Functions of statistics. Distrust of statistics.

 Q. Explain the functions of Statistics. Discuss the distrust of Statistics. 

Ans. Statistics are numerical statements of facts in any department of enquiry placed in relation to each other. Main functions of statistics are as follows:

1. Expression of Facts in Numbers: One of the principal function of statistics is to express facts relating to different phenomena in numbers.  Statements are vested with certainty when facts are expressed in numbers. For example, the statement that per capita income of India is increasing is not so precise. But if this statement is expressed in numbers as: India’s per capita income which was ₹245 in 1950-51 rose to ₹9000 in 1995-96, then it becomes easy to understand and interpret with certainty.

2. Simple Presentation: Another function of statistics is to present complex data in a simple form, so that it becomes easy to comprehend. Statistics renders complex data very simple by expressing it in terms of aggregate, average, percentage, graphs and diagrams. For example, data concerning changes in prices of commodities between 1951 and 1995 may be so voluminous and cumbersome that it would be difficult to understand them or to draw any conclusion about them. But when presented in the form of index numbers, these becomes simple to understand.

3. Enlarges Individual Knowledge and Experience: In the words of Bowley, “The principal function of statistics is that it enlarges individual’s knowledge and expertise”. Like other sciences, statistics enlarges an individual’s knowledge, experience and power of reasoning. One can understand clearly and precisely such concepts as national income, population, agricultural production, and the like.

4. It Compares Facts: Another function of statistics is to compare the data relating to facts. Data have no meaning unless these are compared and inter-related. For example, if it is stated that per capita consumption of sugar in India is 8 kg per annum, then some people may conclude that it is very low rate of consumption while others may conclude that it is very high. But when it is compared with the consumption of sugar in other countries, say America where it is 38 kgs and Russia where it is 40 kgs, then one can draw a more meaningful conclusion.

5. It Facilitates Policy Formulation: To facilitate formulation of policy is another function of statistics. Precise nature of each problem can be ascertained from the analysis and interpretation of data. As a result of it, some policy may be formulated. For example, monetary and fiscal policies of country are formulated on the basis of relevant data.

6. It Helps Other Sciences in Testing their Laws: Statistics also helps in testing the laws of other sciences. Many laws of economics, namely, law of demand, law of supply, Keynes’ theory of employment have been verified with the help of statistics. On the contrary, classical theory of employment, quantity theory of money, etc. were not amendable to statistical verification and so were subjected to criticism.

7. It Establishes Relationship between Facts: Statistics also establishes relationship between two or more than two facts. Tools of correlation of statistics tell if two facts have any relation between them or not and what kind of relation it has?

8. It helps in Forecasting: Statistics help in forecasting changes in future with regard to a problem. For example, forecast can be made with regard to changes in future in food production, supply of power, growth of population, etc. as a result of five year plans in India, with the help of statistics. Extrapolation technique of statistics helps in making forecast on the basis of present facts.

9. It Enables Realisation of Magnitude: Statistics enables realisation of magnitude of a problem. For example, from the statement that India’s population has been increasing rapidly, one cannot fully realize the gravity of the situation. But, if it is stated numerically that population of India increases at the rate of 1.30 crore annually which is equal to the entire population of Australia, the magnitude of the population can be realized properly and easily.

10. Presentation of Data in Condensed Form: Primary data are very much complex and haphazard. Such complex data make it impossible to draw any conclusion. Thus, it becomes imperative to present them in a concise form so that conclusions could be drawn. Statistics present complex data into a condensed form.

Distrust of Statistics: Inspite of the usefulness of statistics and the confidence of people in its efficacy, some people have misgivings about it and they distrust it. Those who distrust statistics make the following observations about it:

(1) In the words of Disrali, “There are kinds of lies - lies, demand lies and statistics”.

(2) Statistics is a rainbow of lies.

(3) Statistics are tissues of falsehood.

(4) Statistics can prove anything.

(5) Statistics cannot prove anything.

(6) Statistics are like clay of which you can make god or devil, as you please.

It is evident from the above observations that statistics are nothing but bundle of lies and so are not trustworthy. The main cause of mistrust is that most of the people believe statistics readily. Thus, to take undue advantage of their credulity, some selfish people make misuse of the statistical data. They can present the statistics in such a distorted way as to prove right what is wrong and wrong what is right.

Main causes of the mistrust of statistics are as under: 

(1) Different kinds of statistics are obtained in respect of a given problem.

(2) Statistics can be altered to prove determined conclusions.

(3) Authentic statistics can also be presented in such a manner as to confuse the reader.

(4) When statistics are collected in a partial manner, the results are mostly wrong. Consequently, people lose faith in them.

If statistics are presented in a wrongful manner, the fault does not lie with the statistics. The fault lies with those people who collect wrong statistics or those who draw wrong conclusions. Statistics, as such, do not prove anything. If the statistician misuses the data, then blame lies on the statistician and not on the data. 

In making use of statistics one should be cautious and vigilant. In the words of King, “The science of statistics is the most useful servant, but only of great value to those who understand its proper use.”

In short, it is the duty of students of economics to make use of the knowledge of statistics to seek the truth. 

Remedies to Remove Distrust: Following measures may be taken to remove distrust of statistics:

(i) Consideration of Statistical Limitations: While making use of statistics, limitations of statistics must be taken care of, for instance, statistics should be homogeneous.

(ii) No Bias: Researcher should be impartial. He should make use only of proper data and allow conclusions without any bias or prejudice.

(iii) Application by Experts: Statistics should be used only by experts. If they use it carefully and scientifically, the possibilities of errors will be little.