FUNCTIONS OF STATISTICS

The following are the important functions of the science of Statistics:

1. It presents 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.

1. Definiteness.

Numerical expressions are convincing and, therefore, one of the most important functions of statistics is to present general statements in a precise and definite form. Statements of facts conveyed in exact quantitative terms are always more convincing than vague utterances. Statistics  presents facts in a precise and definite form and thus helps proper comprehension of what is stated. Consider, for example, a statement: “The production of wheat in India in 1995 is expected to be larger than that in 1994.” The reader will not have a clear idea of the situation from the statement. He would surely like to know what is the extent of increase in wheat production the writer has in mind. On the other hand, if we quantify the statement as, “The production of wheat in India is expected to increase from 59.1 million tones in 1993-94 to 62 million tones in 1994-95.” it conveys a definite information. Similarly, statements like ‘There is a lot of unemployment in India’; The population of India convey any worthwhile information as they do not specify the numerical dimensions involved.

2. Condensation.

Not only does statistics present facts in a definite form but it also helps in condensing mass of data into a few significant figures. In a way, statistical methods present a meaningful overall information from the mass of data. Thus it is impossible for one to form a precise idea about the income position of the people of India from a record of individual incomes of the entire population. However, figure of per capita income can be easily remembered by everyone.

3. Comparison.

Unless figures are compared with the others of the same kind they are often devoid of any meaning. For example, the statement that the number of job seekers on the live register of Employment Exchanges was 12.33 million at the end of March 1995 conveys hardly  any meaning unless the figure is compared with the last year figure. The statement would be much more meaningful if we say that the number of job seekers stood at 12.33 million at the end of March 1995 as against 10.81 million a year before, showing an increase of 14.1 percent. By furnishing a suitable device for comparison of data statistics enables a better appreciation of the significance of a series of figures.

4. Formulating and Testing Hypothesis:

Statistical methods are extremely helpful in formulation and testing hypothesis and to develop new theories. For example, hypothesis like whether a particular coin is fair or not, whether chloromycetin is effective in curing typhoid, whether the credit squeeze is effective in checking price increases, whether students have benefited from the extra coaching, etc., can be tested by appropriate statistical tools.

5. Prediction.

Plans and policies of organizations are invariably formulated well in advance of the time of their implementation. A knowledge of future trends is very helpful in framing suitable policies and plans. Statistical methods provide helpful means of forecasting future events.For example, if Cement Corporation of India has to decide how much cement it should produce in 1996, it must know the expected demand for the year. It may use subjective judgement and make a guess. However, a better method would be to analyse the sales data of the past years or arrange a statistical survey of the market to obtain necessary data for estimating the sales volume of the next year.

6. Formulation of Policies.

Statistics provide the basic material for framing suitable policies. For example, it may be necessary to decide how much crude oil India should import in 1997. The decision would depend upon the expected internal production and the likely demand for oil in 1997. In absence of information regarding the estimated domestic output and demand for oil, the decision on imports cannot be made with reasonable accuracy.

Robert W. Burgess has beautifully summed up the functions of Statistics as “The fundamental gospel of statistics is to push back the domain of ignorance, rule of thumb, arbitrary or premature decisions, tradition and dogmatism and to increase the domain in which decisions are made and principles are formulated on the basis of analyzed quantitative facts.”