1.

1 Origin of Statistics

The term "Statistics" appears to have been derived from the Latin word "Status" or
Italian word "Statista" or German word "Statistik" all of which mean the political state. In
those days "Statistics" was used only in collecting the information's relating the population
of the state military strength, incomes etc. for framing the military and the fiscal policies.
So, at that time "Statistics" was considered only as the science of statecraft. However, with
passage of time, the science of statistics has been applied very widely. So, in modern times,
the scope of statistics has considerably enlarged. It is used not only to the state in
administration, but it is used in Economics, Science, Business, research, Bank etc. There
is hardly any place of human activity where statistics has not been used.

1.2 Definition of Statistics

The word "Statistics" is used in singular as well as plural sense. In the plural sense, it means
the quantitative information or numerical facts collected systematically. In the singular
sense, it means the various methods and techniques adopted for the collection,
presentation, analysis and the interpretation of the figures. But to a layman, it is simply a
mass of figures.

1.2.1 Definition of Statistics in singular sense

A.L. Bowley has defined "Statistics as the science of counting". Again, he defined
"Statistics as the science of averages".

Boddington has defined "Statistics as the science of estimates and probabilities".

Croxton and Cowden has defined statistics as follows "Statistics may be defined as the
collection, presentation, analysis and interpretation of the numerical data".

1.2.2 Definition of Statistics in plural sense

Webster defined Statistics as "classified facts respecting the conditions of people in

a given state".

Yule and Kendall define that "By statistics, we mean quantitative data affected to a
marked extent by a multiplicity of causes".

The most comprehensive and exhaustive definition of statistics given by Horace Secrist
is "By Statistics, we mean aggregates of facts affected to a marked extent by multiplicity
of causes, numerically expressed, enumerated or estimated according to reasonable
standards of accuracy, collected in a systematic manner for a pre-determined
purpose and placed in relation to each other.

1.3 Uses of Statistics in planning, economics and business:

In ancient times, statistics was considered only as a science which was used for
collecting information about population, military strength, wealth for framing
administrative and fiscal policies. But in modern times, statistical methods are used in
every sphere of life. Here we discuss the uses of statistics in planning, economics and
business.
Statistics in planning

Modern age can be considered as the age of planning. No work without well
planning can be successful. So, most of the organizations are resorting to plan for efficient
work and for formulating policy decisions. The successfulness of the planning depends
upon the correct and sound analysis of statistical data. For example: The water supply
corporation will unable to face the problem relating to the supply of water in the
Kathmandu valley unless the population of Kathmandu, the quantity of water required per
day, the quantity of water to be supplied and by which source additional quantity of water
can be supplied if necessary, is known. These are the necessary information to be collected
by water supply corporation. This problem can be solved through the powerful statistical
tools by making use of statistical data.

1.3.1 Statistics in Economics

There is a close relationship between Statistics and economics. Statistical data and
Statistical methods have great importance in the proper understanding of the economic
problems and the formulation of economic policy. Economic problems almost always
involve facts that can be expressed numerically such as production consumption,
distribution of incomes, wages, expenditures, unemployment etc. The study of economic
problems requires the use of statistical methods.

In the field of consumption, statistics helps to know how the people of different
classes of society spend their incomes. This will enable us to have the idea about their
purchasing capacity and their standard of living.

Study of production statistics tries to make a balance between supply and demand.
With the proper statistical data, statistics of production helps in adjusting the supply
according to the demand.
 Statistics plays a vital role in case of distribution of incomes too. The questions such
as a how the national income is calculated? and how it is to be distributed can betterly be
solved with the help of statistical methods.

In the field of exchange we study market prices based on demand and supply, cost
of production etc. Effect in the price of commodity due to increase or decrease in supply,
costs which the monopolist want to take for maximum profit etc. are the questions that can
be answered with the help of Statistics. Thus exchange statistics helps in the commercial
development of a nation. Statistics have a greater importance in reducing the disparities in
the distribution of incomes and wealth. The problem relating to the rising prices, rising
unemployment, poverty etc. can be solved with the help of statistics.

Besides the economic policy, statistics has made a lot of development in economic
theory. Economic laws such as Malthus's theory of population, Engel's law of family
expenditure etc. were pro-pounded after statistical tests. The importance of statistics in the
study of economic problems has resulted a new branch known as "Econometrics".

1.3.2 Statistics in business

For smooth functioning the need of statistical information depends upon the size of
the business. When the size of the business is very small, only a single person can directly
engage in all the areas of business activities. He can contact the customers personally and
has almost all information's about the business. No technique for the supply of information
is necessary. When the size of the business increases, a single person cannot contact the
customers personally and look after all the business activities. He cannot get the
information relating to business in the same manner as in case of small size business.
Unless a very careful study of the market is made, it is difficult to have success in business.
Statistics helps in formulating policies regarding the business with valid forecasts about
the future with the help of tendencies based on past records.

1.4 Functions of Statistics

Important functions of statistics are given below:

1. Statistics simplifies complexity: Statistics consists of aggregate of numerical facts.

Huge facts and figures are difficult to remember. The complex mass of figures can be made
simple and understandable with the help of statistical methods. Statistical techniques such
as averages, dispersion, graph, diagram etc. make huge mass of figures easily
understandable. So, the function of statistics is to reduce the complexity of the huge mass
of figures to a simplier form.
2. Statistics presents fact in a definite form: One of the important functions of statistics
is to present the general statements in a precise and definite form. The conclusion stated
numerically is definite and hence more convincing than the conclusions stated
qualitatively. This fact can readily be understood by the following example: "The
population of Nepal in 1981 has been increased than in 1971". There will be no clear idea
about this statement. Everybody wants to know to what extent the population of Nepal has
increased. But the statement that "the population of Nepal has increased from 11555983 in
1971 to 15022839 in 1981" is in a definite form.

3. Statistics facilities comparison: The science of statistics does not mean only counting
but also comparison. Unless the figures are compared with other figures with the same
kind, they are meaningless. Statistical methods such as averages, ratios, percentages, rates,
coefficients etc. offer the best way of comparison between two phenomena which will
enable to draw valid conclusion. So, statistics helps in the comparison of two phenomena.
For example: The statement that "the income per capita of Nepal is $ 160 is not so clear
unless it is compared with the income per capita of any other country.

4. To help in formulation of policies: Statistics helps in formulating the policies in

different fields mainly in economics, business etc. The government policies are also
framed on the basis of statistics. In fact, without statistics, suitable policies can not be
framed. For example: The quantity of food grains to be imported in a particular year
depends upon the expected internal production and the expected consumption. That is if
the expected wheat production in the particular year be 701 thousands metric tonnes and
that of consumption 710 thousands metric tonnes so we must import 9 thousands metric
tonnes of food grains.

5. Statistics helps in forecasting: While preparing suitable policies and plans, it is

necessary to have the knowledge of future tendency. This is mostly in case of industry,
commerce and so on. Statistical methods provide helpful means in forecasting the future
by studying and analysing the tendencies based on passed records. For example: Suppose
a businessman wants to know the expected sales of T.V. for the next year. The better
method for him would be to analyse the sales data of the past years for the estimation of
the sales volume for the next year.

6. Statistics helps in formulating and testing hypothesis: Statistical methods are helpful
not only in estimating the present, forecasting the future but also helpful in formulating
and testing the hypothesis for the development of new theories. Hypothesis like 'whether
a particular fertilizer is effective for the production of a particular commodity' 'whether a
dice is biased or not' can be tested with the help of statistical tools.
1.5 Limitation of Statistics

Besides the importance of statistics in every field of life, it has some limitations. The
following are the main limitations of statistics.

1. Statistics does not deal with individuals: A part of the definition of statistics is that it
must be the aggregates of facts. That is, it deals only with the mass phenomena. A single
item or the isolated figure cannot be regarded as statistics. This is a serious limitation of
statistics. For example: the mark obtained by a student in English is 75 does not constitute
statistics but the average mark of a group of students in English is 75 forms
statistics.

2. Statistics does not study qualitative phenomena: The science of statistics studies only
the quantitative aspect of the problem. Statistics cannot directly be used for the study of
qualitative phenomena such as honesty, intelligence, beauty, poverty etc. However, some
statistical techniques can be used to study such qualitative phenomena indirectly by
expressing them into numbers. For example: the intelligence of the boys can be studied
with the help of marks obtained by them in an examination.

3. Statistical laws are not exact: 100% accuracy is rare in statistical work because
statistical laws are true only on the average. They are not exact as, are the laws of Physics
and Mathematics. For example: the probability of getting a head in a single toss of a coin
is
½ This does not imply that 3 heads will be obtained if a coin is tossed 6 times. Only one
head, 2 times head or all the times head or no head may be obtained.

4. Statistics is only a means: Statistical methods provide only a method of studying

problem. There are other methods also. These methods should be used to supplement the
conclusions derived with the help of statistics.

5. Statistics is liable to be misused: The most important limitation of statistics is that it

must be handled by experts. Statistical methods are the most dangerous tools in the
hands of inexperts. Since statistics deals with masses of figures so it can easily be
manipulated by inexperienced and unskilled persons. Statistical methods if properly be
used, may conclude useful results and if misused by inexperts, unskilled persons, it may
lead to fallacious conclusion. We have the following example consisting the result
concluded by an inexpert and unskilled person.
The average height of 4 members of a family is 1.56 metres and the average depth of the
river is 1.06 metres. If they are willing to cross the river, they can safely cross the river.
 Chapter 2
Collection of Data

2.1 Introduction
From the very definition of statistics, it is an aggregate of facts which can
numerically be expressed. These types of facts are known as data. So, for any statistical
investigation, the first attempt is to collect the data. Collection of data means the methods
that are to be used for getting the necessary informations from the units under
investigation. The method of collecting the data depends upon the nature, object and the
scope of the enquiry. The person who conducts the statistical enquiry for further analysis
is known as "Investigator". The persons from whom the informations are collected are
known as "Respondents" or "Informants". Before, collecting the data for a given statistical
enquiry, it is essential to examine the following points.

1. Statement of the problem: Before collecting the data, its purpose must clearly be
mentioned. This will ensure the collection of proper informations.

2. Scope of enquiry: After the statement of the problem, the next point to be kept in mind
is the scope of enquiry. The scope of enquiry means the geographical coverage within
which the type of information is to be collected.

3. Source of Informations: Having decided the problem and its scope, the next point is
to determine the sources from which the data are to be collected. The persons or
organisations that have collected the data are known as the source of data. Data may
obtained from two sources: primary source or secondary source.

A primary source is one that itself collects the data. But a secondary source is one
in which the data are available through some organisation or some one else's records.

4. Techniques of data collection: There are two techniques through which the data can
be collected: (i) Census method, (ii) Sample method.

In census method, informations are taken from each and every unit of the population
whereas in sample method informations are taken only from the sample of the population
i.e. from a part of the population and conclusion is drawn for the whole population.

5. Units of data collection: Statistical unit is that basis of measurement in terms of which
the investigator will count or measure. Absence of clear cut and precise statistical unit may
cause serious errors in the collection of data which may lead to fallacious
conclusion.
6. Degree of accuracy: A decision regarding the degree of accuracy desired by the
investigator in his result is necessary before any statistical enquiry. A 100% accuracy in
statistical work is difficult to attain. Degree of accuracy desired primarily depends upon
the objects of enquiry.

2.2 Need of data collection

With the help of statistical techniques, the problems relating to economics,
business and management etc. can be solved. To frame any policy regarding to
economics, business etc. by making forecast about the future trend, one must study the
data of tendencies based on past records. Also, the statistical techniques can be used only
for those informations which are in the numerical form. Therefore an important step in
statistical analysis is to gather the data. The structure of the statistical analysis and the
decision making depends upon the data collected.

2.3 Importance of data collection

Without any data, nothing can be studied. So, for any statistical investigation, the
collection of data is most important. The importance of data collection lies in the following
facts:
The collected numerical facts can be utilized to examine the problems concerning
a field of enquiry in thier true prospective, to find out the causes of change and to estimate
their probable effects. The statistical methods are also employed as a tool for the
comparison between past and present events to throw light on the reason of change,
examine the effects of the changes on the social system and for future plans and
progammes.

2.4 Types of data

Statistical data depending upon the sources are of two types
a) Primary data
b) Secondary data.
a) Primary data: The data which are originally collected by an investigator or an agent
for the first time for the purpose of statistical enquiry are known as primary data. The
data is thus original in character. These types of data are obtained in the survey and
enquiries conducted by government, some individuals, institutions and research bodies.

b) Secondary data: Data which are originally collected but obtained from some
published or unpublished sources are "Secondara data". This type of data is not original
in character.
2.5 Difference between the primary and secondary data
The main difference between primary and secondary data is only of degree one.
Data which are primary in the hands of one becomes secondary in the hands of other.
That is primary data once collected and published becomes secondary data for other
investigators. For example: the data relating the population of Nepal published by
Central Bureau of Statistics are primary for that organisation but secondary for those
who use it.

2.6 Methods of collecting primary data

The various methods with which the primary data can be collected are as follows:
a) Direct personal interview
b) Indirect oral interview
c) Information through correspondents
d) Mailed questionnaire method
e) Schedules sent through enumerators.

a) Direct personal interview

In this method, the investigator collects the data personally from the sources concerned.
In other words, the investigator personally contacts the informants and collects the data.
Thus if a person wants to collect the data regarding the wages of workers of Kapada
Udyog, he personally would go to that Udyog, contact the workers and asking the
necessary questions, collect the required informations. The success of this method
depends upon the unbaisness of the investigator and the informants.
Merits
(i) More accurate informations can be obtained as the interviewer can clear up the doubts
of informants about the questions.
(ii) When the type of enquiry is of intensive nature, the data obtained by this method is
most reliable and accurate.
(iii) The informants response when the interviewer approaches personally.
(iv) Additional supplementary informations about the informant's personal characteristic
and environment can also be obtained.
(v) The interviewer can get proper informations through informants by asking questions
in their language of communication.
Demerits
(i) This method of data collection is too costly and time consuming.
(ii) If the interviewer is not well-trained, the results of the enquiry may not be
satisfactory.
(iii) This method is not practicable when the field of investigation is vast and the
informants are scattered.
(iv) There may be a greater chance of personal prejudice and unbiasness in this method.
Suitability: More accurate results can be obtained by this method only when the
interviewer and informants are unbiased and the field of investigation is not so wide.
b) Indirect oral interview
This method is used in case when the informants hesitate to give informations directly.
So, in this method, the informations are collected by the interviewer from third person
which may be directly or indirectly in touch with the informations sought. The third
person is said to be the "witness". For example: In an enquiry regarding the addiction of
alcoholic drinks, people may hesitate to give correct informations about their drinking
habits. In this case, it is necessary to get informations from the people who may know
them.
Merits
(i) A wide area can be covered for investigation under this method.
(ii) This method saves time, money and labour.
(iii) The opinions and suggestions of experts can be solicited.
Demerits
(i) The informations are obtained from the informants not directly connected, so it is
doubtful that the results will be fully true.
(ii) If the investigator is a biased person, he may twist the fact.
Suitability: This method is suitable when the field of investigation is very wide and the
informations cannot be collected by direct contact.
c) Information through correspondents
In this method, the investigator appoints local agents known as correspondents in
different parts of the field of enquiry. They collect the informations and send them to the
central office where the informations are further processed. If informations from wide
area are to be collected, this method is suitable. This method is adopted by newspaper
and periodical agencies which require informations regularly.
Merits
(i) Informations can be obtained from wide area by this method.
(ii) This method is very cheap and yields result easily and promptly.
(iii) Informations can be obtained regularly.
Demerits
Informations sent by correspondents may not be accurate and reliable due to personal
prejudice and biasness.
Suitablity: This method is applicable when regular informations from wide area are
needed

d) Mailed questionaire method

In this method, a questionnaire i.e. a set of questions relating to the enquiry is prepared.
These questionnaires are addressed to individual informants and sent by post. They are
requested to answer the questions and post back to the investigator.
Merits
(i) Informations are given by informant themselves. Hence informations are free from
the biasness of the investigator.
(ii) It is least expensive and quick service.
(iii) This method is useful when the field of investigation is very vast.
Demerits
(1) This method can be used only where the informants are educated and understand
questions.
(ii) The greatest drawback of this method is considerable non-response. Most of the
informants donot return the questionnaire.
(iii) The returned questionnaires may not be carefully filled in. Hapha-zard answers be
given. This may be due to that the informants might have misunderstood the question.
Suitability: This method is suitable where
(i) informants are literate and understand the importance of survey.
(ii) where legally the informants are supposed to fill up the questionnaire.

e) Schedules sent through enumerators

Schedule is the device of obtaining answers to the questions which are filled up by
the informants in a face to face situation. So, under this method, the enumerators go to
the informants personally with the schedule (a list of questions) and fill up the list of
questions by interviewing informants according to the questions in the schedule. This
method is generally used by the research organisations.
Merits
(i) This method can be used even when the informants are illiterate.
(ii) There is very little possibility of non-response as the enumerators go personally to
obtain the informations.
(iii) The enumerators can check the accuracy of informations.
Demerits
(i) It is an expensive method.
(ii) It is more time consuming.
(iii) The success of this method depends upon the efficiency and skill of the enumerators
who collect the informations.
(iv) The success of this method depends upon the preparation of good schedule.
Suitability: This method is suitable
(i) when the field of investigation is not very vast.
(ii) the informants are even illiterate.
2.7 Choice of method of collecting primary data
It is very difficult to mention that which method should be selected in collecting
the primary data because a number of considerations are to be considered. Generally the
following factors are to be considered.
1. The nature of enquiry
If informations are to be obtained from educated informants or institutes "Mailed
investigation. If the personal contact is necessary, the "direct personal interview" is
suitable. The method to be used for collecting primary data depends upon the nature of
informations are to be gathered on a number of subject matters then "Schedule sent
through questionnaire method" will be appropriate. When the field of investigation is
very wide and enumerators" will be suitable.
2. Object and scope of enquiry
Again the method used for the collection of primary data depends upon the object and
the scope of enquiry. If the scope of enquiry is limited, then "direct personal interview"
should be used. "Information through correspondents" is applicable when information is
required periodically for an extensive enquiry.
3. Financial resources
If there are more finance available, then the "direct personal interview" or "schedules
sent through enumerators" should be adopted. If the financial resource is not so sound,
then "Mailed questionnaire method" may be used.
4. Time factor
Another determining factor in this regard is the time factor. If the results are to be
obtained in a very short period, then "Information from correspondents" can be selected.
If there is no time-limit, other methods can be used.
5. Degree of accuracy desired
High degree of accuracy is obtained in "direct personal interview". The "Mailed
questionnaire method" has less accuracy in comparison to "schedule sent through
enumerators".
All the factors mentioned above are to be taken into account while selecting an
appropriate method of collecting primary data.

2.8 Sources of secondary data

Use of primary data in statistical investigation is not always practicable due to the
availability of time, money and so on. So, in such cases the investigator uses the data
which have already been collected and used by others. There is a lot of published and
unpublished informations from which the further studies can be made. The sources of
such data i.e. secondary data can be classified under the following two headings:
1. Published sources
2. Unpublished sources
2.8.1 Published sources
Published sources: The various sources of secondary data are the (a) reports and official
publications (b) semi-official publications (c) private publications.
(a) Reports and official publications: The followings are the publications made by
international agencies:
International Monetary Fund, International Finance Corporation, United Nations
Organisation, World Health Organisation, World Bank, etc.
The following are the publications made by the Government Organisations:
(i) Reports of pay commission, national population commission.
(ii) Population census carried on by Central Bureau of Statistics.
(iii) Publications made by different ministries such as ministry of industry and
commerce, ministry of education, ministry of health, ministry of finance etc.
(b) Semi-official publications: The publications made by the following
organizations are Industrial services centre, Nepal food corporation, N.I.D.C. etc.
(c) Un-official or private publication:
(i) Trade and professional organisations such as Nepal Chamber of Commerce.
(ii) Financial and economic journals.
(iii) Trade associations, Market reports, Magazine
(iv) Publications brought out by research agencies and research scholars.

2.8.2 Unpublished source

All statistical informations may not be in the published form. Some of them may be
in an unpublished form. The records maintained by private form, business enterprises,
various departments, hospital records, research carried out by the individual research
scholars are the unpublished form of secondary data.

2.9 Precautions in the use of secondary data

The secondary data cannot directly be used for the statistical investigation because the
data may not be suitable and inadequate to the problem under study. The following
points are to be considered before using the secondary data.
1. Suitability
Data which are suitable for one purpose may not be suitable for other. So, before using
secondary data the investigator must confirm whether the data available is suitable
according to the purpose of our enquiry or not. The suitability of the data can be judged
by comparing nature, object and scope of the present enquiry with the original enquiry.
2. Reliability
It is very difficult to find out whether the secondary data available are reliable or not.
The reliability of data can be tested by (i) the reliability integrity, and experience of the
collecting organisation (ii) the reliability of the source of informations (iii) the methods
used for collection and analysis of the data.
3. Adequacy
Though the data available are suitable and reliable but may not be adequate enough for
the purpose of our present enquiry. This is the case when coverage given in the original
enquiry was too narrow or too wide than necessary in the present enquiry. The adequacy
of secondary data available can be judged by studying the geographical area covered by
the original enquiry and the area to be covered by the present enquiry.
Problems in data collection
Various problems or difficulties which arise in the process of data collection are as
follows:
a) Problems in collecting primary data
(i) The informants may show dishonesty in giving the answers of questions put by the
interviewer.
(ii) If the informants are illiterate and the real informations cannot be collected.
(iii) A problem may arise due to lack of transportation facility. Due to this difficulty, real
picture of the information may not get.
(iv) While using "Mailed questionnaire method" in collecting the data, only a few
questionnaire will return back. Those questionnaire which are returned back, may not be
sincerely answered.
(v) If the scope of enquiry is very wide and the high degree of accuracy is required, then
money and time should sufficiently be available.
(vi) The data should be collected by well-trained and skilled investigators and their
agents. Otherwise, the informations collected may not be relevant.
b) Problems in collecting secondary data
(i) Suitable, reliable and adequate data to the enquiry under study can rarely be obtained.
(ii) Sometimes, the unpublished data cannot easily be obtained as the persons hestitate to
give it (data).