The Magnitude of Statistics in Our Day-To-Day Life

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Whoever thought that statistics was just a set of mathematical equation and is studied to analyze things and do calculations, have not yet learned why it is such an important subject?

I say these above lines because students often live in a world that boasts to them about a couple of things. Amongst many, the common one is “Now somebody is going to be an analyst!”

It is actually true. One who has underestimated Statistics has lost a lot. Statistics plays a significant role in routine life. We don’t realize it unless someone helps us know.

Let me take this opportunity to help our students know how statistics plays a vital role and why should one not underestimate its importance.

So the study that deals with collecting, organizing, analyzing, interpretation and presenting data is Statistics indeed. The study incorporates the concept of probability from mathematics. It is this probability that helps one to know how likely an event to happen is. It basically makes all of us around the globe informed about certain occurrences of events and happenings.

Why do you think Statistician, Biostatistician, Lecturer, Consultant, Professor, Data Scientists, Content Analyst, Statistic Trainer and many others in this field are paid the highest?

This day we live in an environment that is created much about information. This information is done much by statistics help.

  • From Where Do You Think You Understand The Weather Forecasting?

Weather forecasting is done using statistical concepts. There are computer models that work towards it. Statistic collects weather-related data. These are collected through means of satellites, radars, barometers, weather balloons, and such other instruments to gather information from water, atmosphere, and land. With the help of the statistical value of the atmospheric pressure, speed, rain, temperature, humidity and several components with regards to weather conditions, the predictions are dealt with.

  • How Do You People Rely On Certain Brands!

Surveys are conducted so that customers get better product and services. Data is collected to learn how certain products are preferred over others. Thus, when out of 10 doctors, 8 doctors claim that specific hand-wash is good, the brand is automatically uplifted. There are a whole lot of interpretations that are presented to the marketers.

The above is nothing but the quantitative interpretations of the data. The trustworthiness of the brand is growing due to the analyses and predictions made. The data collected benefits the investigators to go ahead with a variety of analytical procedures. This further leads to accurate results.

But if you thought the process was a cakewalk, you have certainly mistaken. It is the statisticians that ensure all the aspects of the data collection is followed that is from producing reliable data to analyzing the data considerably to interpretation correct inferences. The entire process demands to study the design, selecting and measuring variables, devising the technique of sampling to cleaning the data and presenting exact conclusions.

  • The Financial Market Requires Statistical Help

If you have read about Carl Friedrich Gauss, you will understand what I am hinting at.  Contributions on quadratic equations, normal distribution, and least squares analysis are uncountable. It is a Gauss model that is often referred to in the financial markets from the prices to probabilities. Normal distribution and the bell curve are parties to the financial world. Distributions cannot go without it being characterized under mean, median or mode. Similarly, when it comes to measuring dispersion, standard deviation and variance is a must.

The idea of using such a distribution model is simple. Let’s put it this way, when there is a normal distribution, then 68% of all the scores fall within -1 and +1. This would particularly mean standard deviation of the mean. While when there is 95% fall it will be within 2 standard deviations, and when it is 99.7% it definitely falls within 3 standard deviations.

So How Does The Gaussian Model Apply To Trade?

The volatility of the market is measured using the Standard deviation. It studies the performance of returns that may be expected in the future. When there is a lower standard deviation, it implies a lesser risk towards an investment while when there is a higher standard deviation; there is obviously a higher risk factor. It is here that the traders then measure the closing prices (difference from the mean). The closing prices that show more difference between the actual values to that of the mean, it claims to show higher standard deviation and thus higher volatility.

Over time, there are several other models that are incorporated to study the financial market and help gain the traders. Statistics, as a result, plays a significant role in the financial market. Without the presence of statistical models, it would have been a different state of mind for the businessmen and the traders in the complete cycle of investment and earning higher revenue.

  • Statistics Allows You To Take Control Of Your Very Life

One life and that’s all we all have. Most of us want to be our own bosses. We hate being dominated. But there has to be something that benefits somebody to take a decision in that regard. Who does that, have you ever wondered?

Bingo, yes, it is Statistics of course. Your daily routine, you use statistical data to make decisions. Taking decision from bad to good be mostly done based on the statistical data available. The data acts like a tool aiding you to react wisely to the information you have heard or read somewhere.

How often does one react to statements like -: “According to the research, 68% of children between the age group of 4 to 16 are susceptible towards obesity.”

Your reaction to this will be instant. You will start keeping a check on your child’s growth. You will avoid junk food eventually. You will want your child to run, skip, jump and do a lot more to remain fit. To prove your child the point, you will set an example.

So you see before you knowing much on statistics and all, you have actually reacted to the data that is provided through a collection of data samples.

Such claims come from investigators, researchers, who hail from the departments of health, sports, law, psychology, business, government etc. It is the data interpretation that is making a common man react to the given time.

  • How Do You Think The Economics Of A Nation Is Administered?

Yes, Economics of a country depends upon national income accounts. These are in turn driven by statistics. Several statistical methods are used by economists and administrators to prepare such accounts. So how does statistics find its place in economics?

Well, it is with the use of a statistical process that collection and analyzing of the data are done and the test of hypotheses is conducted. In fact, the study of demand and supply is learned using statistical techniques. An economy’s inflation rate, to per capita income and per capita consumption and more are prepared with the help of knowledge of statistics.

Also analyzing other economic problems such as unemployment, poverty and more are done with the help of different tools in statistics. Studying the impact of varied government campaigns like that of family planning programme, to poverty alleviation program, predicting the impact of inflation if the money supply gets higher in the economy, all this and more are studied at length with the help of Statistics.

Even at the micro level, decision making at organizations, households in terms with the production of the goods to its consumption, is constrained the study of data. It is the economists and statisticians that use statistical skills to collect appropriate data so that it is a win situation for everybody and there is no loss of time, data or money.

Much of the policies are framed with the aid of statistics concept. For instance, how much should be food production, the GDP, and so on and so forth. This will require you to know the factors that will give the right estimation of the production required and the imports needed.

It is when the facts and figures are in front of the government, it becomes easy to do the forecasting and act accordingly so that the population is not affected in the long run.

  • Banking Sector Needs Statisticians Too, Know How?

It is so surreal but it is true. Banks use much of statistics for their own predictions and calculations. Based on the principle of probability, estimation for a number of deposits to that of claims and loans are reckoned.

As a matter of fact, investment banking depends upon Statistics. Banks make a profit through interest payments and loans. Issuance of bonds is made on behalf of companies on the risk management basis. The risk is estimated with the help of statistical tools. With the help of statistics creating the function of probability against each loan and patron, it helps the banks to maximize the profit ratio and minimize the risk.

With the help of statistics, market risk can be studied. It helps the bank to study the exposure of the bank to the market. Based on the study, impact on the investments, stocks, Value at Risk (VaR) are studied. Investment banking involves relative systematic risk; everything is examined well with techniques of statistics and then put across. A lot of learning goes into understanding the simulations and creating skewed bell curves. And if you thought all that was simple to do, you are sadly mistaken.

Much of the operation risk analyses happen with statistics that showcase the likelihood of certain incidents. While liquidity risk that reads how liquid the money is that is turning your assets into cash is also done by taking the aid of statistics and its analysis.

  • Statistics Needs Its Presence In Natural And Social Sciences Too

When it comes to experimenting with natural and social sciences, it is the statistical method that is followed. In fact, most of the experiments are done using these methods. Be it the conduction of test in biology, chemistry, sociology, or physics, a lot of analyses goes into this. In fact, even information technology relies on statistical data collection and its analyses too.

Medical field medicines and drugs that are prescribed require statistical validation for its approval and effectiveness. Medical science couldn’t have shown its miracle if it hadn’t abided by the rules of statistical value.

Insurance too requires statistical models for calculation of the risk towards giving insurance.

To Cut the Long Story Short

Statistical models, concepts and techniques are used in a variety of things. What products we use this day is made after quality testing. Using the sampling method to prediction of epidemics is done with the help of statistics concepts. The news that we view and we listen is also made on prediction. For instance, who will win this baseball tournament to who will be the elected as the leader in the elections; everything is a part of statistical game plan.

The world is now a smaller place as with the collection method of information through statistical data, the internet bonds all of us with its information. Representation of the things in true forms is done with the help of figures. Imagine a world without statistics!

It would have been a bizarre world with vagueness and undefined. It is with the definite form of facts that this day we have the latest gadgets, the latest motorbikes, modern kitchen types of equipment, hi-tech cities and more. It has definitely helped to increase the standard of living by knowing what a common man wants.

Author’s Bio:

Maja Kazazic is a professional educator and blogger. He has completed her MBA from the University of Chicago – Booth School of Business and he has an experience of 6 years of working with several leading organizations. Because of his skills and experience, he can understand the problems of the students and they can contact her at helpmeinhomework.com for getting any kind of academic help.