8 Functions of Statistics (Scope and Importance)

The Functions Performed by Statistics are given as under:

Functions of Statistics:

1. To Present Facts in Definite Form:

We can represent the things in their true form with the help of figures. Without a statistical study, our ideas would be vague and indefinite.

The facts are to be given in a definite form. If the results are given in numbers, then they are more convincing than if the results are expressed on the basis of quality.

The statements like, there is lot of unemployment in India or population is increasing at a faster rate are not in the definite form. The statements should be in definite form like the population in 2004 would be 15% more as compared to 1990.

2. Precision to the Facts:

The statistics are presented in a definite form so they also help in condensing the data into important figures. So statistical methods present meaningful information. In other words statistics helps in simplifying complex data to simple-to make them understandable.

The data may be presented in the form of a graph, diagram or through an average, or coefficients etc. For example, we cannot know the price position from individual prices of all good, but we can know it, if we get the index of general level of prices.

3. Comparisons:

After simplifying the data, it can be correlated as well as compared. The relationship between the two groups is best represented by certain mathematical quantities like average or coefficients etc. Comparison is one of the main functions of statistics as the absolute figures convey a very less meaning.

4. Formulation and Testing of Hypothesis:

These statistical methods help us in formulating and testing the hypothesis or a new theory. With the help of statistical techniques, we can know the effect of imposing tax on the exports of tea on the consumption of tea in other countries. The other example could be to study whether credit squeeze is effective in checking inflation or not.

5. Forecasting:

Statistics is not only concerned with the above functions, but it also predicts the future course of action of the phenomena. We can make future policies on the basis of estimates made with the help of Statistics. We can predict the demand for goods in 2005 if we know the population in 2004 on the basis of growth rate of population in past. Similarly a businessman can exploit the market situation in a successful manner if he knows about the trends in the market. The statistics help in shaping future policies.

6. Policy Making:

With help of statistics we can frame favourable policies. How much food is required to be imported in 2007? It depends on the food-production in 2007 and the demand for food in 2007. Without knowing these factors we cannot estimate the amount of imports. On the basis of forecast the government forms the policies about food grains, housing etc. But if the forecasting is not correct, then the whole set up will be affected.

7. It Enlarges Knowledge:

Whipple rightly remarks that “Statistics enables one to enlarge his horizon”. So when a person goes through various procedures of statistics, it widens his knowledge pattern. It also widens his thinking and reasoning power. It also helps him to reach to a rational conclusion.

8. To Measure Uncertainty:

Future is uncertain, but statistics help the various authorities in all the phenomenon of the world to make correct estimation by taking and analyzing the various data of the part. So the uncertainty could be decreased. As we have to make a forecast we have also to create trend behaviors of the past, for which we use techniques like regression, interpolation and time series analysis.

Scope and Importance of Statistics:

As far as scope and importance of statistics is concerned it is very vast. There is almost no human activity where its application is not needed.

As far as scope is concerned it is studied under following heads:

1. Nature of statistics

2. Subject matter of statistics

3. Relation of statistics with other sciences

4. Limitations of statistics.