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A Brief History Of Statistic

Bythe 18th century,theterm "statistics" designatedthesystematiccollection
of demographicand economic data bystates. Inthe early 19thcentury,the meaning
of "statistics" broadened,thenincludingthe disciplineconcerned withthe
collection,summary, and analysis of data. Todaystatistics iswidely employedin
government, business, and allthesciences. Electroniccomputers have
expeditedstatistical computation, and have allowedstatisticians
to develop "computer-intensive" methods.
The term "mathematicalstatistics" designates t he mathematicaltheories
of probability andstatisticalinference, which are usedinstatistical practice. The
relation between statistics and probability theory developed ratherlate, however,
Inthe 19th century,statistics i ncreasingly usedprobabilitytheory, whoseinitial
resultswere found in the17th and 18th centuries, particularly in the analysisof
games of chance(gambling). By 1800, astronomy used probability models and
statistical theories, particularly the method of least squares, which was invented
by Legendre and Gauss. Early probabilitytheory andstatistics was s ystematized
and extended byLaplace; following Laplace, probability andstatistics have been
in continual development.
Inthe 19th century,socialscientists usedstatisticalr easoning and
probability models t o advancethe newsciences ofexperimental psychology and
sociology; physical scientistsused statistical reasoning and probability models to
advancethe newsciences ofthermodynamics andstatistical mechanics
The development ofstatisticalreasoning was closely associated
withthedevelopment ofinductive logic andthescientific method. Statistics is not a
fieldof mathematics but an autonomous mathematicalscience , like
computer s cienceor operations r esearch. Unlike
mathematics,statistics hadits origins i n publicadministration and
maintains aspecial concern with demography and economics.Being concerned
withthescientific method andinductive logic,statisticaltheoryhas close association
withthe philosophy ofscience ; withits emphasis onlearning from data and
making best predictions,statistics has great overlap with
the decision science and microeconomics. W ith itsco n cernswith data, statistics
has overlap withinformationscience and computer s cience .
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Statistics Today
Duringthe 20th century,the creation of precise
instrumentsfor
agriculturalresearch, public health concerns (epidemiology, biostatistics,
etc.),industrialquality control, and economic andsocial purposes (unemployment
rate, econometry, etc.) necessitated substantial advances in statistical practices.

Todaythe use ofstatistics has broadened far beyondits origins.

Individuals and organizations usestatistics t o understand data and make
informed decisions throughout the natural and social sciences,
medicine,business, and other areas. Statistics is generallyregarded
not as asubfield ofmathematics but r ather as a distinct, albeit allied, field.
Manyuniversitiesmaintainseparate mathematics andstati stics departments.
Statistics is also taught in departmentsasdiverse a spsychology, education, and
public health.

Index Number
Index numbers aretoday one ofthe most widely
usedstatisticalindicators.Generally usedtoindicatethestate ofthe economy,index
numbers are aptlycalled µbarometers of economic activity¶. Index numbers are
usedin comparingproduction,sales or changes exports or i mports over a certain
period oftime.Therole-played byindex numbers in Indiantrade andindustry is
impossible to ignore. It isa very well known fact that the wage contracts of
workers in our country aretiedtothe cost of livingindex numbers.
By definition, anindex number is astatistical measure
designedtoshowchanges i n avariable or a group
or r elatedvariables withrespect t otime,geographic location
or other characteristics s uch as i ncome, profession, etc.
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-haracteristics of an Index Numbers

1. These are expressed as a percentage [ Index number is calculated as aratio

ofthe current v alueto a basevalue and expressed as a percentage. It must be
clearly understoodthat t heindex number for t he base year is always 100. An
index number isco mmo n ly referred to a s an index.
2. Index numbers are specialized averages [ Anindex number is an average
with a difference. Anindex number is used for purposes of comparisonin
caseswheretheseries being compared could be expressedin different units i.e.
amanufactured products index (a part ofthe wholesale
priceindex)is constructedusingitems likeDairy Products, Sugar, Edible Oils, Tea
and -offee, etc. These itemsnaturally are expressed in d ifferentunitslike sugar in
kgs, m ilk in l iters, e tc.Theindex number is obtained as aresult of an average of
alltheseitems, which are expressedin different units. Onthe other hand,
averageis asingle figure representing a group expressed in the same units.

3. Index numbers measures changes that are not directly measurable [An
index number isused forme asuring the magnitude of changes in such
phenomenon, which are not capable of direct measurement. Index numbers
essentially capturethe changes i nthe group ofrelatedvariables over a period of
time. Fore xamp le , if the index of industrial production is2 1 5 .1 in 1992-93
(baseyear 1980-81)it means t hat t heindustrial productioninthat year was up by
2.15 timescomp ared to 1980-81. But itdoesnot, however, mean that the net
increase in the index reflects an equivalent increase in industrial production in
all sectors oftheindustry. Somesectors might haveincreasedtheir production
morethan2.15times while other s ectors may haveincreasedtheir production
onlymarginally.
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Uses of indexnumbers
1À Establishes trends
Index numbers when analyzedreveal a generaltrend ofthe phenomenon under
study. For eg. Index numbers of unemploymentof the country notonly reflects
the trends in the phenomenon butare u seful in determining factorsleading to
unemployment.
2À elps in policy making
It is widely knownthat t he dearness allowances paidtothe employees is linked
to the cost of living index, generally the consumerprice index. From time to time
it is the cost of living index, which forms the basis of many a wagesagreement
betweenthe employees union andthe employer. Thus i ndex numbers guide
policy making.

3À Determines purchasing power of the rupee

Usuallyindex numbers are usedto determinethe purchasing
power oftherupee.Supposethe consumers priceindex for urban non-manual
employees i ncreasedfrom 100in 1984to 202in 1992,thereal purchasing
power oftherupee can befound ou t as follows[ 100/202=0.495
It i ndicates t hat i frupee was worth 100paisein 1984its purchasing power
is 49.5 paisein 1992.

4. Deflates time series data

Index numbers play avitalrolein adjustingthe original datatoreflect r eality.For
example, nominalincome(income at current prices) can betransformedintoreal
income(reflecting the actual purchasing power) by using income deflators.
Similarly,assumethat i ndustrial production is
representedinvalueterms as aproduct ofvolume of production and price.
Ifthesubsequent year s i ndustrialproduction wereto be higher by
20%invalue,theincrease may not be as a resultof increase in the volume of
production as one would have itbutbecause ofincreaseinthe price. Theinflation
which has causedtheincreaseintheseriescan be eliminated bythe usage of an
appropriate priceindex andthus makingthe series real.
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Type of index number

They are three types of principal indices . they are

1.Price index
The most frequently used form ofindex numbers is the priceindex. A price
index comparescharges in p rice of edible oils. If an attempt isbeing made to
comparethe prices of edible oils t his year t othe prices of edible oils last year,it
involves, f irstly, a comparison of two price situationsover time
and secondly, the heterogeneity ofthe edible oils giventhevarious v arieties of
oils. By constructinga priceindex number, we aresummarizingthe price
movements of eachtype ofoilinthis group of edible oils i nto asingle
number calledthe priceindex. TheWhole Price Index (WPI). -onsumer Price
Index (-PI) aresome ofthe popularlyused priceindices.

2. Auantity Index
Aquantityindex measures t he changes i nquantity from one periodto
another. Ifinthe above example,instead ofthe price of edible oils, we are
interested in the quantum of production of edible oils in those years, then we are
comparingquantities i ntwo different years or over a period oftime. It is the
quantity index thatneeds to be constructed here. The popular quantity index
usedinthis country and elsewhere is theindex ofindustrial production (HP). The
index of industrial production measures the increase o rdecrease in the level of
industrial production in a g iven period compared to some base period.

3. Value Index
Thevalueindexis a combinationindex. It combines price andquantitychanges t o
present a morespatial comparison. Thevalueindex
as s uchmeasures changes i n net monetary worth. Thoughthevalueindex
enablescomparison ofvalue of a commodityin a year t othevalue
ofthat commodityin abase year,it has limited use.
Usuallyvalueindexis usedinsales,inventories,foreigntrade, etc. Its limited
useis owingtotheinability ofthevalueindextodistinguishthe effects of price
andquantityseparately.
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-alculating index number

* Index number Is a measure usedtoshowthe change of a certainquantity

for a stated period of time by choosing a specific time as the base year. In
general an index number is the comparison of a quantity a t two different
timesand is expressed as a percentage