What is the Importance of Statistics?

Have you ever thought about how we use statistics in our daily lives?

Most people believe that statistics is another name for mathematics and complex calculations.

But there is nothing like that; it is just the basic use of mathematics concepts in the technical analysis of data.

I am not saying statistics is easy, just like a piece of cake, although sometimes it is challenging to handle the different calculations. In the practical world, it is used to solve complicated problems and enables the data scientist and analyst to extract valuable trends and changes in the data.

Statistics are crucial in various human activities such as determining the per capita income, population growth ratio, unemployment ratio, housing, schooling, and many more in a specific country.

In this blog, we will explore various importance of statistics in various aspects of life. But before that let’s talk about statistics. 

What are statistics?

Statistics are the mathematical concepts or equations used to analyze things. It tells us about the world’s happenings and other information regarding various aspects of our life. To be updated with world statistics, calculations are essential. 

Nowadays, statistics have a valuable position in every field, such as industries, trade, education, astronomy, etc. Below we will discuss numerous fields where statistics is used commonly.

Importance of Statistics

Weather Forecasting

In this technologically advanced era, we can plan our activities according to the weather of a specific place. For example, when we plan a vacation, we can check the weather conditions in advance so that we can enjoy ourselves without any problem.

How is it possible to know about the weather in advance?

Yes, it is possible due to weather forecasting. With the help of computer models that work on statistical concepts, we can predict the future weather. These models compare the past weather with the present weather and predict future weather conditions.

Insurance

We all are aware of different insurance such as home, medical, vehicle insurance, etc. Sometimes, it is risky for insurance companies to provide insurance. 

Hence with the help of statistical methods, businesses determine the risk of giving insurance on the basis of the application status of individuals. Insurance officers analyze the applications by statistical operations and identify the person who cannot get insurance.

Production

Companies and industries produce various products to ensure their quality companies use statistical concepts for testing. Companies can not test all the products manually, so they use statistics equations to do so.

Business

A businessman needs to be accurate in decision making; he should know what the customer needs and what should be produced. Statistics assist the management team of a business in deciding products as per the demand of the consumers.

Almost all business practices depend on statistical information. Companies can analyze the financial status, resources, and marketing strategies to grow rapidly or to survive in the long run.

Economics Terms

In the field of economics, all the research is done by statistical methods by collecting and analyzing data. Once the researchers gather the data and analyze it, then they test the hypotheses to conclude the calculations.

Economic terms such as national income, per capita income, unemployment rate, various indexes entirely depend on the statistics. The connection between exports and imports, demand and supply, inflation rates can be determined with statistical concepts.

Astronomical calculations

Astronomy deals with the evaluation of distance, masses, density, and size of heavenly bodies. Astronomy is one of the oldest fields that uses statistical concepts for various measurements. Astronomers measure the movement of the stars, planet, and distance of each planet with the help of statistics concepts.

Accounting field

Exactness matters a lot in accounting, whereas statistics provide us with approximations. The purchasing power of money and its current value are responsible for the precision of the values of current assets. However, decision-making does not demand too much precise value; it can be done with the approximate values.

Sampling techniques of statistics are broadly used in auditing. Error determines the size of the sample for an auditor.

Government Policies and Administration

Statistics play an important role in the administration of a country. Statistics methods help to make different policies. The statistics concepts take all the administrative decisions. In addition, statistical methods are used to measure the various government calculations such as pay scale of the employees, cost of living standard, money spent on policies, etc.

Banking sector

In the banking sector, statistics are used for different purposes such as deposition and withdrawal of money, profit claims, interest rates changes, etc. Bankers use probability concepts to estimate the profit by lending the money to needy people.

Conclusion

As a whole, statistics applications are useful in almost every aspect of life. It is used in various sectors for different calculations. In mathematics we solve the equations and formulas to get a perfect answer or value but in statistics we use approximate value to make decisions.

In this blog we have talked about the importance of statistics in different fields. I hope now you know how statistics are important in our day to day life.