Basic Business Statistics

Course Instructor: Md. Mehedi Hasan Sikdar, Professor, Department of Statistics, PSTU.

The Historical Development of Statistics

The precise origin of the word “statistics” is unknown, though it is widely believed to have been derived from several European terms meaning "Political State": the Latin Status, Italian Statista, French Statistique, and German Statistik. This background suggests that statistics has ancient origins, initially used by group leaders to gather information on “Wealth, Strength and Position” to impose taxes and ensure the survival and safety of their communities.

Ancient Origins and the "Science of Kings"

In its earliest forms, statistics was often referred to as the "Science of King". Notable historical applications include:

• Egypt (c. 1400 B.C.): During the reign of Ramses II, statistics were used to count people and land areas to redistribute land among the inhabitants.
• Ancient Civilizations: Systematic data collection was also prevalent in ancient Chinese, Greek, and Roman territories.

Evolution into a Modern Science

Statistics has grown from these ancient roots into a versatile subject applied across all sciences. Key figures in its development include:

• Charles Darwin and Gregor Mendel: Darwin’s biological works were largely statistical in nature, while Mendel extensively utilized statistical concepts to study plant hybrids.
• Karl Pearson: A foundational figure who established schools of statistics and founded the famous journal Biometrika.
• W.S. Gosset: A student of Pearson who succeeded in working with samples and developed the Student’s “t”, which remains a basic tool for modern statisticians.
• R.A. Fisher: Known as the "Father of Statistics," he made significant contributions to agriculture, biology, and genetics, and invented the Analysis of Variance (ANOVA) and Experimental Design.
• Francis Galton: Developed the foundational concept of the regression line.
• Mahalanobis: A key Indian statistician who contributed to sample surveys and is famous for his ** $D^2$ Statistic**; he also founded the Indian Statistical Institute and the journal Sankhya.
• Quazi Motahar Husain: An authority in Bangladesh statistics known for the “Hussain Chain” and for founding the Department of Statistics at the University of Dhaka.

Chapter 2: Defining Statistics

The definition of statistics has evolved alongside its methodology. Various experts define the field as follows:

• R.A. Fisher (1947): Viewed statistics as a branch of applied mathematics specifically applied to observational data.
• Steel, Torrie and Dickey (1997): Defined it as the science of creating and applying techniques to evaluate the uncertainty of inductive inferences.
• Functional Definition: Statistics is the scientific method concerned with collecting, organizing, presenting, analyzing numerical data, and drawing inferences from that data.

Chapter 3: Characteristics and Limitations

Key Characteristics

To be considered statistics, data must possess specific features:

• It deals with aggregates of individuals rather than isolated cases.
• It must be expressed in numerical figures.
• It is influenced by a multiplicity of causes.
• It must meet reasonable standards of accuracy and be collected for pre-determined purposes.
• The data must allow for comparison with other sets of information.

Limitations of the Field

While powerful, statistics has inherent boundaries:

• Quantitative Focus: It primarily deals with numerical data. Qualitative information must be converted into numbers through ranking or scaling to be analyzed.
• Mass Data Only: Statistics applies to groups (masses) and is not applicable to a single observation.
• Average Truth: Statistical results are often only true on an average and are always subject to a certain amount of error.
• Not a Panacea: Statistics is a means to draw conclusions but is not a solution to every type of problem and can be misused.

Academic Warning

Like medicine or engineering, statistics has its own jargon and serves as a vital means of communication. To secure a satisfactory grade or even pass the course, regular study throughout the entire semester is considered highly essential.