Q.Explain the relationship between statistics and

Statistics both borrows from mathematics and serves economics, so the answer must bring out a two-way relationship in each case.

1. Statistics and Mathematics. Statistics grew out of, and constantly uses, mathematics — arithmetic, algebra and the theory of probability supply the formulae for averages, dispersion, correlation and inference. But the two differ in nature: mathematics deals with exact quantities and certain results, whereas statistics deals with data affected by many causes and reaches conclusions true only on the average. Mathematics is therefore a tool for statistics, not a replacement for it — a statistician uses mathematical formulae but must also judge the quality of data and interpret results, which is not a mathematical task.
2. Statistics and Economics. The relationship is especially close and two-way:

• Economics uses statistics everywhere — national income, price indices and inflation, demand and supply, and the distribution of income and wealth are all measured and analysed statistically.
• Statistics owes tools to economics — index numbers and time-series analysis were developed largely to solve economic problems.
• Their fusion is econometrics, the application of statistical methods to economic theory to measure and test economic relationships. …

Students often describe only a one-way link (e.g. 'economics uses statistics') and miss the reverse direction (statistical tools developed for economics). For mathematics, the key distin …