Statistics For Economics // Econometrics (Concepts In Brief) - Self_Project
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SIMPLY Statistics: refers to averages, analysis of data, study of principles and applied methods, and interpretation of enquired data.
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Key Points
- Statistics is very important to analyse the data clearly. It helps to plan on your own based on the collected data.
- Modern economics has included the study of statistics to study the information and facts in more quantitative and scientific manner (systematic procedure). That is called as the data.
- Prof. Ronald A. Fisher is considered as the father of statistics because of his contribution towards development of theories and experiments in statistics. that led to involvement of statistics in various subjects like psychology, biology, marketing/advertisements, sociology etc.
- Statistics is the science as well as an art.
- when we study the data, we may explain all its causes and factors theoretically. but, when we understand and measure the data clearly, it's very helpful to plan policies to solve various economic problems such as unemployment, poverty etc.
- Qualitative information is collected and arranged systematically in economics to study about a particular object and its relationship with other ones. it is also used to describe its degrees or levels such as worst/good/better or skilled/unskilled/... healthy/excellent etc.
- quantitative information describes about an object numerically as level of income, prices, cost of production, level of consumption, savings, investments etc...
- Statistics enables an economist to present data more clearly and it is valid forever rather than theoretical statements.
- Statistics also enables to explain the huge / mass data into smaller quantitative measures such as mean, median, mode etc. (averages)
- It is used to find the relation between different variables / factors such as prices, demand, supply etc. we can understand relation more clearly.
- Statistics helps the economists and other analyzers to valuate the statements given by the researchers whether true or falls.
- It is also used in predicting future based on current data.
- In India the statistics is already in use before some thousands of years ago in the books of Shukra-Niti and Manusmriti.
- There is a tremendous growth in statistics due to an increase in demand for statistics and low cost of implementation and maintaining data.
Econometrics
Statistics vs econometrics
Why to study statistics in economics
Without statistics many questions will not have answer in economics like:
- Living standards of the people
- rate of economic growth and development
- distribution of national income
- value of per capita income and
- ability to pay taxes. etc.
Meaning and definition of statistics
- Singular: Singular means collection, classification and presentation of the data. It is systematic and scientific in nature.
- plural: It refers to all the statistics as a single data. (usage of the data). In the plural sense, it refers to the numerical facts and figures systematically collected for some special purpose.
Definitions
- In Plural Sense,
- In Singular Sense.
Following definitions are in plural sense.
”Statistics are measurements, enumeration or estimater of natural orsocial phenomena systematically arranged so as to exhibit their interrelations.”
* According to A. L. Bowley
Statistics are numerical statement of facts in any department of
enquiry placed in relation to each other.
Following definitions are in singular sense.
According to Croxton and Cowden,
Statistics may be defined as the collection, presentation, analysis
and interpretation of numerical data.
According to A. L. Bowley,
Statistics
is the science of measurement of social organism, regarded as a whole in all its manifestations.
According to Seligman,
Statistics is the science which deals with the methods of collecting, classifying,
presenting, comparing and interpreting of numerical data collected to throw some light on any sphere of
enquiry.
Importance or (Significance( of statistics
Statistics enables a person to interpret the data by using various methods. Conducting of statistics paper in examination of different courses like Charted accountant, cost accountants, economics, natural sciences, psychology, etc has become mandatory because of its importance and applicability. we can study the flow of income and the level of savings and consumption, level of tax payment in a country. It is also important in business management, commerce/marketing, planning, research (Public opinions/surveys) etc.
Importance of statistics in Economics is as follows:
- Quantitative expression of economic problems: it simply refers to the way of expressing the data. in economics some problems cannot be expressed clearly in theoretical statements but, they're expressed more by quantitative approach. An economist may better understand the problem of poverty by comparing the ratios of different years numerically (quantitative) rather than qualitative data.
- Comparisons: Quantitative data is not only useful to better understanding but also it is very useful to compare the progress of an economy. Inter-sectoral comparison refers to the comparing between different sectors. Inter-temporal comparison refers to the comparing the progress in different periods/times and planning years.
- Causes and effect relationship: statistics is useful to understand the causes of a particular economic problem and along with its effects to the economy. finally, it is very useful to understand the problem better to implement right policies.
- Economic equilibrium: The term equilibrium refers to the state of balance or stability or state of changelessness. statistics provides the information about the behaviour of both the producers and the consumers. it specifies the combination of inputs, amount of output, consumer choices etc. it helps producers to take better decisions and economists to work for market equilibrium.
- Economic theories: By using different methods in statistics, Economists can develop different theories and models to explain about a particular factor in relation to many variables. for example, changes in prices of basic mobiles by the introduction of smart phones and its increasing demand. Hence, it is very useful to draw many conclusions as well as to develop new theories /economic models.
- Forecasting: Forecasting refers to the historical data as inputs that are used to predict the future trends and directions. It is a technique to expect future causes. It enables the economists to understand the changes in different factors which effects other factors and finally that leads to instability. The statistical data provides required information to well predict the future cause and enables economists and analysts to take suitable measures to overcome the problem.
- Policy making: Statistics is very very important to implement or modify/change the existing policies. for example, if government wants to introduce a policy regarding to decrease unemployment rate, it requires the data of number of unemployed students, their skills and abilities, age, personal details etc. It is even required to alter/change the existing policies also.
- Important to state: for state administration purpose the state requires some accurate data or information. It may be about national income, budget/finance, transportation or markets or population. Hence it plays a key role in state administration.
- Important to research: many universities and organizations conduct research to understand public interests and latest data in many fields of subjects. Research is very important to get new ideas and to take better decisions. the methods in statistics for collecting data helps the individuals and groups to collect data in various methods by allocating required time and resources.
- important to manage business and its decision process
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limitations of statistics (Restrictions / barriers):
- Deals with only averages: Statistics doesn't provide the individual details of figures. according to Prof. A. L. Bowley, "Statistics is a science of average". For example, the average performance of II Year students in economics examination is 75%, then the students who studies better are equal to those who studies rarely. so we can say that averages are just values to analyse and predict only.
- Absence of uniformity: It means the data obtained from statistics is not same i.e. it is always heterogeneous. the data which is not similar has no value for the purpose of collecting data. Hence, sometimes the data which is not similar is considered as invalid.
- Statistics require only homogeneous data.
- Statistics can only be used by the experts.
- Does not study individuals: Generally statistics deals with averages of the data. so, it does not deal with the values of individual figures even they are very important. For example, Economics marks of X student (Individual) is not subject matter of statistics but, average marks of some students are valid in statistics. hence it is suitable for only averages than individual facts.
- Higher possibility to misuse: Statistics provides large amount of data and its computation. It requires a well skilled person who has good knowledge and genuine, honest and uncorrupted person to deal with statistics. otherwise the person may draw wrong conclusions in his favour and may use falls statistics. Hence it is also one of the limitation of statistics. "In the words of W. I. King, “One of the shortcomings of statistics is that they do not, bear on their face the label of their quality.”
- Statistics is not applicable to qualitative data: Qualitative data refers to that data which is in the form of descriptive text. It is also collected using various methods like interviews and questionnaires. Statistics only deals with quantitative data (Numerical ... Numbers) but not with qualitative data. so, it is not useful to measure degrees of qualitative attributes like good, bad, satisfied, healthy, etc.
- Ignorance in terms of qualitative data: The data which cannot be expressed in terms of quantitative I.E. numbers/numerical is not studied as part of statistics. It is possible when qualitative data is converted into quantitative data. Now a days research is going on about measuring qualitative response into quantitative data. The best example is that, Psychology uses various methods to record human reactions in terms of quantitative data by using various standardize devices. Human reactions are qualitative in nature.
- cannot make clear conclusions: Statistics provides large amount of data. but when the data of an occurrence or a phenomenon is available, it cannot provide the causes or other qualitative data. hence, our conclusion which is drawn from the statistical data is not clear and accurate because, it ignores other side of qualitative data which contain some information about the phenomenon. so, qualitative data is also very important.
- Availability of many methods to solve problem: there are many methods to solve the same problem in statistics. finally, using different methods to get same result leads to variations in the results. for example, there are mainly 3 methods to perform deviation.
Stages or (Characteristics) in statistics
- Collection: We all know that collection is the first step in collecting or enquiring about the data. data should be collected clearly and carefully because, if the data is not proper, then the conclusions are also falls one. that is why collection is the backbone of statistical data or enquiry. If the data is collected for the first time or (Primary data), it is a challenging task to the investigator or the researcher. So, proper collection of data is very very important.
- Organisation: after collection organisation is the next step in statistics. generally if the data is collected from secondary sources or published sources, then it is in proper organised form. but in case if the data is collected directly from the research; it has to be organised properly. the main step in organising data is editing i.e. correcting the errors and wrongly counted calculations. after editing, the final step is Tabulation (It means arrangement of data in rows and columns clearly). so organisation of the data involves mainly: editing, classification and tabulation.
- Presentation: presentation of the data is another important step in statistics. data should be presented properly to provide clarity on the figures. proper presentation of the data enables the analyst to understand and analyse the data clearly.
- Analysis (Study / evaluation): after completing the process of collection, organising, tabulation and presentation of the data; The next step is analysing the data. analysing means drawing a clear conclusion and defining. with the available data, the researcher uses many methods to understand and analyse the data (averages). there are mainly Scientific, Numerical and empirical analysis.
- Interpretation(explanation): It is the final step in the statistics. It refers to commenting or drawing conclusions on the analysed data. Interpretation is not a simple task. it requires a specialised, skilful, experienced professional. If the data is not properly interpreted or concluded, the whole process of collecting and analysing data becomes useless.
Statistical survey
Statistical units
Statistical data or (Data)
Ungrouped data
Grouped data
Frequency distribution
Diagram
Graphical presentation
Types of diagrams
One-dimensional diagrams
Two dimensional diagram or (2D)
Three-dimensional diagrams (3D)
The main difference between two-dimensional diagram and 3-dimensional diagram is
Pictograms
Cartograms
Sources of data or (Types of data)
- Primary data: data collected by an investigator or researcher for a particular purpose. the investigator may be a student, teacher or other person but, has a clear purpose for collecting data.
- Secondary data: refers to the data which is already collected by a person for a purpose but used by the researcher for another purpose. It is already published data.
Other classification of the data
- Internal data: internal data means data from within the area or a particular business.
- External data: external data means the data collected from outside sources. It may be collected from primary or secondary data.
Primary data (Original)
For example, In My college I.E. BJR GDC collection of student details such as their course, Year, combination, personal details etc are collected from each student for college purpose. It's best example of primary data. Our college used questionnaire method during lockdown (Covid19) period to collect data. they used google forms to record responses by the students.. Here there is a need to collect data because it is not available with our college.
Some advantages are as follows
- researcher or investigator has clear purpose of collecting the data.
- High rate of accuracy. it is very quality data which is obtained directly from the population.
- he can get additional data if he wants during analysis.
- They are reliable.
- they are original.
- this data is latest and fresh I.e. not outdated.
Some disadvantages or demerits as follows
- Its time consuming or time taking.
- Skill: requires a skilful person.
- Funds: Not easy to get funds for investigation sometimes.
- the data assumed as unnecessary or useless is not considered. it's ignored.
- involves large number of investigators or labours.
- chance of personal bias and prejudices.
- if the participant is not active, reduces the quality of the data.
Secondary data (Existing data)
According to M. M. Blair,
For example, Let us understand this concept from Covid19 data. During Covid19 pandemic, many videos and articles (Data) is published by the media. It is called as secondary data because, media did not collect the data and analysed. but In reality, Health professionals interacted with Coronavirus patients and collected the data. that is primary data. but here media worked on this primary data for its purpose of publishing. and we are just analysing the edited version of the data and truly we have to believe because we always don't have access to primary data. and still we are not truly aware about actual reality.
Merits of secondary data
- It saves resources and efforts.
- It consumes less time.
- less expensive.
- accessibility in internet: there is easy access in internet if we want to get any data instead of having membership in libraries, institutions etc.
- easy to eliminate errors by the investigator.
demerits of secondary data
- no clarity regarding the quality of the data.
- required data may not be available.
- It may be outdated. (Hence it is not useful to you).
- quantity of the data is not appropriate to its purpose. secondary data provides mass information but it may be not related to the purpose of collecting. Generally primary data is collected for a particular aim or purpose. but collected existing data may not satisfy the aim or purpose of collecting the data.
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Sources of secondary data
- Published sources: refers to the data which is published by national and international agencies. It's secondary.
- Unpublished sources: refers to the data which is collected but not published. like government offices records, account maintenance books, CBI records, etc. this data is also secondary data but not published.
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Classification of the data
Why classification is important?
- compare the data
- analyse the data
- he can avoid irrelevant or unrelated data.
- Drawing logical conclusions is more easy.
- classification is very useful for tabulation.
- in business and organisations, it specifies which data to be kept confidential.
Types of Classification of data
- Qualitative classification: here, data is classified based on the qualitative characteristics or attributes. (in the form of text) like employed, student, profession etc. it is also classified into 2 kinds of classification They are: 1. two-fold (based on presence and absence of attribute eg: married/unmarried, vaccinated / not vaccinated). 2. Manifold classification (classification based on more than 1 attribute. here data is further classified into sub classes and groups).
- Quantitative classification: which can be measured in terms of numbers. data is classified based on the measurement of variables. for example, classification of students in terms of marks obtained.
- geographical classification: here data is classified based on the place or a particular location. for example, total students received scholarships in Telangana state is xxxxx. in Hyderabad number of students received scholarship amount are xxxx.
- Chronological Classification: here data is arranged based on the time. it is also known as time series.
Tabulation of the data
*Senses and sampling
Senses method or (Senses investigation)
Merits of senses method
- it provides huge amount of key data like literacy rate, birth rate, death rate, Infant mortality rate, etc.
- data is more accurate
- Each and every item is considered to collect data
- reliable
- Collected data can be used for other purpose also.
some demerits
- very expensive and time consuming
- cannot provide urgent information if required immediately.
- requires more labours
- Chance of errors in collection of data.
Finally: if the survey includes all the population to collect the data, it is known as senses method.
Sample survey method
For example, If a researcher wants to collect data from the students about Reasons for distraction, knowledge of teachers, about the college, active students, lack of participation by girls/boys in the class etc... he will select few students in the class as a sample and follows a particular technique and finally he collects the data. Hence, information about whole class and the college can be studied.
Some merits
- Takes less time, money and labour
- easy to analyse errors
- data acquired is more accurate and reliable.
- Easy to draw conclusions about whole population.
Some disadvantages
- Chances of bias.
- Difficulty in selecting a good representative sample.
- Unscientific: sample population may not be useful for the researcher and he may not continue systematic process and it becomes unscientific.
Finally: Sample survey means survey of few population or sub set of population rather than whole population. collecting data from selected few people instead of whole population.
Sample, Sampling And Population
Population
- Population is also known as universe.
- In statistics, all the items which fall under the survey or enquiry are known as population.
- It is the set of all possible observations.
Concepts
- Finite population: If the units of the population are measurable, they're called as finite population. for example, number of literates in India, number of government employees in Telangana, etc.
- Infinite population: If the units of the population cannot be measurable, they're known as Infinite population. for example, Number of stars in the sky, number of bacteria cells/organisms, etc.
- Population size: total number of population is considered as the size of population.
There are 3 types of sampling methods for selecting participants.
- Probability Sampling: having equal chance of a sample for being selected.
- Non-probability Sampling: selection based on subjective judgments of a researcher rather than random selection.
- Mixed sampling: combination of random and non-random sampling methods to select a sample.
Probability sampling (Random sampling)
A small example to make you clear!
Types of probability sampling
Simple random sampling (SRS)
Stratified sampling
Cluster sampling
Remember
- classification: its based on similarities features like age, gender etc. but in cluster sampling, there is no classification based on similarities.
- sample formation: population is selected randomly from each group. but in cluster sampling: whole group is selected randomly.
Systematic sampling
Non-Probability sampling or (Non-Random sampling)
Example
Its types
Convenience sampling
Consecutive sampling
Quota sampling (reservation)
Judgmental or Purposive sampling
Snowball sampling
The end
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- Concept is important. other information is not at all important. but for knowledge purpose, concept should be linked with information. It should be used in daily life.
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