Statistics For Economics: Introduction, Benefits & Limitations
If you are an economics student, you’ll probably know about statistics because you’ll need to use it for your degree. But what about economics? Many people will think that economics is a subject that doesn’t need any statistics. But in fact, statistics play a significant role in economics. A lot of data that we use every day is based on statistics. So it’s extremely important to understand statistics to understand economics. This blog aims to give a short course on statistics for economics. But before we get started, let’s look at what statistics mean in economics.
What is statistics for economics?
Statistics in economics is concerned with gathering, processing, and analysing specific economic data. In addition, it helps in the understanding and analysis of economic theories, as well as the identification of correlations between variables such as demand, supply, price, production, and so on.
In other words, the significance of statistics in economics is well known since statistics are used to collect, compile, process, distribute, and analyse economic data.
However, you may have heard that economic analysts highlight each government programme’s good and bad aspects or economic decisions. These judgments are not based just on speculation but on strong statistical proof derived from statistical data.
Let us examine the characteristics of statistics.
- Statistics is numerically represented.
- It is fairly accurate.
- It indicates the systematic gathering of data.
- Data acquire from several sources in comparison to one another.
- A variety of things can influence statistical data or analysis.
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Statistics in a Plural sense
We are interested in statistics for economics in its Plural sense. That is, statistics are numerical statements or quantitative facts in situations that arrange in connection to one another.
Here are the characteristics of statistics in its plural sense
Numerically expressed
Statistics in economics concerns with data and are quantitative. Qualitative descriptors such as rich, poor, and tall. In addition, it has no statistical universe.
Reasonable accurate
A statistical conclusion should be reasonably accurate. However, this determines by the investigation’s objective, type, scale, and available resources.
Systematic data collection
It also provides systematic data collection from many sources. In other words, it is gathering raw data without knowing from origin. Additionally, it is quite helpful in economics, as we must collect data from numerous economic sources.
Aggregation
Statistics in economics may also benefit from aggressiveness and data averages. Economics is not dependent on a single piece of data. Additionally, it is built on a significant quantity of data. However, the economist uses this characteristic to compute the countries per capita income.
Statistics in a Singular Sense
Here are the features of statistics for economics in a singular sense.
Data collection
Firstly, it is to decide on a data collection approach for a given research and then collect data.
Data organisation
Secondly, the data acquire is then simplified so that it may compare. The data organisation at this step divide according to time and location.
Data presentation
Thirdly, it shows the structured data in graphs, charts, diagrams, and tables to make it easy and appealing.
Data analysis
Following the presentation, the data examine to get accurate findings. Measures of dispersion, measures of central tendency, interpolation, and other techniques include in the data analysis.
Data interpretation
The data interpretation is essential for determining the magnitude of a percentage, averages, and degree of association for various economic variables.
Benefits of Statistics For Economics
There are many benefits of statistics; some of them are as follows:
- Statistics provide more weight to numerical data. Publishing data in bulk also boosts economic credibility and financial integrity.
- Economic statistics may also help promote economic ideas. In addition, it contributes to the development of economic theories and models by giving evidence.
- National policies are developed via policy formulation. Statistics are quite helpful in developing an effective approach. However, several economic statistics can help you develop better policies.
- Economic equilibrium is the point of contact between the producers and the customers. Both sides are delighted with the market in this case. Economic equilibrium is simple to calculate using statistics in economics.
Limitations of Statistics For Economics
- Firstly, Statistics does not consider elements that cannot be represented quantitatively.
- Secondly, statistics only work with aggregates and cannot deal with data on a single entity.
- Thirdly, statistics in economics are mainly valuable to economists. It signifies that a small number of individuals only use it.
- Lastly, Heterogeneous data will be useless.
Conclusion
I hope you enjoy this blog about statistics for economics. We know this information is helpful for you!
Statistics in economics are becoming an increasingly important component of economics. As a result, students studying economic studies should be familiar with statistics and statistical software. In addition, if you want to be a great economist, you should strive to be well-versed in statistics. Some of the useful instruments for statistics in economics are listed below.
