Importance of Statistics
IMPORTANCE OF STATISTICS In today’s world we are faced with situations everyday where statistics can be applied. Statistics can be used to determine the potential outcome of thousands of things where the human mind alone wouldn’t be able to. Statistics benefits all of us because we are able to predict the future based on data we have previously gathered.
Being able to predict the future not only changes our lifestyle but also helps us be more efficient and effective. Statistics is the science of collection, analysis, and presentation of data.
Statisticians contribute to scientific enquiry by applying their knowledge to the design of surveys and experiments; the collection, processing, and analysis of data; and the interpretation of the results. Statisticians may apply their knowledge of statistical methods to a variety of subject areas, such as biology, economics, engineering, medicine, public health, psychology, marketing, education, and sports. Many economic, social, political, and military decisions cannot be made without statistical techniques, such as the design of experiments to gain federal approval of a newly manufactured drug.
Statisticians provide crucial guidance in determining what information is reliable and which predictions can be trusted. They often help search for clues to the solution of a scientific mystery and sometimes keep investigators from being misled by false impressions Why do we need to study statistics? There are five major reasons to study statistics: * The first reason is to be able to effectively conduct research. Without the use of statistics it would be very difficult to make decisions based on the data collected from a research project.
For example, in the study cited in Chapter One, is the difference in recorded absenteeism between psychiatric and obstetrics nurses large enough to conclude that there is meaningful difference in absenteeism between the two units? There are two possibilities: The first possibility is that the difference between the two groups is a result of chance factors. In reality, the two jobs have approximately the same amount of absenteeism. The second possibility is that there is a real difference between the two units with the psychiatric unit being more nurses missing work.
Without statistics we have no way of making an educated decision between the two possibilities. Statistics, however, provides us with a tool to make an educated decision. We will be able to decide which of the two possibilities is more likely to be true. We will base this decision on our knowledge of probability and inferential statistics. A second point about research should be made. It is extremely important for a researcher to know what statistics they want to use before they collect their data. Otherwise data might be collected that is uninterruptable.
Unfortunately, when this happens it results in a loss of data, time, and money. Now many a student may by saying to themselves: “But I never plan on doing any research. ” While you may never plan to be involved in research, it may find its way into your life. Certainly, it you decide to continue your education and work on a masters or doctoral degree, involvement in research will result from that decision. Secondly, more and more work places are conducting internal research or are becoming part of broader research studies. Thus, you may find yourself assigned to one of these studies.
Finally, many classes on the undergraduate level may require you to conduct research (for example, a research methods or experimental psychology course). In each of these instances, a knowledge of measurements and statistics will be invaluable. * The second reason to study statistics is to be able to read journals. Most technical journals you will read contain some form of statistics. Usually, you will find them in something called the results section. Without an understanding of statistics, the information contained in this section will be meaningless.
An understanding of basic statistics will provide you with the fundamental skills necessary to read and evaluate most results sections. The ability to extract meaning from journal articles and the ability to critically evaluate research from a statistical perspective are fundamental skills that will enhance your knowledge and understanding in related coursework. * The third reason is to further develop critical and analytic thinking skills. Most students completing high school and introductory undergraduate coursework have at their disposal a variety of critical thinking and analytic skills.
The study of statistics will serve to enhance and further develop these skills. To do well in statistics one must develop and use formal logical thinking abilities that are both high level and creative. * The fourth reason to study statistics is to be an informed consumer. Like any other tool, statistics can be used or misused. Yes, it is true that some individuals do actively lie and mislead with statistics. More often, however, well meaning individuals unintentionally report erroneous statistical conclusions. If you know some of the basic statistical concepts, you will be in a better position to evaluate the information you have been given. The fifth reason to have a working knowledge of statistics is to know when you need to hire a statistician. Most of us know enough about our cars to know when to take it into the shop. Usually, we don’t attempt the repair ourselves because we don’t want to cause any irreparable damage. Also, we try to know enough to be able to carry on an intelligible conversation with the mechanic (or we take someone with us who can) to insure that we don’t get a whole new engine (big bucks) when all we need is a new fuel filter (a few bucks). We should be the same way about hiring a statistician.
Conducting research is time consuming and expensive. If you are in over your statistical head, it does not make sense to risk an entire project by attempting to compute the data analyses yourself. It is very east to compute incomplete or inappropriate statistical analysis of one’s data. As with the mechanic discussed above, it is also important to have enough statistical savvy to be able to discuss your project and the data analyses you want computed with the statistician you hire. In other words, you want to be able to make sure that your statistician is on the right track.
To summarize, the five reasons to study statistics are to be able to effectively conduct research, to be able to read and evaluate journal articles, to further develop critical thinking and analytic skills, to act as an informed consumer, and to know when you need to hire outside statistical help. How statistics are used in business areas Statistics clearly has real world applications in all of the subjects you list. * Accounting – Random sampling is frequently used by accounting firms when accounts (like travel expenses) are relatively small and inconsequential.
You can use a random sample to estimate the quality of the whole population of accounts. * Finance – Trend analysis and correlation are common when making economic forecasts. * Management – Sampling of opinion polls and data pertaining to personnel. These are often summarized with estimates of errors. * Marketing – Customer surveys, correlations between advertising outlays and increased revenues. Estimates of market sizes use sampling. Product quality is also a rich field for statistical analysis. Any time you want a quick answer, you can get a good estimate by using statistical sampling.
For example, a stratified random sample of accounts can be used instead of an exact calculation when you have paper sales orders (or pending sales orders) that are not entered into the computer. Make sure to count all the big ones, and you can estimate the small ones. On the other hand following ways, statistics can be possible to use in the business area. In general a typical organization has three levels: Strategic, Managerial and Oper- ational. This classi? cation is somewhat general and arbitrary. However, this can help identify and emphasize di? rent tools to be directed at the di? erent levels. We envision Statistics to play important roles at all these levels. Strategic Level (Top of an Organization) At the strategic level the most emphasis should be on Statistical thinking which Have the following components: * Notion of a Process, * Notion of measurement and data based decisions, * Understanding and dealing with variation, * Statistical tools, and * Systematic approach. The notion of process thinking is fundamental to any organizational change. Every action has some inputs and outputs which need to be identi? d in every context. Decisions at the strategic level should be based on facts supported by appropriate data and this requires an understanding of variation (Deming 1986). Business and Industry have seen the arrival and demise of many programs such as Total Quality Management. Embracing any program that comes along without ? rm commitment and understanding is doomed to failure. Managerial Level (Middle Level) This is the level at which systems are devised for implementation of the directions taken by upper management.
In particular, systems for robust product and pro- cess design, process control and improvement, and training are the responsibility of middle management. Understanding of some statistical tools and statistical thinking are prerequisites for those who are designing these systems. Operational Level At this level the methods are implemented through the system built at the mana- gerial level. Understanding of statistical tools such as control charting, capability analysis, design of experiments, measurement system analysis, regression analysis etc are essential.
Appropriate statistical tools need to be used by operational peo- ple as part of their daily work. People in some areas need to know the details only of certain statistical tools. For instance, an operator responsible for maintaining stability of a process by charting should know the workings of a control chart but need not know a lot about design of experiments. On the other hand an engineer responsible for process improvement should be knowledgeable in several aspects of statistical process control and design of experiments.
How entrepreneur minimizes the business risk By using following tools, am entrepreneur can minimize the business risk. Those are: * Business forecasting * Risk return analysis in portfolio and project management * Probability concept in manufacturing area and others Statistics are used all over the world. They can be applied in almost any situation and can always help. They are used in explaining group behavior of organisms, marketing research, and the list goes on and on. A good example is how scientists observe the behavior of groups of animals.
Scientists can record data from a group of elephants and determine that a certain percentage of elephant herds will defend themselves from predators while the other percentage may run away. This kind of data can help scientists predict the elephant’s lifestyle and culture. Statistics affects our daily life every day. Researchers use statistics to advertise their products which in turn we the consumer purchase. The price of the products we buy are determined upon statistics which show the demand for the product at that point in time and because of these statistics, we the consumers pay a certain amount of money to buy the product.
Another example of how statistics affect me is in school. Every year statistics are looked over and the curriculums for the classes I take are based on data collected in the past. The curriculums are modified and help the learning process. In conclusion, statistics are a major staple of our world today. They are used in practically any situation and help improve our overall lifestyle. Statistics change the way we think about tomorrow and the way we live today and without them.