Chapter 1.

Concept of Economics and significance of statistics in

economics.

Economics:- Economics is that branch of knowledge in which those activities of

human beings are studied which they Undertake to acquire scarce resources or
wealth to satisfy their unlimited wants.

Economics is a science of human behaviour concerned with the allocation of scarce

resources in such a manner that consumers can maximise their satisfaction, producers can
maximise their profits and the society can maximise its social welfare.

Scarcity:- Scarcity means a situation when availability of a commodity or service requires

some sacrifice.
Scarcity means shortage of resources or wealth in relation to human wants.

Due to the following features of resources and human wants, the problem of choice
arises.
Features of resources
1. Resources are scarce and limited.
2. Resources have alternative uses.
Features of human wants
1. Human wants are unlimited.
2. Intensity or urgency of human wants are different.

Micro economics:- Microeconomics refers to the study of economic problems or economic

activities of an individual consumer or an individual household or an individual firm.
Micro economics is also known as the ‘theory of price’

Macroeconomics:- Macroeconomics refers to the study of economic problems or economic

activities relating to the economy as a whole.
Macroeconomics is also known as ‘theory of employment’

Economic activities:- Economic activities refers to all human activities which are related to
the use of scarce resources for the satisfaction of human wants.

COMPONENTS OF ECONOMIC ACTIVITIES

1. CONSUMPTION, 2. PRODUCTION,
3. DISTRIBUTION

1. CONSUMPTION:- Consumption means use of utility value of goods and services by

consumers for direct satisfaction of their wants.
Consumers have limited resources but their wants are unlimited. So they have to allocate
their resources in such a manner that they can maximise their satisfaction or they can fulfil
their maximum wants.
Study of consumption is also called study of consumer behaviour.
2. PRODUCTION:- Production is the process of converting raw materials into useful things.
Production is a process of increasing the utility value of things.

A producer is one who produces and/ or sells goods and services for the generation of
income.

Producers have limited resources which have alternative uses. So producers have to
allocate their resources in such a manner that they can produce maximum goods and
services at minimum cost and maximise their profits.

The study of production is also called the study of producers' behaviour.

3. DISTRIBUTION :- Distribution refers to distribution of income among the owners of factors

of production such as, rent to the landlord, wages to the labourers, interest to the capital
providers, profits to the entrepreneurs etc.

Distribution of income refers to the distribution of GDP (Gross domestic Product) among the
owners of the factors of production (land, labour, capital and entrepreneurship).

Economic principles used for distribution of income is called distribution theory.

Distribution of income also considers social issues like poverty and unemployment, growth
with social justice etc.

Saving:- The part of income which is not consumed is called saving. It is an act of
abstinence from consumption.
Investment:- Investment is expenditure by the producers on the purchase of such assets
which help to generate income.

STATISTICS:- Statistics is the study of numbers relating to selected facts in a systematic

form.
Statistics deals with the collection, organisation, presentation, analysis and interpretation of
numerical data.
“All statistics are data but all data are not statistics”
Data can only be called statistics if it contains following features:-
1. Data should be in the form of aggregates.
2. Data should be related and comparable to each other.
3. Data should be systematically collected.

Statistics can be defined in the following two senses:-

1. Statistics in the plural sense
2. Statistics in the singular sense

1. STATISTICS IN THE PLURAL SENSE:- In the plural sense statistics refers to information
in terms of numbers or numerical data such as population statistics employment statistics
public expenditure statistics etc.
Statistics means numerical facts in the form of data.
Features or characteristics of statistics in the plural sense:-
1. Aggregate of facts can be termed as statistics. A single number cannot be called
statistics.
2. Statistics are expressed in terms of numbers.
3. Statistics are affected by many factors.
4. There should be reasonable accuracy while collecting statistical data.
5. Statistical data should be mutually related and comparable to each other.
6. Statistics are collected with some predetermined objective.
7. Statistics may be collected by enumeration or are estimated.
8. Statistics should be collected in a systematic manner.

2. STATISTICS IN SINGULAR SENSE:- In the singular sense statistics means science of

statistics or statistical methods.
Statistics refers to techniques or methods relating to collection, classification, presentation,
analysis and interpretation of numerical or quantitative data.

In the singular sense study of statistics include following 5 stages

1. COLLECTION OF DATA :- Collection of data refers to the collection of numerical
information relating to a particular subject for statistical study.
2. ORGANISATION OF DATA:- Organisation of data refers to the arrangement of numerical
information in such a form that comparison of the mass of similar data may be facilitated and
further analysis may be possible.
3. PRESENTATION OF DATA:- Presentation of data refers to exhibition of the data in such a
clear and attractive manner that these are easily understood and analysed.
4. ANALYSIS OF DATA:- Analysis of data refers to the study of data in terms of averages,
percentages and correlation.
5. INTERPRETATION OF DATA:- interpretation of data refers to interpreting the data to find
certain conclusions.

Statistical tools:- Statistical tools refers to certain standard techniques or methods which
are used for collection organisation presentation analysis and interpretation of data.
Certain standard techniques or methods which are used for statistical study are called
statistical tools.

NATURE OF STATISTICS:- Statistics is both a science as well as an art.

As a science, statistics studies numerical data in a systematic or scientific manner.
As an art, statistics relates to quantitative data to the real life problems.

SUBJECT MATTER OF STATISTICS:-

1. Descriptive statistics:- It refers to those methods which are used for the collection,
presentation as well as analysis of data.
2. Inferential statistics:- it refers to all such methods by which conclusions are drawn
relating to the universe or population on the basis of a given sample.

LIMITATIONS OF STATISTICS:-
1. Statistics is the study of numerical facts only. It does not study qualitative facts.
2. Statistics is a study of aggregates only. It does not study a single number.
3. Only homogeneous data are studied under statistics.
4. Statistical results are true only on an average.
5. Without reference, statistical results may prove to be wrong.
6. Statistics can be used only by the experts.

DISTRUST OF STATISTICS:-
Statistics is a rainbow of lies.
Statistics are tissues of falsehood.
Statistics can prove anything.
Statistics cannot prove anything.
Statistics are like clay of which you can make a god or a devil as you please.
There are three kinds of lies - lies, damned lies and statistics.

FUNCTIONS OR IMPORTANCE OF STATISTICS:-

1. Quantitative expression of economic problems :- Statistics helps in quantitative
presentation and study of economic problems in a systematic manner.
2. Inter-sectoral and inter-temporal comparisons:- Inter-sectoral comparison means
comparison across different sectors of the economy. For example, the study of the problem
of unemployment across rural and urban sectors of the economy can be termed as
inter-sectoral comparison.
Inter- temporal comparison means understanding of changes in the magnitude of the
problem over time. For example the study of the problem of unemployment over different
plan periods can be termed as Inter- temporal comparison.
3. Working out cause and effect relationship:- Statistics helps economists to find out the
cause and effect relationship between different sets of economic data relating to different
economic problems and it enables them to suggest some effective remedies.
4. Construction of economic theories:- Statistical study of economic problems helps in
construction of economic theories like law of demand, law of diminishing marginal utility etc.
5. Economic forecasting:- Statistical studies help economists to forecast future economic
conditions.
6. Formulation of policies:- Statistical studies of economic problems of the country helps
the government in making plans and policies for the country's economic development.
7. Economic equilibrium:- Through the use of statistical methods economists have evolved
some economic fundamentals about how profits of the producers are maximised(producers
equilibrium) or how consumers get maximum satisfaction(consumers equilibrium).

Chapter 2. Collection of data

Data:- Data refers to quantitative information capable of some meaningful conclusions

Collection of data:- Collection of data means collection of quantitative or numerical
information relating to a particular subject for statistical study.

Purpose of Collection of data:- In economics the purpose of Collection of data is to

understand, analyse and explain a socio economic problem.
Variables:- Variables refers to that quantity which can vary or change and which can be
measured by some unit.
Each value of a variable is an observation.
The variables are generally represented by the letters X, Y or Z.

SOURCES OF COLLECTION OF DATA

1. PRIMARY SOURCE,
2. SECONDARY SOURCE

1. PRIMARY SOURCE:- Primary source of data refers to Collection of data from its source
of origin. Under this system investigators contact the respondents directly or indirectly and
obtain the desired quantitative information relating to a particular fact.
2. SECONDARY SOURCE:- Secondary source of data refers to Collection of data from
some agencies or institutions which have already collected data for their own purposes.
Under this system data is not collected from the respondents or its original source.

PRIMARY DATA:- Data collected by the investigator for his own purpose for the first time
from beginning to end are called primary data.
Data collected from its source of origin for the first time is called primary data.
Primary data are original and first hand information.

SECONDARY DATA:- Data already collected by other institutions, agencies or departments

for their own purpose are called secondary data.
Secondary data not original and are second hand information.

DIFFERENCES BETWEEN PRIMARY DATA AND SECONDARY DATA

Primary data Secondary data

1. Primary data are original data. 1. Secondary data are not original data.

2. Primary data are collected by the 2. Secondary data is already collected by

investigator for his own purpose. others for their purposes and not for the
purpose of the investigator.

3. Primary data is more expensive in terms 3. Secondary data is less expensive in

of time, money and efforts involved. terms of time, money and efforts involved.

4. Primary data are first hand data. 4. Secondary data are second hand data.

METHODS OF COLLECTING PRIMARY DATA:-

A. PERSONAL INTERVIEWS
1. Direct personal investigation
2. Indirect oral investigation
3. Information from local sources or correspondents
B. INFORMATION THROUGH QUESTIONNAIRES AND SCHEDULES
1. Mailing (questionnaires) survey
2. Enumerator’s methods
C. TELEPHONIC INTERVIEWS
Investigator:- Investigator is a person who plans and conducts a statistical study or
investigation independently or with the help of others.

Respondent:- Respondent is a person who answers or responds to the set of questions

asked by the investigator or enumerator.

1.Direct personal investigation:- Under this method data are personally collected by the
investigator from the respondents.
Suitability:- direct personal investigation is suitable when,
1. The field of investigation is limited.
2. Original and accurate data is needed.
Merits of direct personal investigation
1. Original and accurate data are obtained.
2. Data collected through this method is more reliable.
3. This method is elastic.
Demerits of direct personal investigation:-
1. This method is not suitable for wide areas.
2. This method is very expensive in terms of time, money and efforts involved.
3. This can be affected by personal bias of the investigator.

Indirect oral investigation:- Under this method information or data is collected orally from
other persons who are expected to possess the necessary information relating to the
concerned respondents.
Suitability:- This method is suitable when:-
1. The field of investigation is large.
2. Direct contact with the concerned respondent is not possible.
3. Concerned respondents are not capable of giving information.
4. Experts' opinions are needed.
Merits of indirect oral investigation:-
1. This method helps in statistical study of wide areas.
2. This method is less expensive in terms of time, money and efforts involved.
3. Experts' opinions can be obtained.
Demerits of indirect oral investigation:-
1. Less accurate data is collected.
2. This method can be affected by personal bias of the witnesses giving information.
3. Doubtful conclusions can be drawn.

Information from local sources or correspondents:- Under which method the investigator
appoints local persons or correspondence at different places to collect information and send
it to the investigator.
Suitability:- This method is suitable when,
1. Regular and continuous information is needed.
2. The area of investigation is large.
3. The information is to be used by journals, magazines, radio, TV etc
Merits:-
1. This method is less expensive.
2. This method can be used in wide areas.
3. This method provides regular information.
Demerits:-
1. This method does not provide original data.
2. There is a lack of uniformity of data.
3. This method can be affected by the personal bias of the correspondents.

Mailing (questionnaires) survey :- Under dis method questionnaires are mailed to the
respondent and they note the answers against the questions and return the completed
questionnaires to the investigator.
Suitability:- This method is suitable when,
1 The area of study is very wide.
2. The respondents are educated.
Merits:-
1. This method is less expensive in terms of time, money and efforts involved.
2. This method provides original information.
3. This method covers wide areas.
Demerits:-
1. Respondents do not take interest in answering the questionnaires.
2. This method is not flexible.
3. This method has limited accuracy.

Enumerators method:- under this method a questionnaire or schedule is prepared which is

filled by the enumerator himself after seeking information from the respondents.
Enumerator is a person who actually collects data on behalf of the investigator.
Suitability:- This method is suitable when,
1. The field of investigation is large.
2. The investigators are well versed in the local language and cultural norms of the
respondents.
Merits:-
1. This method covers wide areas.
2. This method provides more accurate and complete information.
3. This method is impartial.
Demerits:-
1.This method is very expensive.
2. Competent enumerators are not easily available.
3. This method can be affected by personal bias of the enumerators.

Difference between questionnaires and schedules:- In questionnaires the entire

information is recorded by the respondents themselves but in schedules the information
supplied by the respondents is recorded by the enumerators.

Qualities of a good questionnaire:-

1. The number of questions in a questionnaire should be limited.
2. Language of the questions in the questionnaire should be simple.
3. Questions must be placed in a proper order.
4. Questions relating to calculations must be avoided.
5. Questions should not be controversial.
6. Pre- testing pilot survey: - Under this survey some questions are asked from the
respondents on trial basis. If their answers involve some difficulty these can be reframed
accordingly. Such testing is called pre testing pilot survey.
7. There must be clear instructions for filling the questionnaire.
8. Cross questions should be included.
9. Requests should be made to the respondents to return the questionnaire completed in all
respects.

Telephonic interviews:- Under this method the investigator seeks the desired information
from the respondents over the telephone.
Suitability:- This method is suitable when,
1. Telephone facility is available to the respondent.
2. The area of investigation is large.
Merit:-
1. This method provides original, accurate and reliable information.
2. This method is less expensive.
Demerits:-
1. This method can be affected by personal bias of the investigator.
2. This method has limited access to the respondents.

METHODS OF COLLECTING SECONDARY DATA: -

A. PUBLISHED SOURCES
B. ON PUBLISHED SOURCES

A. PUBLISHED SOURCES:-
1. Government publications.
2. Semi government publications.
3. Reports of committees and commissions appointed by the government.
4. Publications of trade associations.
5. Publications of research institutions
6. Journals and papers.
7. Publications of research scholars.
8. International publications.

B. UNPUBLISHED SOURCES:- Data collected by the government organisations and others

generally for their self use or office record and these are not published. These data can be
provided to the investigator by the organisations on investigator’s demand.

TWO IMPORTANT SOURCES OF SECONDARY DATA

1. CENSUS OF INDIA:- Census of India is a comprehensive enquiry on population size and
the related parameters of change covering each and every household of the country. Census
of India provides following information about population:-
1. Size, growth rate and distribution of population in India.
2. Population projections
3. Density of population
4. Sex composition of population
5. State of literacy.

2. REPORTS AND PUBLICATIONS OF NATIONAL SAMPLE SURVEY OFFICE (NSSO):-

NSSO is a government organisation under the ministry of statistics and programme
implementation. This organisation conducts regular sample service to collect basic statistical
information relating to a variety of economic activities in rural as well as urban parts of the
country. NSSO offers following informations:-
1. Land and livestock holdings.
2. Housing conditions and migration.
3. Employment and unemployment status in India.
4. Consumer expenditure in India.
5. Sources of household income in India.

Chapter 3. CENSUS AND SAMPLE METHODS OF COLLECTION OF

DATA

Population or universe :- In statistics the population or universe means the aggregate of all
items about which we want to obtain information.
CENSUS METHOD :- Census method is that method in which data are collected covering
every item of the universe or population relating to the problem under investigation.
Census method refers to complete enumeration of the universe or population.
Census of population in India is the most suitable example of the census method.
Suitability:- Census method of collecting data is suitable when,
1. The size of the population is small.
2. Diverse items exist in the population.
3. High degree of accuracy and reliability is needed.

Merits:-
1. This method provides the most reliable and accurate data.
2. This method provides extensive information about the respondent.
3. It is helpful in studying the diversity of the population.
Demerits:-
1. Census method is very costly in terms of time, money and efforts involved.
2. The Census method requires a large number of trained enumerators.
3. This method is not suitable for large investigations.

SAMPLE METHOD:- Sample method is that method in which data is collected about the
sample on a group of items taken from the population for examination and conclusions are
drawn on their basis.
Suitability:- Sample method is suitable when,
1. The size of the population is very large.
2. High degree of accuracy is not needed.
3. Different units of the universe are broadly similar to each other.
Merits:-
1. Sample method is less expensive in terms of time, money and efforts involved.
2. Errors can be easily identified.
3. This is suitable for large investigations.
Demerits:-
1. It is a partial investigation of the universe. It does not provide complete information about
the universe.
2. Selection of representative samples is very difficult.
3. If samples are not taken scientifically wrong conclusions can be drawn.

Qualities of good sample selection:-

1. Sample must represent all the characteristics of the universe.
2. Sample should not be dependent upon selection of other items of the universe.
3. Samples should be homogeneous.
4. Samples should be in adequate quantity.

METHODS OF SAMPLING
1. Random sampling :- Random sampling is that method of sampling in which each and
every item of the universe has an equal chance of being selected in the sample.
There are two methods of random sampling:-
i. Lottery method:- Under this method samples are selected by lottery system.
ii. Tables of random numbers:- Under this method all the items of the universe are first
arranged in an order and then by using tables of random numbers samples are selected.

Merits of random sampling:-

1. Each and every item of the universe has an equal chance of being selected.
2. This method is free from the personal bias of the investigator.
Demerits of random sampling:-
1. Random sampling does not guarantee proportionate presentation of different items in the
universe.
2. Random sampling does not give weightage to certain important items in the universe.

2. Non- random sampling:- Non- random sampling includes all those methods of sampling
in which all the units of population do not have equal chance of being selected in the sample
of study.
Methods of non random sampling:-
i. Purposive or deliberate sampling:- Purposive sampling is that method in which the
investigator himself makes the choice of the sample items which in his opinion are the best
representative of the universe .
ii. Stratified or mixed sampling:- under this method of sampling population is divided into
different strata (groups) having different characteristics and some of the items are selected
from each strata, so that the entire population gets represented.
iii. Systematic sampling:- Under this method units of the population are numerically
geographically and alphabetically arranged. Every nth item of the numbered items is
selected as a sample item.
iv. Quota sampling:- Under this method the population is divided into different groups or
classes according to the different characteristics of the population and a fixed quota or
percentage of the items are selected as samples from each group.
v. Convenience sampling:- In this method sampling is done by the investigator in such a
manner that suits his convenience.
Merits of non random sampling:-
1. Non random sampling ensures proportionate presentation of different items in the
universe.
2. Non-random sampling gives weightage to certain important items in the universe.
Demerits of non random sampling:-
1. Each and every item of the universe has not an equal chance of being selected in the
sample.
2. This method can be affected by the personal bias of the investigator.

DIFFERENCE BETWEEN CENSUS AND SAMPLE METHODS OF COLLECTING DATA

Census method Sample method

1. This method provides information relating 1. This method provides information relating
to all items of the universe. to some items of the universe.

2. The Census method is suitable for limited 2. Sample method is suitable for a large
areas. area.

3. The Census method provides the most 3. Sample method provides less accurate
accurate data. data.

4. Census method is very costly. 4. Sample method is economical.

5. Census method is time consuming. 5. Sample Method is time saving.

6. Verification of information is very difficult. 6. Verification of information is easy.

Chapter 4. Organisation of Data

Organisation of data means arrangement of data in such a form that it can be easily
understood, compared, analysed and conclusions can be drawn from it.

Classification of data means arranging the data into groups or classes based on some
criteria.

Objectives of classification of data:-

1. To present the data in brief and simple form.
2. To increase the utility of the data.
3. To make the data comfortable.
4. To make the data more attractive and effective.

Characteristics of good classification of data:-

1. Classification of data should be comprehensive that include each and every item of the
universe.
2. Classification of data should be clear and simple.
3. Classification of data should be suitable to the objective of investigation.
4. Classification of data should be elastic.

Basis of classification of data:-

1. Geographical or spatial classification:- under this data are classified on the basis of
geographical location or places.
For example ; classification of data on the basis of countries, States, districts, towns etc are
termed as geographical or spatial classification.

2. Chronological classification:- Under this data are classified on the basis of time.
For example classification of data on the basis of years , months , weeks or days are termed
as chronological classification.

3. Qualitative classification:- Under this, data are classified on the basis of qualities or
attributes of the data.
This classification maybe of two types:-
i. Simple classification:- under these data are classified on the basis of existence or
absence of a quality.
For example ; classification of data on the basis of male -female, healthy - unhealthy,
educated - uneducated etc are termed as simple classification of data.
ii. Manifold classification:- Under this data are classified on the basis of more than one
characteristic.
For example:- classification of a factory workers as skilled and unskilled then both are
classified as literate and illiterate and further as rural and urban, can be termed as manifold
classification.

4. Quantitative or numerical classification:-

Under this data are classified on the basis of numerical values or facts.
This classification is also called classification by variables.
For example, Classification on the basis of Marks, income, expense ,weight etc. can we
called quantitative classification

Variable:- Variable refers to that fact which changes or varies over time and which can be
measured by some unit.
For example ; marks obtained by the students of class 11, income of people in a society, age
of students in a class etc are variables.

Types of variable:-
1. Discrete variable:- The variables that increase in jumps or in complete numbers are
called discrete variables.
For example marks of class 11 students can be 46, 60, 72, 75 etc. and these can be called
discrete variables.

2. Continuous variable:- Variable that assumes a range of values or increases not in jumps
but continuously or in fraction.
For example, the range of marks 10-20, 20-30, 30-40, 49-50 etc. can be called a continuous
variable.
Note : Discrete variables are in complete numbers but continuous variables are in fractions
(4’5’’ ,5’9’’ , 5’3’’ etc ) or are in any range such as 10-20, 20-30, 30-40, 40-50 etc.

Raw data:- A mass of data in its crude or original form is called raw data. This is
unorganised and unclassified data.

Univariate:- Univariate refers to a series of statistical data with one variable only.
Bivariate:- Bivariate refers to a series of statistical data with two variables.
Multivariate:- Multivariate refers to a series of statistical data with more than two or many
variables.

Statistical series:- When statistical data are arranged in some logical order, it is called a
statistical series.

Types of statistical series:-

1. Individual series or series without frequencies.
2. Frequency series or series with frequencies:-
i. Discrete series or frequency array
ii. Frequency distribution

1. Individual series or series without frequencies :- Individual series are those series in
which the data are arranged singly without frequencies.
Individual series maybe presented in following two ways:-
i. According to the serial number.
ii. Ascending or descending order of data.

2. Frequency series or series with frequencies :- Frequency series are those series in
which the data are arranged in groups with frequencies.
Types of frequency series:-
I. Discrete series or frequency array:- Discrete series means arrangement of discrete
variables with frequencies. Under this series there are no class intervals and particular items
are shown with their frequencies.
II. Frequency distribution:- Under this data are classified into different classes with a range
(class- interval). The number of times an item repeats itself in a class interval is shown as
frequency.
Types of frequency distribution:-
1. Exclusive series:- Exclusive series is that series in which every class interval excludes
items corresponding to the upper limit.
2. Inclusive series:- An inclusive series is that series which includes all items up to its
upper limit.
3. Open-end series :- An open-end series is that series in which the lower limit of the first
class interval and the upper limit of the last class interval is missing.
4. Cumulative frequency series:- Cumulative frequency series is that series in which the
frequencies are continuously added corresponding to each class interval in the series.
5. Mid -values frequency series:- Mid- value frequency series are those series in which we
have only mid-values of the class intervals and the corresponding frequencies.

Difference between exclusive and inclusive series

 Exclusive series Inclusive series

1. It does not include the upper limit of class 1. It includes the upper limit of class
interval. interval.

2. In this series the upper limit of one class 2. In this series the upper limit of one class
interval is the lower limit of the next class interval and the lower limit of the next class
interval. interval are not the same.

3. Exclusive series can be used for both 3. Inclusive series is useful only for
complete numbers or decimal numbers. complete numbers.

4. Under exclusive series counting can be 4. For counting, inclusive series is

done in all cases. converted into exclusive series.

Note:
1. Frequency:- Frequency is the number of times an item repeats itself in the series.