Comprehensive Introduction to Statistical Methods for Economic Analysis

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[Music] hello Learners welcome to the course statistical methods for economics module

one in this session we will discuss the concepts related to understanding how knowledge of Statistics can help in

describing consumption production and distribution learn about some uses of Statistics in the understanding of

economic activities understand the meaning and purpose of data collection distinguish

between primary and secondary sources know the mode of collection of data distinguish between sensors and Sample

surveys let us begin our learning with a brief introduction to

statistics the term statistics appears to be derived from the Latin word status or the Italian word statista or the

German word statistic or French word statistic all these words means political State because in early years

statistics meant collection of facts about the state or the fiscal policies statistics was known as the science of

Kings or science of statecraft many researchers and scientists have defined statistics in

different ways we shall discuss the singular and plural sense of them in singular sense statistics is the science

of collection of data presentation analysis and interpretation statistics as numerical

statement of facts is the plural sense of defining statistics statistics may be defined as

the aggregate of facts affected to marked extent by multiplicity of causes numerically expressed enumerated or

estimated according to a reasonable standard of accuracy collected in a systematic manner for a predetermined

purpose and placed in relation to each other this definition is given by Professor Horus

secretist now let us look into the characteristics of Statistics simple or isolated items

cannot be termed as statistics unless they are a part of aggregate of facts relating to any field of

inquiry numerical figures should be affected by multiplicity of factors however statistical techniques have been

devised to study the The Joint effect of a number of factors on a single item or the isolated item of a single Factor on

the given item provided the effect of each of the factors can be measured quantitatively only numerical data

constitute statistics the numerical data pertaining to any field of inquiry can be obtained

by completely enumerating the underlying population in such a case data will be exact and accurate however if complete

enumeration is not possible then the data are estimated by using the powerful technique of sampling and estimation

Theory the data must be collected in a very systematic manner thus for any social economic survey a proper schedule

depending on the object of inquiry should be prepared and trained Personnel should be used to collect the data by

interviewing the persons it is of atmost importance to Define in clear and concrete terms the

objectives or the purpose of the inquiry and the data should be collected keeping in view these

objectives from the Practical point of view for statistical analysis the data should be comparable

every discipline has some limitations statistics for that matter is not an

exceptional we now look onto some limitations of Statistics statistics are numerical

statements in any Department of inquiry placed in relation to each other since statistics is a science dealing with a

set of numerical data it can be applied to the study of only that phenomenon which can be measured

quantitatively statistics methods do not give any recognition to an object or a person or an event in

isolation this is a serious limitation of Statistics hence statistics is confined only to those problems where

group statistics are to be studied since the statistical laws are probabilistic in nature nature

inferences based on them are only approximate and not exact like the inferences based on mathematical

laws the most significant limitation of Statistics is that it must be used by expert statistical methods are the most

dangerous tools in the hands of the inexpert as they can misuse the information now let us know about how

statistics is connected with various disciplines statistics in planning the problems like over production under

production unemployment cost of living literacy Etc which are the major characteristics of developing countries

can be understood with the help of statistical data National sample survey office a central government office

collects statistical data for use in planning in India economic planning is done to

achieve predetermined objectives and goals they have to be expressed in quantitative

terms statistics in Commerce statistics plays a very important role in the development of Commerce the statistical

data on some macro variables like income investment profits Etc are used for the compilation of national income economic

barometer are developed through statistical methods and the concepts are used all over the

world statistics in hospitals hospitals use the techniques to manage patient appointment schedule procedures rotation

of Staff existing to maximize the profit and optimize the time statistics in production statistics

iCal analysis helps in identifying how consumer preferences change with the seasons and this AIDS in planning

production based on those preferences by taking into account changing preferences and demand manufacturing companies can

exhaust all opportunities throughout the year statistics in economics statistics play a major role in economics

statistics helps in the study of Market structure and understand the different economic problems after a better

understanding of the economic problems statistics also help in solving those issues by formulating appropriate

economic policies at this stage you are probably ready to know more about statistics and

what subject statistics is all about isn't it then we shall start by understanding the important Concepts

used in statistics statistics is broadly classified as descriptive and

inferential statistics descriptive statistics refers to data analysis that aids in the

meaningful description presentation or summarization of data whereas inferential statistics are approaches

and methods that allow us to make generalization about populations from which samples

were collected data is an important aspect of Statistics data is classified as

qualitative and quantitative where quantitative data is further classified as discrete and

continuous the values or information that we have gathered are referred to as data a qualitative variable is a

characteristic of people or objects that cannot be naturally expressed in a numerical value certain examples of a

qualitative variables are religion pain marial status a quantitative variable is a

feature of persons or things that can be numerically expressed some examples of quantitative variables are height

weight income a discrete variable is a random variable that can take on a finite

number of values or countable infinite number of values the variables like number of people working in a family

number of students in a class can be treated as a discrete data a continuous variable is a random

variable that can take on a range of Val values on a continum the variables such as age of an employee calorie intake can

be considered as a continuous variable scales of measurement the variables are

categorized using the measurement scales the most popular scales used in the statistical analysis are nominal ordinal

interval and ratio the understanding of these SC scales of measurements becomes easier

through the properties of the measurement scales the first property is identity

which means that each measurement scale value has an unique identity and distinct

meaning the second property is magnitude the magnitude refers to the order in which the values of the measurement

scale are related to one another that is some values are l larger and some values are

smaller the third property is equal width under this property the scale units are all the same length along the

scale this means that the difference between 3 and 4 is equal to the difference between 20 and 21 the fourth

and the last property is absolute zero which actually indicates that there is no values Bel below the scale true 0

point now we shall look into the classification of the levels of measurement based on the properties

discussed the nominal scale of measurement is the most fundamental scale only the identity property of

measurement is Satisfied by the nominal scale of measurement under this scale the

variables are given number values that reflect a descriptive category but they have no inherent numerical

value in terms of magnitude some examples for the nominal scale of measurement are gender religion

blood group The ordered nominal scale of measurement is the ordinal scale it is

the second level of measurement the ordinal scale of measurement has the property of both identity and

magnitude every value on the ordinal scale has a distinct meaning and is related to every other value on the

scale in an ordinal manner the grades of students in a class like A+ a B+ B Etc can be considered as

an ordinal scale the interval scale of measurement is the third level of measurement the

interval scale has the properties of identity magnitude and equal width we can use an interval scale to determine

not only whether certain values are larger or smaller but also how much larger or smaller they are temperature

is an example for the interval scale of measurement temperature is measured using the Fahrenheit scale the

difference between 30 and 40° fahit is equivalent to the difference between 50 and 60° fah since the scale is made up

of identical temperature units if the temperature is 50° fah on Monday and 60° Fahrenheit on Tuesday we

will know that Tuesday was not simply hotter but it was 10° hotter than Monday the highest level of measuring is the

ratio scale of measurement under the ratio scale all the four properties identity magnitude equal width and the

absolute zero properties are satisfied example the weight of an object each weight scale has unique

meaning weights can be ordered units along the weight scale are equal to one another and there is an absolute

zero collection of data population a population is a collection of all

things of interest that share one or more common traits the population can further be classified as infinite and

finite population an infinite population is defined as a population with an infinite number of

elements the number of trees in a forest the number of insects born can be considered as example examples of

infinite population a finite population is defined as a population with a finite

number of elements the number of students in a college the number of ERS in a ward Etc are examples of finite

population statistical data can be obtained from two sources the researcher May collect the

data by conducting an in quiry such data are called primary data as they are based on firsthand

information if the data have been collected and processed by some other agency they are called secondary data

the secondary data can be obtained from published sources such as Government reports documents newspapers books

written by Economist or from any other source now let us try to understand about

sensors and Sample surveys a survey which includes every element of the population is known as

sensus or the method of complete enumeration a survey carried on the representative part of the population

selected for the purpose of the study is called as a sample survey let us see the comparison between

the sensus method and the sample survey method under the sensus method each and every unit of the population are

enumerated whereas in the sample survey method a few representative units of the population is done the non-sampling

errors are likely to be more in sensus enumeration and the sampling errors would be more in Sample

survey the sensus and enumeration method is not scientific whereas the sample survey method is more scientific the

sensus enumeration method is impossible if the population is infinite however the sample survey

method is more suitable if the population is infinite the sensus method requires more

money time and labor but sample survey method is more economical if the destructive units are

involved in the study then census method cannot be used whereas sample survey is the only method which can be used the

common method of the data collection is through surveys a survey is a method of gathering information from the

individuals the purpose of the survey is to collect data the most common type of instrument strent used in surveys is the

questioner or an interview schedule the questioner is either self administered by the respondent or

administered by the researcher or trained investigator while preparing the

questioner the following points should be borne in mind the questioner should not be too long the number of questions

should be as minimum as possible the questioner should be easy to understand that is avoid using ambiguous

and difficult words the questions should be arranged in an order such that the person answering should feel

comfortable the questioner should start from the general questions and proceed to more specific

ones the questions should be precise and clear the questions should not be ambiguous

they should enable the respondents to answer quickly correctly and clearly the questions should not use

double negatives the questions starting with wouldn't you or don't you should be avoided as they may lead to biased

responses the question should not be a leading question which gives a clue about how the respondent should

answer the question should not indicate alternatives to the answer the questionnaire May consist of

closed ended or open-ended questions in the closed ended type of questioner the options are provided and the respondents

are directed to select the responses from the options provided whereas the open-ended question allow for more

individualized responses but they are difficult to interpret and hard to score since there

are a lot of variations in the responses once the questioner is ready it is advisable to try the questioner

with a small group of people which is known as pilot survey or pre- testing of the questioner the pilot survey helps in

providing a preliminary idea about the survey it helps in pre- testing of the question year so as to know the

shortcomings and drawbacks of the questions pilot survey also helps in assessing the suitability of questions

Clarity of instructions performance of enumerators and the cost and time involved in the actual

survey the data can be collected in different methods we shall discuss about some common modes of data

collection personal interview this method is used when the researcher has access to all the

members the researcher conducts face-to-face interviews with the respondents some advantages of the

personal interview method are true and reliable data can be collected in this method the degree of

accuracy can be high uniformity and homogeneity can be maintained some disadvantages of this

method are when the area is large this method is not suitable this method is expensive and

time consuming presence of the researcher May inhibit respondents from saying what

they really think indirect oral interview this method is applicable if

the informant is not ready to give the information in this method the investigator approaches the third

parties who are in touch with the informant some merits of indirect oral interview are this method is simple and

convenient this method is free from bias and Prejudice of the respondent some of the demerits of this

method are interview with an improper person will spoil the result witness May Supply biased information according to

their interests information through agencies under this method local agents

or correspondents will be appointed they collect the information and transmit it to the

investigator agents who collects the information from the informants are generally called

correspondents the advantages of the data collected by the method of information through a gencies are this

method is more economical it is useful where information is needed regularly some of the disadvantages in

this method are the information may be biased it is difficult to maintain the degree of accuracy and

uniformity ma questionnaire when the data in a survey are collected by mail the questionnaire is sent to each

individual by mail with a request to complete and return it by a given date the merits of the mailed question year

are this is most economical method it allows the researcher to have access to people in remote areas also it does not

allow influencing of the respondents by the interviewer it also permits the respondents to take sufficient time to

give thoughtful answers to the questions some of the demerits of the maed questioner method are this method cannot

be used if the informants are illiterates there is less opportunity to provide assistant in clarifying

instructions so there is a possibility of misunderstanding the questions in this method many informants

will not respond in the case of non response followup work is essential telephonic interviews in a telephone

interview the investigator asks question over the telephone however this method also has

certain advantages and disadvantages the advantages of this method is telephone interviews are that

they are cheaper than personal interviews and can be conducted in shorter time they allow the researcher

to assist the respondent by clarifying the questions the accessibility of the people over telephone may be an

disadvantage of this method schedules sent through enumerators schedules is a list of

questions where the facts will be supplied by informants and recorded by enumerator the merits under this method

are it is very useful where the informants are illiterates in this method the rate of

non response is less however the demerits in this method include that the training of enumerators is

essential this method is time consuming personal bias of the enumerators may lead to failure of

inquiry let us summarize the concepts discussed in the session we discussed about how the subject statistics have

been developed in its w application in different fields with relevant examples before applying any tools of

Statistics as a precautionary measure we should check with the characteristics and limitations of

Statistics the Learners are now familiar with the important terms associated with Statistics the scales of measurement

such as nominal ordinal interval and ratio scales are discussed in detail also how the sources of data the

importance and difference between sensus and Sample survey is noted the tool for data collection and

the guidelines for preparing the questioner is discussed the various methods of data collection along with

its merits and demerits are discussed thank you [Music]

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