Introduction
One important aspect of everyone's life is making decisions. We take decisions multiple times a day. These decisions can be as small as choice of color you want to paint wall of your room with or as big as to take your company public or not.
The question is; How do you make these decisions?
Imagine you have decided to paint the wall of your room white. How did you reach to this decision? Is it a random thought? or Is it a decision on the basis of some input? Likewise, when an entrepreneur is making a decision to take the company public or not, How he is making this decision?
In both the cases we have one of the two choices. That is either we make an informed decision or uninformed decision. Which one of the two approaches do you think is more effective while making a decision?
Let us discuss a situation
One of my students working in Gurugram came to meet me and he was mentioning that, "I use a lot of information based approach to make decisions and that helped me in getting a good position at the company". As the discussion went along I came to know that he is searching for a rented individual accommodation in Gurugram. The challenges in making the decision was (i) cost of individual places was too high, and (ii) the hostels do not allow to set up individual WiFi connection and it was required for work. I said how you are taking the decision? to which, he mentioned that he is randomly talking to the people and searching on google to make it work. He was making the decisions randomly with negligible input or information. I said let's take a informed call here; let's collect some information and solve the problem for you. The first input we have discussed is the transportation mode that is most suitable for him, to which the answer was Yellow Line Delhi Metro. The next information gathered was, the time he can afford in travelling. In response he mentioned that he is happy to travel 25 - 30 mins one way. We traced all the stations on Yellow Line of Delhi Metro using DMRC website; Identified 25 - 30 minute distance stations from his office; near those stations searched for affordable rented individual accommodations and found the solution.
You can observe the difference in making a decision based on information and non-information. This information is also called as "Data". Statistics facilitates to process this data mathematically and systematically. You could say that, "Data are words that are converted into communicable sentences using statistics". It is important to understand that the data or information can be received in qualitative or quantitative format. Statistics operates majorly on quantitative data. It is not necessary that the informed decisions are always correct, however the probability that an informed decisions provide better outputs is very high.
Summary
Decisions made by processing information or data are more effective and efficient comparatively. Statistics is a mathematical tool that provides apt mathematical tools for processing the information or data. The data can be qualitative or quantitative. Statistics has a better applicability on quantitative data.
History of Statistics
Historically, statistics is known as the "Subject of Kings". In order to rule a kingdom effectively and have an efficient administration, the most important thing for a king is to be informed about his kingdom. The information related to population of the kingdom, economy of the state, potential people available for service etc. Hence, kings used to get the information of the state collected and documented from time to time. Three words "Status", "Statista" and "Statistik", Latin, Italian and German respectively are in closed historical proximity of the word "Statistics", and refer to political state.
In India, the evidences of data collection on vital statistics can be traced back to 300 - 324 B.C. during the regime of "Chandrgupta Maurya", through "Arthshastra", written by Kautilya. Raja Todarmal during the regime of Akbar also maintained the data related to revenue collection and the evidences can be found in Aina-e-Akbari written by Abul Fazi. However, the statistics was practically practiced throughout the world, the theoretical development of Statistics started taking shape in 17th century with introduction to Theory of Probability. The mathematicians like Pascal, Fermat, De-Moivre, James Bernouli have contributed heavily to the field of probability and indirectly to the field of statistics.
Importance and Scope of Statistics in Professional Career
From the discussion above it can be clearly understood that knowledge of statistics is vital for making data driven decisions. Most of the firms feel confident about data driven decisions. However, there is an amount of uncertainty involved in these decisions as well but it is a tradeoff between making decisions in dark or in the light of data.
The statistical decision making is applied in all walks of life. Some of the examples are given below;
A scientist in chemistry may want to understand the significant difference between the results of two experiments and may use statistical tools to find the statistically significance to prove the results. A scholar studying physics may wish to identify the strength of relationship between two data sets produced by two different experiments and hence used the statistics. An economist may want to study the impact of a government decision on consumer price index and conduct a statistical study to observe the impact. A biostatistician may want to understand the significant difference among various treatments given to species. A farmer may want to understand the impact of soil and seed quality on the harvest. A management professional has to make data driven decisions in all fields of management frequently e.g., a marketing professional may wish to study the impact of two advertisement on sales, a human resource manager wants to measure the level of satisfaction of employees with newly announced leave policy, a finance professional may wish to study the average change in the cash flow over the years, an operations manager may want to ensure the quality control, all these answers can be confidently provided by the statistical tools and their right application. Hence, in modern world statistics is a required ability as to read and write for effective and efficient decision making.
Statistics also serves as a foundation course for conducting research in all fields of applied and social sciences.
Limitations of Statistics
Since statistical decision making is largely driven by the voice of data, the researchers' scope is limited to data based interpretations. However, the subjectivity lies in the interpretations made by analysts on the same data. Further, statistics has a limited role to play in qualitative studies, the scope of statistics is much wider in quantitative studies. Statistics also very sensitive to data errors e.g., biasness, manipulation, data feeding errors, inappropriate methods. The sensitivity is very high when data sets are small in size, hence utmost care is required while performing statistical studies.
Conclusion
Statistics is the necessity for making effective data driven decisions, that are highly efficient and smart. Statistics also improves the analytical ability of the practitioner. Statistics provides a concrete foundation for research aspirants. Statistics enhances the ability of using the IT tools of an individual as most of the statistics is practices on computers these days. Statistics provides the confidence for executing a decision as it is backed by concrete mathematical reasoning. Statistics helps the managers to diagnose the problems and issues of the system, this further helps to make tailored decisions for cure. Statistics helps managers to produce impactful reports even for everybody's understanding.
Practicing Statistics
Reading business newspaper will provide a lot of exposure towards the quantum of statistics that is used for understanding the business and making business decisions. You may also go through cases where projected statistics could not get to the output. Government of India has a department called, "Office of the Registrar General & Census Commissioner, India" under the ministry of Home Affairs.
Loads of data can be found on the website to have a statistical understanding of the Country. Each country and every state of India has such departments for collecting statistics for effective and efficient decision making.
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TED Talk
A Knowledgeable and Understandable introduction into Statistics , Focused on How Decisions can be Made with the Help of Proper data , History of Origination , etc., A Wonderful Start to The Subject. THANK YOU SIR
Aditya Narayan
Section A
924368
It was too much Informative Sir and "I am grateful for the encouragement and knowledge you’ve shared. Your impact on my education has been invaluable."
Thanking you.
Prakhar Singh
Section A
924304
It's was very informative about Statics and it's important points also mentioned here and it is very effective and efficient decision by the help of statistical decision making.
Thank you so much sir for sharing this with us
Shalni gaud
Section A
924107
It is very informative and gave a brief knowledge about statistics and it's history and importance usage in different sectors.
Thank you so much sir for sharing this with us .
Prapti Rathor
Section A
924042
It was wonderful to read the introductory part of statistics that emphasizes on decision making by the help of statistics data information and got know that how important it is to make effective and efficient decision by the help of statistical decision making.
Thankyou so much sir!!
Best regards
Richa!!
924480
Section A