The Statistical Method

The method of averaging the behavior of a large number of individuals is called a statistical method. When we talk of the statistical average, is not necessary to know the behavior any one individual. This is illustrated below with the help of a few examples:

(i)    The Life Insurance Company calculates the premium for people different ages on the basis of the statistical average of the life expectancy of a large number of individuals. It, however, cannot foretell the life of any one individual.

(ii)    The price index is calculated on the basis of the statistical average of rise in prices of a large number of essential commodities.

(iii)    The death rate and the birth rate of any country is again statistical average of a large number of individuals without going into the exact details of the persons born or died in different places of a country.

A simple scientific example of statistical average is that of the pressure exerted on the walls of a vessel containing a gas at a particular temperature. The different molecules are moving with different velocities and thus hit the walls of the vessel with difference force but still the gas on the whole possesses a particular pressure. Similarly, the kinetic energy of a gas at a particular temperature is a statistical average of the kinetic energies of the individual molecules.

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