Scope and Functions of Statistics

Scope of statistics. The scope of statistics is extremely wide — it is used in almost every field where numerical data is collected and decisions must be made. The main areas relevant to a commerce student are:

• Business and commerce — sales forecasting, market research, quality control, inventory and production planning, and analysis of profit, cost and consumer demand.
• Economics — measuring national income, price levels and inflation (through index numbers), studying demand and supply, and analysing the distribution of income and wealth.
• Government and administration — census of population, planning, budgeting, taxation, and framing economic and social policy.
• Banking, insurance and finance — assessing risk, fixing premiums, and analysing deposits, credit and investment.
• Natural and social sciences — physics, biology, agriculture, medicine, psychology and sociology all rely on statistical methods for experiments and surveys.

Functions of statistics. Whatever the field, statistics performs a set of standard functions:

1. It presents facts in a definite, numerical form. Vague qualitative statements are converted into precise figures — "prices rose sharply" becomes "prices rose by 12%".
2. It simplifies and condenses a mass of data. Hundreds of individual figures are reduced to a few summary measures (averages, dispersion, percentages) that the mind can grasp at once.
3. It facilitates comparison. Averages, ratios, percentages and index numbers make it possible to compare one period, place or group with another.
4. It studies relationships between phenomena. Correlation and regression measure how two variables (say, advertising and sales) move together, helping isolate cause and effect.
5. It helps in forecasting and prediction. Analysis of past data (trends, time series) supports estimating future values — a key input to business planning. …