Indore Institute of Law

BBA LL. B. (Hons.)

Semester I
Business Statistics
Unit I
Introduction to Statistics
Prof. Ambarish Bapat
 Introduction to Statistics
Origin – It is either derived from the word Latin word
Status or Italian word Stato or German word
Statistick. In all the three languages it means ‘an
organized political state’.

Meaning of Statistics
Statistics has multiple meanings depending upon the
person using it. For a common man it is just a data or
a fact or a measurement. Some may regard it as study
of figures, for some it is analysis of figures for
forecasting or drawing inferences. Diagrammatic or
graphic representation of facts is also considered as
statistics.
Processing, analysis and application of
quantitative facts is also regarded as Statistics. In
general it can be of following forms –
As a product – Data
As a process – Statistical methods
As an application – Methods and
theories
used to handle
numerical data
for
inferential decision
purposes.
Definition of Statistics –
According to Horace Secrist, “By statistics we
mean aggregate 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”.
The definition mentions the characteristics which
data should possess. As per the definition it
should have following features –
1. Statistics are aggregates of facts – single or
unrelated figures are not statistics, because they
do not throw light on any problem. Statistical
data are concrete numbers which represent
objects. Numbers like 20, 25, 18, 23 etc. cannot
be called statistics but if they are placed in a
series indicating ages of 20 and 25 years of the
husbands the respective ages of wives are 18 and
23 years, then these figures are termed as
statistics.
2. Affected to a marked extent by multiplicity of
causes – Statistics refer to the measurement of
phenomena in a complex universe. They are
related to various factors surrounding them.
Hence to say that statistics are affected by a
single factor is not correct.

3. Numerically expressed, enumerated or

estimated – The facts which are to be called as
statistical data are expressed numerically as it
adds a value to it.
 4. According to the reasonable standards of
accuracy – There has to be certain rules while
collecting data associated. This is necessary to
maintain homogeneity of data.

5. Collected in a systematic manner for a pre-

determined purpose – Data is collected as per a
set of rules decided prior to the collection to
avoid any kind of redundancy as well as
inaccuracy.
6. Placed in relation to each other – Data is usually
collected for comparing it with other type of
similar data so that certain conclusion can be
drawn.
Other definitions of Statistics –
A. L. Bowley – He gave following three
definitions of statistics –
1. Statistics is the science of counting.
2. Statistics may rightly be called as science
of Averages.
3. Statistics is the science of the
measurement of social organism regarded as a
whole in all its manifestations.
Modern Definitions of Statistics –
1. W. I. King – The science of statistics is the
method of judging collective, natural or social
phenomena from the results obtained by the
analysis of an enumeration or collection of
estimates.

2. P. H. Karmel – The subject statistics is

concerned with the collection, presentation,
description and analysis of data which are
measurable in numerical form.
3. Seligman – Statistics is the science which
deals with the methods of collecting, presenting,
comparing and interpreting numerical data
collected to throw some light on any sphere of
inquiry.

4. Wallis and Roberts – Statistics is a body of

methods making wise decisions in the face of
uncertainty.
5. Fisher – Statistics may be regarded as
a. The study of population,
b. The study of variation,
c. The study of methods of reduction of data.

In general, “Statistics is a science and an art which

deals with collection, classification, tabulation,
presentation, establishment of relationship,
interpretation and forecasting of data in connection
with social, economic, natural and other problems
so that the predetermined aims may be achieved”.
As per the above definition there are five stages
in a statistical investigation –
1. Collection – Collecting data is the first step in
a statistical investigation. Data must be collected
with maximum care and accuracy as it forms the
foundation of the statistical analysis. In case
faulty data is collected wrong conclusions will be
drawn. The first hand collection of data is very
difficult and important task faced by the
statistician. An investigator must view data
collected earlier so that repetition and waste of
time and resource can be avoided.
2. Organization – Data collected from published
sources are generally in organized form.
However, a large mass of figures that are
collected from a survey needs to be organized.
The first step is to edit the data. It must be edited
carefully so that omissions, inconsistencies,
irrelevant answers and wrong computations can
be adjusted / corrected. After editing data it must
be classified according to some common
characteristics. Tabulation is the last step in the
organization.
3. Presentation – After the data is collected and
organized it is ready for presentation. Data
presented in an orderly manner facilitate statistical
analysis. There are two different modes in which
the collected data can be presented –
1. Diagrams
2. Graphs

4. Analysis – After collection, organization and

presentation the next step is analysis. The purpose
of analyzing data is to dig out information useful
for decision making.
5. Interpretation – The final stage in statistical
investigation is interpretation, i.e. drawing inferences
/ conclusions form the data collected and analyzed.
Interpretation is a difficult task and needs a high
level of expertise and experience.

Functions of Statistics –
1. It represents facts in a definite form.
2. It simplifies mass of figures.
3. It facilitates comparison.
4. It helps in formulating and testing hypothesis.
5. It helps in prediction.
6. It helps in the formulation of suitable policies.
Application of Statistics –
Statistics and the State – Since ancient times the
ruling kings and chiefs have relied prominently
on statistics in framing suitable military and
fiscal policies. Most of the statistics related to
crimes, military strength, population, taxes etc.

Statistics and Mathematics –

Statistics is a branch of science based on
mathematics. It attempts to formulate definite
rules of procedure applicable in handling groups
of data of many different varieties.
Statistics and Economics – Economic policies are
often designed on the basis of statistics. Various
economic laws and theories were propounded
after statistical tests. Statistical methods help in
deriving economic laws and also in providing the
validity of existing economic laws. It helps in
developing the empirical laws side of economics.

Statistics and Physical Sciences – Various

sciences like biology, physics, chemistry,
Astrology, Medicines etc. use statistical methods.
In these sciences statistical data are collected
from the results of experiments.
Statistics and Social Sciences – Statistics is
widely used in social sciences. Political science,
geography, history, psychology etc. use statistical
methods in investigations and research in their
respective fields. I.Q computation in psychology
is done using statistical methods.

Statistics and Industry and Commerce –

Statistical methods and procedures are employed
by business managers. Data recorded on
commercial transactions gives an insight
regarding buying/selling pattern and helps in
forecasting.
Functions of Statistics –
1. To simplify complex data.
2. To provide comparative studies.
3. To study relationships between different facts.
4. To enlarge individual knowledge and
experience.
5. To formulate policies in different fields.
6. To measure effects.
7. To test a hypothesis.
8. To provide numerical measurement.
9. To forecast.
Limitations of Statistics –
1. Statistics only studies the quantitative aspects
of a problem and does not study the qualitative
aspects.
2. Statistics deals with averages.
3. Statistics does not study individuals.
4. Statistical results are only approximately
correct.
5. Statistical results are not always beyond doubt.
6. Statistics is only a mean.