have been used from the time of origin of statistics to collect information regarding the military and fiscal policies.
The state collects a huge amount of statistics on different aspects of the people and thereby frames different policies r the welfare of the people.
4. Statistics in research
Statistical methods are extensively used in every type of research work. Whether it is agriculture, health, or social science, the statistics help in carrying out different types of researches.
In agriculture, the yield of the crop with different kinds of seeds, fertilizers, etc. can be examined with the help of appropriate statistical tools.
Similarly, statistics are of great help to insurance companies, industries physical science, banking, railways, transportation, astronomy, etc.
Hence, we can conclude that nowadays there is hardly any sphere of human activity where statistics have not been used.
What is the Importance of Statistics?
1. Statistics and planning
Statistics in indispensable in 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 in involving economical problem. Such as wages, price, time series analysis, demand analysis.
3. Statistics and business
Statistics is an irresponsible tool for 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 are widely used in quality control. In production engineering to find out whether the product is conforming 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 disease 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 of 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 Limitations of Statistics?
Although there are so many applications of statistics in every field, it is not without limitations. The main Limitations of Statistics are the following:
- Statistics is unable to explain individual items
- Statistics are unable to study qualitative characters
- Statistical results are not accurately correct
- Statistics deal with average
- Statistics is only one of the methods of studying a given problem
- Statistics is liable to be misused
- Qualitative Aspect Ignored
- Many methods to study problems
- Results are true only on average
- Statistical laws are not exact
1. Statistics is unable to explain individual items
Statistics always study a group of values instead of single observation studies the mass of phenomena and the conclusion on certain characteristics obtained.
For example, the study of income of one worker of a company is statistics, but the study of incomes of 50 workers of that company form statistics.
In other words, the monthly income of Rs. 1,000 workers do not constitute statistics but the average income of Rs. 1000 of a group of workers of that company forms statistics
2. Statistics are unable to study qualitative characters
In general, statistics studies only the quantitative characters of the given problems instead of qualitative characters.
The problems which cannot be studied quantitatively (i.e. in numerical form) such as poverty, leadership beauty intelligence, honesty, etc, are not directly studied in statistics.
3. Statistical results are not accurately correct
There are only a few results that are accurately correct in statistics and almost all are only approximately correct.
In other words, a hundred percent accuracy is impossible in statistical work because statistical laws are based on average.
4. Statistics deal with average
Statistics deals with averages that are obtained from different individual items. The laws of statistics are true only on average.
5. Statistics is only one of the methods of studying a given problem
The best solution under all conditions of the given problem is not p by the statistical methods.
Statistics cannot be of much help in studying the provided problem, like a country’s culture, religion, and philosophy unless they are supplemented by other evidence.
6. Statistics is liable to be misused
The greatest limitation of statistical science is that it can be misused.
The only one who has expert knowledge of statistical methods can scientifically handle statistical data.
Statistical methods, if misused by incompetent, unskilled and inexperienced persons, it may lead to false conclusions.
7. Qualitative Aspect Ignored
The statistical methods don’t study the nature of phenomenon which cannot be expressed in quantitative terms.
Such phenomena cannot be a part of the study of statistics. These include health, riches, intelligence etc. It needs the conversion of qualitative data into quantitative data.
8. Too many methods to study problems
In this subject, we use so many methods to find a single result. Variation can be found by quartile deviation, mean deviation or standard deviations and results vary in each case.
“It must not be assumed that the statistics are the only method to use in research, neither should this method of considered the best attack for the problem.” — Croxton and Cowden.
9. Results are true only on average
As discussed above, here the results are interpolated for which time series or regression or probability can be used. These are not absolutely true.
If the average of two sections of students in statistics is the same, it does not mean that all the 50 students are section A has got the same marks as in B. There may be many variations between the two. So we get average results.
10. Statistical laws are not exact
Statistical laws are not exact as in the case of natural sciences. These laws are true only on average. They hold good under certain conditions. They cannot be universally applied. So statistics have less practical utility.
These above are the Scope and Limitations of Statistics which is very important and we also learned about the importance of statistics above.