Needs, Functions and Limitations of Statistics

What is Statistics

The term statistics is marked to have evolved from the Latin word 'status,' or the Italian word 'Statista,' or the German word 'Statistik,' or the French word 'Statistique.' Each of these words means 'Political State,' and one of them is the root of the word 'Statistics.' Thus, as the name implies, the old-fashioned nature of statistics was known as the 'Science of Statecraft' or the 'Science of Kings' back then. The scope of statistics was limited to collecting data for state administration, i.e., army and public finance. However, statistics are now used in all fields of knowledge, including economics, business, management, natural science, political science, sociology, medicine, engineering, etc. Hence, statistics are used almost everywhere these days.

This article deals with the definition of statistics in both the plural and singular senses, the importance or uses of statistics, and their limitations in this context.

Functions/ Needs and Importance of Statistics

Statistics were once used to formulate fiscal and military policies. As a result, it was known as the "Science of King." However, statistics are widely used in modern times. It is applied in various fields, including economics, planning, business and management, pure science, social science, etc. The following sections discuss the scope and importance of statistics in various sectors and disciplines:

  • Statistics in economics: Statistical data and techniques are extremely useful in studying and solving various economic problems such as consumption, production, distribution, exchange, wages, prices, saving, investment, employment, poverty, etc. Statistics can also be used to develop economic theories and policies. Similarly, it aids in forecasting economic variables such as demand, supply, production, cost, national income, population, etc. Furthermore, it aids in comparing economic data and presents it using various tools such as pie charts, line graphs, bar diagrams, tables, etc. Thus, in the modern era, economics and statistics are complementary.
  • Statistics in business and management: Statistics have numerous applications in business and management. In the modern era, business activities have become increasingly multidimensional and they are becoming increasingly complex. Statistics can be used to reduce the complexity of business and management fields, which reduces the complexities of business and management problems. As a result, statistics aid in analyzing and resolving problems such as production control, determining the quality and quantity of raw materials and labor, and determining the commodity's quantity, shape, size, and color.
  • Statistics in planning: The modern era is known as the age of planning. Work can only be successful if it is well-planned. As a result, organizations, individuals, and the government of a country develop plans for efficient work, efficient allocation of scarce resources, and the formulation of policy decisions. The success of the planning is dependent on the accurate and thorough analysis of the statistical data.
  •  Statistics to the state: A state needs statistics because they help with administration and policy creation. A state must evaluate the advantages and disadvantages of any policy before enforcing it, and this can only be done with the aid of numerical facts. For instance, the government implements numerous policies that all rely on statistics, including fiscal and monetary policy, employment policy, poverty alleviation policy, and so forth.
  • Statistics in natural (Pure) science: The study of natural /pure sciences such as physics, chemistry, biology, astronomy, and others benefits from using statistics. Additionally, it is helpful in fields of science like engineering, medicine, environmental science, etc. All of the natural sciences and science-related subjects extensively use information or numerical facts, facilitating learning and the development of new theories.
  • Statistics in social sciences: The social science-related fields of sociology, history, political science, psychology, anthropology, criminology, etc., benefit greatly from statistics. These courses all examine society and human behavior. Numerous statistical tools, including mean, mode, median, dispersion, regression, correlation, etc., are used to study and analyze social and human behavior. Demography is another crucial area of social science that heavily relies on applying statistics. The study becomes difficult and incomplete without using statistical tools in these areas.
  • Statistics in mathematics: Mathematics and statistics are related. Today, statistics is also thought of as the area of applied mathematics that focuses on examining numerical facts or data, Similar to how statistics are necessary for creating various mathematical models in mathematics. Therefore, a new branch of mathematical statistics has emerged due to the growing importance of mathematics in statistical analysis.

Uses and Importance of Statistics in Economics:

Statistics plays a vital role in economics, as it is used to collect, analyze, and interpret data in order to understand and make informed decisions about economic phenomena and trends. Some specific ways in which statistics is used in economics include:

  1. Measuring economic indicators: Statistics is used to collect and analyze data on economic indicators such as GDP, unemployment rate, inflation rate, and consumer spending, among others. These indicators provide important information about the overall state of an economy and can be used to forecast future economic trends.
  2. Evaluating economic policies: Statistics is used to collect and analyze data on the effects of different economic policies, such as tax cuts, spending increases, or regulatory changes. This helps policymakers to evaluate the effectiveness of these policies and to make informed decisions about their implementation.
  3. Analyzing market trends: Statistics is used to collect and analyze data on market trends, such as changes in consumer demand, supply, and prices. This helps businesses and investors to make informed decisions about buying and selling goods and services.
  4. Modelling economic phenomena: Statistics is used to develop statistical models that can be used to understand and predict economic phenomena, such as consumer behaviour, market trends, or the effects of economic policies. These models can be used to make informed decisions about economic issues and to forecast future economic trends.

Overall, the use of statistics in economics is essential for understanding and making informed decisions about economic phenomena and trends. It allows policymakers, businesses, and investors to analyze and understand economic data in order to make informed decisions and predictions about the future.

Limitation of statistics

Statistics has numerous applications in almost every aspect of human life. Statistics are almost universally applicable. Statistics, despite its many applications, has some limitations, which are as follows:

  • Statistics do not study individuals: Statistics is concerned with aggregate objects and does not provide specific reform to individual items in a series. Individual items, such as a girl's beauty or a person's height, do not constitute statistical data and are, therefore, meaningless in a statistical investigation. Individual agricultural production figures are meaningless. As a result, statistical analysis is only appropriate for problems involving group characteristics.
  • Statistics is not suitable for studying a qualitative phenomenon: Statistics studies quantitative characteristics of given problems rather than qualitative characteristics. Statistics do not directly study problems related to qualitative phenomena, such as honesty, poverty, leadership, intelligence, and so on.
  • Statistical laws are not exact: Statistical laws, unlike physical and natural science laws, are only approximations and not exact. In statistics, there are only a few completely correct results, and almost all are only roughly correct. In other words, statistical laws are only true on average.
  • Statistics is liable to be misused: The most significant limitation of statistics is that experts must use them. When inexperienced people use statistical methods, statistical tools provide incorrect information and must draw incorrect conclusions. As a result, statistics can be dangerous in the hands of an inexperienced person.
  • Statistics is only a means: Statistics only provides a method for studying a problem. There are additional methods. These methods should be used to supplement the conclusions reached through statistical analysis.


The term "statistics" appears to be derived from the Latin word "status." Back then, it was known as the "science of statecraft." Statistics are now used in economics, business and management, natural science, sociology, medicine, and engineering. The modern era is known as the planning era. Work can only be considered successful if it is meticulously planned. The accuracy and thoroughness of the statistical data analysis are critical to the success of the planning. Statistics are also useful in scientific fields such as engineering, medicine, and environmental science.

Statistics is now considered a branch of applied mathematics that focuses on analyzing numerical facts or data. As a result of the growing importance of mathematics in statistical analysis, a new branch of statistics known as mathematical statistics has emerged. Statistics' most significant limitation is that experts must use them.


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