Showing posts with label 10. Business Statistics. Show all posts
Showing posts with label 10. Business Statistics. Show all posts

Monday, 13 October 2025

What is Primary data? Difference between primary and secondary data. Methods of collecting primary data.

 Q. What do you mean by Primary Data? Differentiate between primary data and secondary data. What are the different methods of collecting primary data

Ans. MEANING OF PRIMARY DATA: Data collected by the investigator for his own purpose, for the first time, from beginning to end, is called primary data. It is collected from the source of origin. In the words of Wessel, “Data originally collected in the process of investigation are known as primary data”.

MEANING OF SECONDARY DATA: According to Wessel, “Data collected by other persons are called secondary data”. These data are, therefore, called second-hand data.

DIFFERENTIATE BETWEEN PRIMARY DATA AND SECONDARY DATA: The following are the points of difference between primary and secondary data.

(1) Difference in Originality: Primary data are original because these are collected by the investigator from the source of their origin. On the other hand, secondary data are already in existence and, therefore, are not original. Primary data are used as raw material while secondary data are finished products.

(2) Difference in the Suitability of Objectives: Primary data are always related to a specific objective of the investigator. These data, therefore, do not need any adjustment for the concerned study. On the other hand, secondary data have already been collected for some other purpose. Therefore, this data need to be adjusted to suit the objective of study in hand.

(3) Difference in Cost of Collection: Primary data are costlier in terms of time, money and efforts involved than the secondary data. This is because primary data are collected for the first time from the source of origin. Secondary data are simply collected from the published or unpublished reports. Accordingly, these are much less expensive. 

It may be noted that there are no fundamental differences between primary data and secondary data. Data are data, whether primary or secondary. These are classified as primary or secondary just on the basis of their collection: first-hand or second-hand. Thus, a particular set of data when collected by the investigator for a specific purpose from the source of origin would be primary data. And the same set of data, when used by some other investigator for his own purpose would be known as secondary data. 

METHODS OF COLLECTING PRIMARY DATA:
The primary data may be collected by using any of the following methods:

(1) Direct Personal Investigation: In this method, data are collected personally by the investigator himself. There is a face-to-face contact with the persons from whom the information is to be obtained. Data are collected by asking questions relating to the enquiry to the informants. Suppose, if an investigator wants to collect data about the involvement in politics of the students of Kurukshetra University, Kurukshetra, he would go to the campus and contact each student and obtain the required information.

▶ Suitability: This method is suitable particularly when:
(1) the field of investigation is limited.
(2) a greater degree of originality of the data is required.
(3) information is to be kept secret; and
(4) investigation needs lot of expertise, care and devotion. 

▶ Merits: 
(1) Originality: Data have a high degree of originality according to this method.
(2) Accuracy: Data are fairly accurate when personally collected.
(3) Reliable: Because the information is collected by the investigator himself, reliability of the data is not doubted.
(4) Other information: When in direct contact with the informants, the investigator may obtain any other related information as well.
(5) Uniformity: There is a fair degree of uniformity in the data collected by the investigator himself from the informants. Comparison becomes easy because of uniformity of data.
(6) Flexible: This method is fairly flexible because the investigator can always make necessary adjustments in his set of questions.

▶ Demerits:
(1) Not Proper for Wide Areas: Direct personal investigation becomes very difficult when the area of the study is very wide.
(2) Personal Bias: This method is highly prone to the personal bias of the investigator. As a result, the data may lose their credibility.
(3) Costly: This method is very expensive in terms of the time, money and efforts evolved.
(4) Wrong Conclusions: In this method, area of investigation is generally small. The results are, therefore, less representative. This may lead to wrong conclusions.

(2) Indirect Oral Investigation: In this method, the investigator obtains the information not from those persons for whom the information is needed. Information is collected orally from other persons who are expected to posses the necessary information. These other persons are known as witnesses. Indirect oral Investigation is usually adopted in those cases where information through direct sources is not possible or less reliable. For example, if a case of murder is to be investigated, it would be quite impossible to know the facts by contacting the persons directly who are involved in it. In such case, information is to be obtained from third persons such as friends, neighbours, witnesses, etc. 

▶ Suitability: This method is suitable particularly when:
(1) the field of investigation is large.
(2) it is not possible to have direct contact with the concerned informants.
(3) the concerned informants are not capable of giving information because of their ignorance.
(4) Enquiry committees and commissions appointed by the Government generally adopted this method.

▶ Merits: 
(1) Wider Area: This method can be applied even when the field of investigation is very wide. 
(2) Less costly: This is relatively a less costly method.
(3) Expert opinion: Using this method an investigator can seek opinion of the experts and thereby make his information more reliable.
(4) Free from Bias: This method is relatively free from the personal bias of the investigator.
(5) Simple: This is relatively a simple method of data collection.

▶ Demerits:
(1) Less Accurate: The data collected by this method are relatively less accurate. This is because the information is obtained from persons other than the concerned informants.
(2) Biased: There is possibility of personal bias of the witness giving information.
(3) Wrong Conclusions: This method may lead to doubtful conclusions due to ignorance and carelessness of the witness.

(3) Information from Local Sources or Correspondents: In this method, the investigator appoints local agents or correspondents in different places to collect information. These correspondents collect the information in their own way and send the same to the central office where the data are processed. Newspapers agencies generally adopt this method. This method is generally adopted by various government departments where regular information is to be collected from a wide area. For example, in the construction of wholesale price indices, regular information is obtained from correspondents appointed in different areas.

▶Suitability: This method is suitable particularly when:
(1) accuracy of the data is only modestly needed.
(2) regular and continuous informations are needed.
(3) the area of investigation is large.
(4) the information is to be used by journals, magazines, radio, TV, etc. 

▶ Merits: 
(1) Economical: This method is quite economical in terms of time, money and efforts involved.
(2) Wider Coverage: Investigator can cover wider cover. 
(3) Continuity: The correspondents keep on supplying almost regular information.
(4) Suitable for Special Purpose: This method is particularly advantageous for some special purpose investigations, e.g., price quotations from different grain markets for the construction of Index Number of Agricultural Prices.

▶ Demerits:
(1) Less Originality: In this method, there is less originality. Investigation depends more on estimation rather than actual enumeration.
(2) Lack of Uniformity: There is lack of uniformity of data. This is because data is collected by a number of correspondents.
(3) Personal Bias: This method suffers from personal bias of the correspondents.
(4) Less accurate: The data collected by this method are not very accurate.
(5) Delay in Collection: Generally, there is delay in the collection of information through this method.

(4) Mailed Questionnaire Method: In this method, a list of questions (known as questionnaire) related to the survey is prepared and sent to the informants by post. The questionnaire contains questions and provides space for answers. A covering letter is addressed to the informant explaining the object of survey and making a request to fill up the questionnaire and send it back to within a specified time. It is also assured that the information would be kept secret. The informants write the answers against the questions and return the completed questionnaire to the investigator.

▶ Suitability: This method is most suited when:
(1) the area of study is very wide and
(2) when the informants are educated.

▶ Merits: 
(1) Economical: This method is economical in terms of time, money and efforts involved.
(2) Originality: This method is original and, therefore, fairly reliable. This is because the information is supplied by the concerned persons themselves.
(3) Wider area: This method can cover wider area.

▶ Demerits: 
(1) Lack of interest: Generally, the informants do not take in interest in questionnaires and fail to return the questionnaires. Those who return, often send incomplete answers.
(2) Lack of flexibility: This method lacks flexibility in the sense that when questions are not properly replied, these cannot be changed to obtain the required information.
(3) Limited Use: This method has limited use in that questionnaires are answered only by the educated informants. Thus, this method cannot be used when the informants are uneducated.
(4) Biased: If the informants are biased, the informations will also be biased.
(5) Less Accuracy: The conclusions based on such investigation have only limited accuracy. This is because some questions may be difficult and accurate answers may not be possible.

(5) Schedules Filled through Enumerators: In this method, a questionnaire is prepared as per the purpose of enquiry. The enumerator himself approaches the informants with the questionnaire. The questionnaires which are filled by the enumerators themselves by putting questions are called schedules. Thus, under this method, the enumerator himself fills the schedules after making enquiries from the informants. Enumerators are those persons who help the investigators in collecting the data. The enumerators are given training to fill the schedules and put the questions intelligently in the interest of accuracy of information.

▶ Suitability: This method is mostly used when:
(1) field of investigation is large.
(2) the investigation needs specialised and skilled investigators.
(3) the investigators are well versed in the local language and cultural norms of the informants.

▶ Merits:
(1) Wide Coverage: This method is capable of wider coverage in terms of area involved. Even illiterates will also provide information.
(2) Accuracy: There is a fair degree of accuracy in the results. This is because investigations are done by specialized enumerators.
(3) Personal Contact: Unlike in the case of mailing questionnaires, there is personal contact with the informants in this method. Accordingly accurate and right answers are obtained.
(4) Impartiality: This method is impartial. This is because the enumerators themselves do not need the required information; so they are impartial to the nature of information they obtain.
(5) Complete: Schedules have the merits of completeness, because these are filled in by the enumerators themselves.

▶ Demerits 
(1) Expensive: This is a very expensive method of investigation because of the involvement of trained investigators.
(2) Difficulties regarding Enumerators: Competent enumerators may not be available. Accuracy of the information accordingly suffers.
(3) Time Consuming: Enumerators may need specialised training for particular investigators. The process of investigation thus becomes time consuming.
(4) Not suitable for Private Investigation: Since this method is very expensive, it is generally not suitable for private investigations. This method is generally used by the Government institutions.
(5) Inaccurate Data: If the enumerators are biased, the data will not be accurate.

Friday, 16 May 2025

Index Numbers- meaning, uses & problems

1. What are Index Numbers ? Explain uses of Index No.s and discuss various problems faced in the construction of Index No.s. 

Or 

What are Index Numbers ? Explain various problems faced in the construction of Index No.s .  

Or 

Explain the uses of Index Numbers. What are the difficulties in the construction of Index Numbers ?

Ans. MEANING OF INDEX NO.s: Index Numbers is a statistical technique which helps us to measure (which measure) the relative changes in general price level. These are a specialized type of averages designed to measure the change in a group of related variables over a period of time. These are economic barometer of (economic activities of) the country because if one wants to have an idea as to what is happening in an economy, he should check the important indicators like the index number of industrial production, index number of business activity etc.

USES/UTILITY OF INDEX NO.S:  The main uses of Index No.s are the followings:

i) To Simplify Complexities: An index number makes possible the measurement of such complex changes whose direct measurement is not possible. In other words, index numbers are used to measure the changes in some quantity which we cannot observe directly.

ii) Helpful in the Fixation of salary and Dearness Allowances: By index numbers, government and other employees can properly make wage and salary fixation. They determine the instalment of dearness allowance for employees on the basis of index numbers only.

iii) Helpful in Prediction: Index Numbers give the knowledge as to what changes have occured in the past. On the basis of these changes alone, predictions about the future are made. Thus, index numbers are economic barometers.

iv) Helpful in Comparison: Index Numbers make possible the comparative study of phenomena (fact or event that can be observed). By index numbers, the relative changes occurring in the variables are determined. This simplifies the comparison of data on the basis of time and space.

v) To measure purchasing power of money: By index numbers, the changes taking place in purchasing power of money can also measured.

vi) Useful in Business: Index Numbers measures the changes taking place in the business world and prove very useful in making a comparative study of those changes e.g. sales, change in output and value etc. Thus, index numbers, for a businessman, function like a barometer.

PROBLEMS FACED IN THE CONSTRUCTION OF INDEX NO.S: The number of problems come up while constructing the index numbers. Some of them are as follows:

i) Purpose of Index Number: Index numbers are of many types as they are constructed for different purposes. A single index can not fulfil all the purposes. It is very essential to fix the purpose of index number, because selection of commodities, their prices, fixation of their weights etc., depend on the very purpose of index numbers. There can be many purposes of an index number- measurement of changes in retail prices or measurement of changes in wholesale prices etc.

ii) Selection of Items: Another important problem in the construction of index numbers is the selection of items. The following things should be considered while making a selection of items. (i) Only those items should be selected which represent the taste, habit, custom and needs of the related group of people, (ii) the selected items should be standardized and of classified feature, (iii) their quality too must be considered, (iv) the number of items should be enough and they should be of current quality, and (v) the selected items must be classified into groups and sub-groups.

iii) Selection of Prices: After making the Selection of items, the next arises the problem of selection of prices. Prices can be of both types– retail and wholesale. Whether wholesale or retail prices are to be used, the decision depends upon the purpose of index number.

iv) Selection of Base year: Another important problem in the construction of index numbers is related to the selection of base year. A base year has to be selected for making an index number. The year for which changes are to be determined, is known as base year. Index number of base year is always taken as 100. In selecting a base year, the following things are to be kept in mind.
a) Base year should be normal year and no unusual event like Earthquake, Flood, War etc. should have taken place in that year.
b) Base year should not be very far in past.
c) So far as possible, base year should be close to the current year.
d) Base year should not be too old or too distant.

v) Selection of Weights: The term weight refers to the relative importance of different items in the construction of index numbers. Another important problem in making of index numbers is to assign weights to different commodities or items. In fact, all commodities included in the construction of Index numbers do not have equal importance. Therefore, to have accurate results, commodities are assigned weights according to their importance. There are two ways of assigning weights: (i) Quantity, (ii) Value. Weights decided in the construction of index numbers should be logical, accurate and rational.

vi) Selection of an Average: Averages can be of several types. Theoretically, any average can be used but in practice, arithmetic mean and geometric mean are used. Geometric mean is considered to be best for the construction of index numbers as this is the most suitable for measuring relative changes but due to the difficulties of computation, in place of geometric mean, arithmetic mean is often used in the construction of index numbers.

vii) Selection of an Appropriate Formula: Various formulae can be used in the construction of index numbers but it is very essential to select the most suitable out of them. This selection depends upon the purpose of index number and availability of data. Fisher's formula, which is called as Fisher's Ideal Index, is considered to be the best.    

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