Statistics For Economics For Class 11 N M Shah

PREFACE TO THE THIRD REVISED EDITION
Periodic updating and review accommodate new knowledge as well as adds

freshness even as it allows for continuity. This third revised edition is an effort to
that end.
Statistics for Economics for class XI in its revised format brings forth the changed
mode by the Central Board of Secondary Education, New Delhi in 2005-06. The
revision includes sufficient exercises keeping in mind learning tools of Statistics in
the context of the study of Economics.
This volume incorporates extensive and colourful diagrams and illustrations to
enhance a better and friendlier understanding of concepts of Statistics. Answer to
the numerical questions in the exercise of unit 3 are also provided so that the
students can verify the solutions.
It is hoped that this revised edition will be of great help to both teachers and
students.
N.M. SHAH
PREFACE
Stamtics has become an anchor for social, economic and scientific studies
Stat,st,cal methods are widely used in several disciplines, be i, planning bul '
management, psephology (study of voting patterns), psycholo^ oT adve Sn;
steps. A hst of formulae has been provided at the end of each chapter of unit 3 and
rJr rTT ông years of teLh ng thrsubta
I have to acknowledge that in the wriring of this volume I have got immense help
rom my frtends and relation. The pubUshers have been very cooperative aTrelp ll
1 Trr r "tT-
-derstanding w'fe bes d s tsp rin '
me and looktng after the household, has done ind.spensable work for the volume Z
M.M. Shah, himself a scholar and teacher of economics, and who retired as dean of
acuity of Commerce, Nagpur University and Prmc.pal, G.S. College of clt rct
Shri Ram College of Commerce, Delhi April, 2002
N.M. SHAH
SYLLABUS
STATISTICS FOR ECONOMICS-XI
One Paper
3 Hrs.
100 marks
104 Periods/50 xMarks 5 Periods/3 Marks 25 Periods/12 Marks 64 Periods/30 Marks
10 Periods/5 Marks
PART-A
STATISTICS FOR ECONOMICS
1.
Introduction
2.
Collection, Organisation and Presentation of Data
3.
Statistical Tools and Interpretation
4.
Developing Projects in Economics
Unit 1: Introduction
What is Economics?
^^
Meanmg scope and importance of statistics m Economics

Unit 2: Collection, Organisation and Presentation of Data
SoToflot^tm^^^^^^^ W imrr^
and National Sam;:;! sT^.y^lZZT
^^^^ ^^
p,,,
Organisation of Data: Meaning and types of variables; Frequency Distribution.

Unit 3: Statistical Tools and Interpretation
interpretation for the rite dîved)
P'-d'
deviat.o,_Lorez curvLMeaJâX ^^^ --Karl Pearson's method

Oirrelation-meaning, scatter diagram-Measures of correlation-(two variables
ungrouped data), Spearman's rank correlation
"n^ inL'"on types-wholesale price index, consumer price
"umLrs
production, uses of index numbers; inflation and iLx
Unit 4: Developing Projects in Economics

Tu . J
Periods
in n j
latlo^ both TaL tT^rV"
data, secondary
of L eimnl. f I' organisations outlets may also be encouraged. Some

of the examples of the projects are as follows (they are not mandatory but
suggestivT) (t) A report on demographic amongst households;
suggestive).
() Consumer awareness amongst households
(/) Changing prices of a few vegetables in your market
(w) Study of a cooperative institutionmilk cooperatives
êJ^t to enable the students to develop the ways and
u1
CONTENTS
UNIT 1 : Introduction
1.
What is Economics
2.
IntroductionMeaning and Scope .
UNIT 2 : Collection and Organisation of Data

3.
Collection of Primary and Secondary Data
4.
Organisation of Data
Presentation of Data
5.
Tabular Presentation
6.
Diagrammatic Presentation
7.
Graphic Presentation
UNIT 3 : Statistical Tools and Interpretation

8.
Measures of Central Tendency
9.
Positional Average and Partition Values
10.
Measures of Dispersion
11.
Measures of Correlation
12.
Introduction to Index Numbers
UNIT 4 : Developing Projects in Economics
13.
Preparation of a Project Report
1 10
22 52
76 87 108
138 178 232 313 354
394
WHAT IS STATISTICS?
S:T:A:T:I:S:T:I:C:S:
Scientific Methodology
Theory of Figures
Aggregate of Facts
Tables and Calculation for Analysis
Investigation
Systematic Collection
Tabulation and Organisation
Interpretation
Comparison
Systematic Presentation
tc fc ea dc in lif wl his
in (
UNIT 1
HmODUCTIOr^
m Whui is ficonoinifs? Jlieaiiiiig, Scope and Imporianct^ of l)tatislics in Economms
Chapter 1
what is economics?
1- Introduction
2.
Activity
3.
Definition of Economics
4.
Nature of Economics
Economics as a Science (i^ Economics as an Art

introduction
If each of us possessed 'Aladdin's magic lamp, which we had merely to rub in order
to get our desires fulfilled immediately, there would be no economic problem and no
need for a science of economics. In real life we are not lucky as Aladdin, we have to
work to earn our livelihood. All people in this world work to satisfy their unlimited
wants and desires. Every one requires food to eat, clothes to wear and house to live
in. Besides these in daily life. They need television, mobile phone, motor bike, car
etc., to lead a comfortable life. The person visits the market and enquires about the
varieties and prices of the item which he wants to purchase. Thinking about his
source and alternative choices, he uses his sense of economy and decides to buy
that item. This is economics.
So,
A customer is a person who buys goods to satisfy his wants.
A Producer is a person who produces or manufactures goods.
A Service holder is a person who is in a job to earn either wages or salary to buy
goods.
A Service provider is a person who provides services to society to earn money, e g
doctors, scooter drivers, lawyers, bankers, transporters, etc.
All above persons are busy in different activities to earn, called economic activity in
ordinary business of life. They face in their life the problem of scarcity of income
z
Statistics for Economics-XI purcha.
Thus,
and^J^Ttu' "" ^r^'^ff'^^l^dge with economic activities relating to earning ar^
spending the wealth and tncome. Economics is the study of how human beinJZa^
tZ^ tn":^-' T"""
unlimited wLts in sZZ Z^LTZ
ômm maxnntse thetr satisfaction, producers can maximise their profits and
society can maxtmtse its social welfare'.
^^
infn^W mT publication of Adam Smith's "An Inquiry
into the Nature and Causes of Wealth of Nations", in the year 1776 At its Mxth Z
name of economics was 'PoHtical Economy'. Some of the suggested names
Catallactics or the science of exchange.
Plutology or the science of wealth.
Chrematistics or the science of money-making
~ "y't toôm- s''.'^'
-- ^
(HoItVoTr
has its origin into two Greek words : Oikos
E'^gli^h
'
'ô'^tical
(Household) and nomos (to manage). Thus, the word economics was used to mean
home management with limited funds available in the most possible economLal
mTn2
activity
Iife.?herlf
"
day
1.
Non-economic Activities
2.
Economic Activities
or
Activities. These activities are those which have no economic aspect
or are not concerned with money or wealth, viz.

~ bkll^S ''
8-together, attending
Dirtnday parties or marriages etc.

" wSrCo?'''!'''^'"'^ ''
o,
&
^"^"dwara, mosque or church to
worship God, attending mass prayer (Satsang), etc.

Political activities such as various activities performed by different political
parties namely by Bhartiya Janata Party (BJP), Congress Party etc
~
^'ds or helping
Parental activities, such as love and affection towards their children
^lêy involve any
nf
Activities. Different types of activities are performed bV different types
of people (doctors, teachers, businessmen, industrialists, lawyers etc.) so as taelT^
What is Economics?
living. Every one is concerned with one or the other type of activity to earn money
or wealth to meet their wants. An economic activity means that activity which is
based on or related to the use of scarce resources for the satisfaction of human
wants. Economic activities are classified as under :
the
ECONOMIC ACTIVITIES
i
nt
>ution
kos ome
I day
ispect nding to lies ilping
any
[types I their
Production : Production is that economic activity which is concerned with increasing
the utility or value of goods and services. Manufacturing shirt with the help of cloth
(raw material) and tailoring (labour) etc. is an act of production. Transporting sand
from river bank to a town, where it is needed, is also an act of production. Here
utility is created through transportation of goods to the person who needs it.
Consumption : Consumption is that economic activity which is concerned with the
use of goods and services for the direct satisfaction of individual and collective
wants. Consumption activity is the base of all production activities. There would
have been no production if there would have been no consumption. For example,
eating bread, drinking water or milk, wearing shirt, services of lawyer or doctor etc.
are consumption activities.
Investment : Investment is that economic activity which is concerned with

production of capital goods for further production of goods and services. Investment
indirectly satisfies human wants. For example, the production of printing press
machines to print newspapers, books, magazines etc. or investment in computers to
provide Internet, banking and related services.
Exchange : Exchange is that economic activity which is concerned with sale and
purchase of commodities. This buying and seUing is mostly done in terms of money
or price. So, it is also called ""Product Pricing'' which relates to determination of the
price of the product under different conditions of the market, viz., perfect
competition, imperfect competition, monopoly etc.
Distribution : Distribution is that economic activity which deals with determination
of price of factors of production (land, labour, capital and enterprise). This is known
as the 'Factor Pricing', e.g., price of land is rent, that of labour is wage, that of
capital is interest and price of entrepreneur is profit. Distribution is the study to
know how the national income or total income arising from what has been produced
in the country (called Gross Domestic Product or GDP) is distributed through
salaries, wages, profits and interest.
"Economics is that branch of knowledge that studies consumption, production,
exchange and distribution of wealth".
Chapman
10
Statistics for Economics-XI
definition of economics
Economics has been defined by many economists m different ways The set of
cat"go^s^'"'" ''
^^
mto the folwL; W
1.
Wealth definitionAdam Smith
2.
Material welfare definitionAlfred Marshall
3.
Scarcity definitionLionel Robbins
4.
GroAvth definitionPaul A. Samuelson
1. Wealth Definition
(/) Adam Sm^th the father of modem economics, m his book 'An Inquiry mto the
Nature and Causes of Wealth of Nations' in 1976 defined thatproduction and expansion of wealth as the subject matter of
() According to J.B. Say, Economics as "the science which deals wtth wealth"
ofTaTth!
"
^^^ consumption
{in) Ricardo shifted the emphasis from production of wealth to distribution of wealth
Criticism : This definition is not a precise definition. It gives importance to wealth
rather than production of human and social welfare.importance to wealth
The wealth definition of economics was discarded towards the end of the 19th
century. 2. Material Welfare Definition
"Economics is a sUuiy of mankind i the ordinary business of life it examines that
What is Economics?
5
Criticism :
{a) In economics, we study immaterial things also.
(b)
Welfare cannot be measured in terms of money.
(c)
Welfare definition makes economics a purely social science.
II h "Tf
""
"
- d^ff-nt times.
Then basic difference between Adam Smith's and Marshall's definition is that Ad.m
r-iti* sr. -hiri^3. Scarcity Definition
There are three important aspects in this definition. They are
Icf of Tir m" human wants which is the
tact of Me. When one warn gets satisfied, another want crops up.
fr"
''
are scarce in relation
coal IS used m factories, m running railways and in thermal stations for electric
generation and by households, etc.
electric
In short, according to Robbins, Economics is a science of choice It deals with how
Crit^sm :
Sfets
Scarcity definition of economics has been criticised on the following grounds (0
The defimtion is impractical and difficult. It is narrow and restricted in scope It
^ development. It has notS^^^
Hi) The definition makes economics a human science.

4. Growth Definition
Paul A. Samuelson defines
to pû^ vanous commod,Ues overtime and distribute them for consumptionZ^ or
12
The definition combines the essential elements of the definitions by Marshall and
Robbms. Accordmgly, economics is concerned with the efficient allocation and use
of scarce means as a result of which economic growth is increased and social
welfare is promoted. The definition has been accepted universally. In short, the
growth definition of economics is most comprehensive of all the earUer definitions.
iture of economics ^
Nature of economicsas a science or art. It is science and art as well.
NATURE OF ECONOMICS
ics as Art
A. ECONOMICS AS A SCIENCE
Science can be divided into : (a) Natural science, and (b) Social science : Sciences
like Physics Biology and Chemistry are natural or physical sciences, where
experiments can be conducted in the laboratory under controlled conditions.
Relationships can be decided between cause and effect, which are based on facts.
Observations can be made and used to prove or disprove theories. The results apply
universally.
Economics is a social science because it is systematic study of economic activities
of human beings. Economics is a science as it is a branch of knowledge where
various facts have been systematically collected, classified and analysed.
The following arguments are given in favour of economics as a science.
(/) Systematised Study : The study of economics is systematically divided into
consumption, production, exchange and distribution of wealth and finance which
have their own laws and theories. Economics as social science which is a systematic
study of human behaviour concentrating on maximum satisfaction to households
maximum profit to producers and maximum social welfare to the society as a whole.
^
Hi) Scientific Laws : Economics is a science because its laws are universally true
Different laws m economics namely, law of demand, law of supply, law of
dimimshing marginal utility, law of returns, Gresham's law etc. are applicable to all
types of economies, whether capitaKstic, socialistic or mixed economy
y
ae. of ; to
What is Economics?
(m) Cause and Effect Relationship : Economic laws establish cause and effect
relationship like the laws in other sciences. For example, the law of demand shows
the relationship between change in price and change in demand..It shows that
mcrease in price of a commodity (the cause) will decrease its demand (the effect)
establishing the negative or inverse relationship between price and quantity
demanded. The law of supply shows that the increase in price of a commodity
(cause) will increase its supply (the effect) establishing the positive relationship
between price and supply of quantity of commodity.
(iv) Verification of Laws : Like other sciences economic laws are also open to
verification. These economic laws can be verified through any empirical
investigation.
On the basis of the arguments given above, we can say economics is a sciencenot
exacriy natural or physical science but social science that studies economic
problems and policies in a scientific manner.
EconomicsA Positive or Normative Science
(a) Economics as a Positive Science
A positive science is one which makes a real description of an activity. It only
answers what ts} what was! It has nothing to suggest about facts, positive
economics deals with what IS or how the economic problems facing a society are
actually solved. Prof. Robbins held that economics was purely a positive science.
According to him, economics should be neutral or silent between ends; /.e., there
should be no desire to learn about ethics of economic decisions. Thus, in positive
economics we study human decisions as facts which can be verified with actual
data.
Some exampi es of Economics as a positive science are : {i) India is second largest
populated country of the world. (k) Prices have been rising in India.
(m) Increase in real per capita income increases the standard of living of people. (iv)
The targeted growth rate of the tenth five-year plan is 8 per cent per annum. {v)
Fall in the price of commodity leads to rise in its quantity demanded.
(vi)
Minimum wage law increases unemployment.
(vii) The share of the primary sectors in the national income of India has been
declining.
{viii) Ordinary business of life is affected enormously by tsunami, earthquakes, the
bird flue, droughts, etc.
(b) Economics as a Normative Science
A normative science is that science which refers to what ought to be} what ought to
have happened} Normative economics deals with what ought to be or how the
economic problems should be solved. Alfred Marshall and Pigou have considered the
normative aspect of economics, as it prescribes that cause of action which is
desirable and necessary to achieve social goals. It makes an assessment of an
activity and offers suggestions for that. The statements which make assessment of
activity and offer suggestions are called
14
normative statements. The normative statements, in fact, are the opinions of

different
persons relating to tightness or wrongness of a particular thing or policy. Normative
statements cannot be empirically verified. That part of economics which deals with
normative statements is called Normative Economics. Thus, economics is both
positive and normative science. F^smvc
Some examples of Economics as a normative science are :
(/) Minimum wages should be guaranteed by the government in all economic
activities. (//) India should not take loans from foreign countries. [Hi) Rich people
should be taxed more. [iv) Free education should be given to the poors.
{v) Effective steps should be taken to reduce income-inequalities in India. (vi) India
should spend more money on defence. {vii) Government should stop minimum
support price to the farmers.
(vtii) Our education system should produce sufficient qualified and trained persons
to the economy.
Economics as positive science and normative science is inseparable. In reality
economics has developed along, both positive and normative lines. The role of
economist is not only to explain and explore as positive aspect but also to admire
and condemn as negative aspect which is essential for healthy and rapid growth of
economy.
In the followii^ examples first part of statement is positive giving facts and second i
part IS normative based on value judgements.
H) Indian economy is a developing economy, the government should make
development through correct and proper planning.
(ii) A rise in the price of a commodity leads to a fall in demand of quantity of
commodity, therefore government should check rise in prices.
(iti) Rent Control Act provides accommodation to the needy peoples, therefore, the
act should be honestly implemented.
B. ECONOMICS AS AN ART
Art IS practical application of knowledge for achieving some definite aim. It helps in
solution of practical problems Art is the practical application of scientific principles.
Sc ence lays down princip es while art puts these principles into practice. Economics
is an art as it gives us practical guidance in solution to various economic problems. '
We all know that there is oil shortage in India. The information given by
economics .sposmve sconce We also know the govermnent aims at removing' oil
shortage X information supplied by economics is normative science. In order to
achieve the objective of full availability of oil m India, the govermnent has followed
the path of oil plaLng The path of planmng is an art as it implies practical
application of knowledge with a view to achieve some specific objectives. So, we
can say that economics is an art. Economics is, thus, a science as well as an art.
What is Economics?
exercises
i Explain the origin of word 'Economics', i What is economic activity?
Distinguish between non-economic and economic activities.
Make a Ust of economic activities that constitute the ordinary business of life.
What are your reasons for studying Economics?
How will you choose the wants to be satisfied?
Give Adam Smith's definition of economics.
Define economics in the words of Alfred Marshall.
"Economics is the science of choice." Explain.
Which is the most accepted definition of economics? Give the definition. Explain
welfare definition of economics.
"Economics is about making choices in the presence of scarcity." Explain. How

scarcity and choice go together? What is meant by economics? Economics is a
science? Give reasons.
Discuss the nature of economics as a science. Give argimient in favour of economics
as a science.
Is economics an art? Give reasons.
Is Economics a science or an art? Explain with reasons.
Is economics a positive science or a normative science or both? Explain.
lin
3.
4.
5.
6.
Chapter 2
introduction-meaning and scope
Introduction What is Statistics? Functions of Statistics Importance of Statistics
Limitations of Statistics Misuse of Statistics
i introduction
e,
plannW and X
^^^^ ^^ ^
progJsst tcTs - - developments and

chemistry, medicine, technology etc) neLTnWr'
new machines have been devdoS'tLt I f ff
because man-whether Indtn
' ^^"^'ês of energy,
T? -^f^^ble. All this is possible
thinking and reasoning which had evo^

given us civiIisation4he wtef
^P^^^^ês,
'""I' ^^ ^^"^^ê-is gifted with
f ^^ has
electricity, machinery etc. We ntw ^^ ^ê irrigation system,

systems, better organisations for the comX bul^^^^^^^
All thic h^c , "-"'npiex Dusiness and administration today
wayfoftalSmnrp^^^^^^^
^PP^'ed itself in'findmg
and scientific man'ner. A meZdo^X b'n^ things. The empirical methodolog^

consists Jf la^^^^
mformation, analysing the information Th^ ôbservations and collecting
conclusions by fuêr^bserta^TsZs W al ZtZ' ^^^^ ^
knows it or not, he uses this method tof'""'.^'e made Whether a common man
buying vegetabks he looks t dS^lrû^^^^^^^^^^
decision-makmg. While
and then mentally calculates, or ^rks out wLT.
^ôps
P."'''
observes from his daily exêlre whT'> ^^^ ^hich shop. A shopkeeper
decides to stock these
- demand, a'nd
the pattern of demand and manufactures larle o^T "^^ûfacturer also observes
or manufactures new items acco^SnSr^rthTZL^
^^^ demand
radio, the television etc., it is possiWe trcXr T f "^^^^"êdia-the newspaper, the

IntroductionMeaning and Scope
\ 11
demand and supply, he collects data (information) systematically, gets it organised
in some logical or systematic way, analyses this data according to certain principles
and draws conclusions. He has to do it carefully since a wrong judgement can
completely ruin him.
Quantitative Data and Qualitative Data : An empirical investigation is an
investigation where facts are collected through observation. In Physics, Chemistry
and Botany, only those things that can be observed by our sensesseeing, hearing,
touching, tasting and smellingare taken to be reliable and then recorded (noted).
We all agree that the rose is beautiful. How do we reach that conclusion? We all like
its colour, shape and above all its smell. In this respect, it is not a subjective or
personal conclusion. But I say that I like the rose most of all the flowers, this would
be a subjective statement. A scientist however, makes very precise statementhe
would say that roses have a sweet smell. Similarly, people might say that theft and
robbery have increased these days. This might be a conclusion based on impression
people get from the newspaper reports of cases of theft and robbery. This
impression may or may not be true. We can find out whether it is true or not only by
comparing the number of cases of theft and robbery reported during one year with
the number of cases reported in other years. An investigator would collect such
information from police records.
When information or observations are recorded in numbers or quantity, we say we
have quantified information. For example, the number of people in a state who are
strict vegetarians, heights or weights of students, everyday temperature, income of
individuals, prices of wheat during this week, number of people in country are really
poor-rich-middle class, number of people are illiterate who will not get jobs, number
of highly educated and will have best job opportunities, etc. are known as
'Quantitative data'.
However, not all information can be numerically expressed. It is not possible in
certain cases to measure or quantify information, e.g., preference of people viewing
TV. channels, intelligence of students, appreciation of art, beauty, music etc.
Supposing a selection for a post is to be made, candidates are interviewed, some
questions are put to them and their qualifications are taken into consideration. The
interview board discusses the comparative merit of the candidates and ranks them
for final selection. This judgement is not quantifiable, it is based on impression.
Non-quantifiable/qualitative items can however be measured in percentages. For
example, percentage of people watching TV. news in English or Hindi or other
regional languages. This information obtained in percentages is called 'Qualitative
data'. It may be collected through questionnaire or opinion poll using landline or
mobile telephone, internet or newspapers.
Social sciences, such as economics, sociology, management etc., do not always
deal with what we call inherently measurable or quantifiable facts.
is smistics ? >
It is necessary to have quantitative measurements even for things which are not
basically quantifiable. This is necessary for preciseness of statement. The
systematic
h
12
vw 11 ^^'^tistics for Economics-Xl
treatment of quantitative expression is known as 'Statistics'. Not all quantitative
expressions are statistics; we will see that certain conditions must be fulfilled for a
quantitative statement to be called statistics. We will also consider later the
functions and hmitations of statistics. First, let us understand what comes under the
name Statistics. Statistics can be defined in two ways :
(a)
In plural sense.
(b)
In singular sense.
i^nn'W^nir"*
'consider whether figures
1600, 400, 80, 20, 700, 300, 70 and 30 are Statistics? Figures are innocent and do
not
speak anythmg. But when they refer to some place, person, time etc., they are
called statistics. Let us look at the table given below :
Students in Two Schools (2005-2006)
Kendria Vidyalaya
Govt. Senior Secondary School
Students
Number
Percentage Number
Boys Girls
1600 400
80 20 700 300
Total 2000 100
Percentage
70 30
1000 100
The above table gives a numerical description of students in Kendria Vidyalaya and
Govt Senior Secondary School. Students are grouped as boys and girls and
percentage is st^
calculated for each group. Now, in this context the figures 1600, 400, 700 etc have
a ' of
statistical meaning; we call this statistics of students. Similarly, we find in
newspapers ^
statistics of scores in a cricket match, statistics of price, statistics of agricultural
production, i sin statistics of export and import etc. j ^ "
martT^^'^Vl
Statistics we mean aggregates of facts affected to ^ ^
marked extent by muhtphctty of causes numerically expressed, enumerated or

estimated according to reasonable standards of accuracy, collected in a systematic
manner for a predetermmed purpose and placed in relation to each other."
The above definition covers the following main points about statistics as numerical
presentation of facts (Plural sense).
Statistics are aggregates of facts : A single observation is not statistics, it is a group
of observations, e.g., "pocket expenses of Anil during a month is Rs 50" is not
statistics. But "pocket expenses of Anil, Prakash, Sunil and Suresh during a month
are Rs 50, 55, 80 and 70 respectively" are statistics.
{b) Statistics are affected to a marked extent by multiplicity of causes : Statistics

are generally not isolated facts they are dependant on, or influenced by a number of
phenomena, e.g., electricity bills are affected by consumption and rate of electricity
(c) Statistics are numencally expressed : Qualitative statements are not statistics
unless A they are supported by numbers. For example, if we say that the students of
a class colle.
13
are very good in studies, it is not a statistical statement. But when a statement
reads as 40 students got first division, 30 second division, 20 third division and 10
failed out of 100 students, it is a statistical statement expressed numerically.
(d)
Statistics are enumerated or estimated according to reasonable standard of
accuracy: Enumeration means a precise and accurate numerical statement. But
sometimes, where the area of statistical enquiry is large, accurate enumeration may
not be possible. In such cases, experts make estimations on the basis of whatever
data is available. The degree of accuracy of estimates depends on the nature of
enquiry.
(e)
Statistics are collected in a systematic manner : Statistics collected without
any order and system are unreliable and inaccurate. They must be collected in a
systematic manner.
if) Statistics are collected for a pre-determined purpose : Unless statistics are
collected for a specific purpose they would be more or less useless. For example, if
we want to collect statistics of agricultural production, we must decide before hand
the regions, commodities and periods for which they are required.
(g) Statistics are placed in relation to each other : Statistical data Jre often required
for comparisons. Therefore, they should be comparable periodwii>c, regionwise,
commoditywise etc.
When the above characteristics are not present numerical data cannot be called
statistics. Thus, "all statistics are numerical statements of facts bui all numerical
statements of facts are not statistics."
Statistics defined in singular sense (as a statistical method) : Statistics in its second,
singular sense, refers to the methods adopted for scientific empirical studies.
Whenever a large amount of numerical data are collected, there arises a need to
organise, present, analyse and interpret them. Statistical methods deal with these
stages :
PRESENTATION
I Interpretation
Statistics as Methodology
According to Croxton and Cowden, "Statistics may be defined as a science of
collection, presentation, analysis and interpretation of numerical data.'"
It
Statistics for Economics-XI The above definition covers the following statistical
tools :
(a)
Collection of data : This is the first step in a statistical study and is the
foundation of statistical analysis. Therefore, data should be gathered with maximum
care by the investigator himself or obtained from reliable pubHshed or unpublished
sources
(b)
Organisation of data : Figures that are collected by an investigator need to be
organised by editing, classifying and tabulating.
(c)
Presentation of data : Data collected and organised are presented in some
systematic manner to make statistical analysis easien The organised data can be
presented : with the help of tables, graphs, diagrams etc.
(d)
are
Analysis of data : The next stage is the analysis of the presented data. There
large number of methods used for analy sing the data such as averages, dispersion
correlation etc.
'
(e)
Interpretation of data : Interpretation of data implies the drawing of
conclusions
on the basis of the data analysed in the earlier stage. On the basis of this conclusion
certain decisions can be taken.
Stages of Statistical Study
According to the figure, interpretation of data is the last stage in order to draw some
conclusion. One has to go through the four stages to arrive at the final stage; they
are collection, organisation, presentation and analysis. First stage collection of
data refers to gather some statistical facts by different methods. The second stage
is to organise the data so that collected information is easily intelligible. This is the
arrangement of data in a systematic order after editing. Third stage of statistical
study is presentation
of data After collection and organisation the data are to be reproduced by various
niethods of presentation, namely tables, graphs, diagrams, etc. so that different

characteristics of data can easily be understood on the basis of their quality and
uniformity.
Fourth stage of statistical study is the analysis of data. Calculation of a value by
different
methods and tools for various purposes is made to arrive at the last stage of study
viz interpretation of data. ^
In brief statistics is a method of taking decisions on the basis of numerical data
properly collected, organised, presented, analysed and interpreted.
in i scie drai relai
((
functions of statistics
Following are the functions of statistics :
1. Statistics simplifies complex data : With the help of statistical methods a mass of
data can be presented in such a manner that they become easy to understand. For
example, the complex data may be presented as totals, averages, percentages etc
Stati
I
resea Mars quan;
of stj
\5
2.
Statistics presents the facts in a definite form : This definiteness is achieved
by stating conclusions in a numerical or quantitative form.
3.
Statistics provides a technique of comparison : Comparison is an important
function of statistics. For example, comparison of data of different regions; periods,
conditions etc., is helpful for drawing economic conclusions. Some of the statistical
tools like averages, ratios, percentages etc., are used for comparison.
4.
Statistics studies relationship : Correlation analysis is used to discover
functional relationship between different phenomena, for example, relationship
between supply and demand, relationship between sugarcane prices and sugar,
relationship between advertisement and sale. Statistics help in finding the

association between two or more attributes, for example, association between
literacy and unemployment, association between innoculation and infection etc.
5.
Statistics helps in formulating policies : Many policies such as that of import,
export, wages, production etc., are formed on the basis of statistics. Some laws
such as Malthus' theorj^ of population and Engel's law of family expenditure are
based on statistics.
6.
Statistics helps in forecasting : Statistics also helps to predict the future
behaviour of phenomena such as market situation for the future is predict^).' on the
basis of available statistics of past and present. Economist might be interested in
predicting the changes in one economic factor due to the changes ir another factor.
For example, he might be interested to know the impact of today's investment on
the national income in future which is possible with the knowledge of statistics.
7.
Statistics helps to test and formulate theories : When some theory is to be
tested, statistical data and techniques are useful. For example, whether cigarette
smoking causes cancer; whether demand increase affects the price, can be tested
by collecting and comparing the relevant data.
importance of statistics
The use of statistical method is so widespread that it has become a very important
tool in affairs of the world. It IS indispensable to fields of investigations especially in
the sciences, such as Botany, Sociology, Economics, Medicine etc. It helps
particularly in drawing research conclusions. Let us examine the importance of
statistics in some fields relating to economics and business :
{a) Statistics and Economics
(b) Statistics and Economic Planning
(c) Statistics and Business
(d) Statistics and Government
Statistics and Economics

A number of economists have given a practical shape to statistical tools for
economic research. Famous economists (like Augustin, Cournot, Vilfredo Pareto,
Leon Walras, Alfred Marshall, Edgeworth, A.L. Bowley etc.) evolved a number of
economic laws by
quantitative and mathematical studies^ In India, Prof. P.C. Mahalanobis, Dr V.K R V
Rao R.C. Dcsai, ctc. iiave cgntrmuieu aTOtWtne aeveiopmeiu ui lucuiclk-^t-----'
of statistics.
!H
If
16
...rilT
tools and the importance of
ZnomV: rr' f" "T" ^^^^^ - ^ relanonLp amo^

Tecorm^rA
of mathematics andLtistic!
m economics. As a result, a new science has evolved which is called Econometrics

the Z" ^r'
have evolved due to statistical analysis in
the f eld of economics, Engel's law of family expenditure, Malthus theory of

population etc. New things are being invented today in all the sciences becauTo7the
econoT^b^"""
T^
T ^^^^
new laws in
Statistical methods have made a contribution to the
development of empirical side of economics; the inductive method of economics is

dependent upon statistical methods. economics is
TT''
are the tools and
appliances of his laboratory, m the same way as the doctor uses stethoscope for
diagnosis
of a patient. A number of economic problems can easily be understood by the useTf
tatistical tools. It helps m formulation of economic policies.^ Let us unLstand the
importance of statistics keeping in view the various parts of economics
oTrh!" consumption : Every individual needs a certain number
7 K'
necessities, then on comforts and luxuries, which
depend on his income; but there is no end to his desires and demands. No sooner
does he consume one thing, he desires to obtain the other. We discover how
staS^" T"^' consumption. The
Td/vT r
T rt^ ^ê taxaWe liability of
individuals and their standard of living

(b) Statistics and the study of production : The progress of production every year
can
easily be measured by statistics. The comparative study of the prod^Lty of

various elements of production (e.g., land, labour, capital and enterprise) is also
done with the help of statistics. The statistics of production are ver^ helpful or
ad^stment of demand and supply. Every developed country executes L census of
production with a view to make a comparative study of various fields of production
and economic planning. ^ wuucuou
fn^ttirf
^^
- -ônal and
international demand. A producer needs statistics for deciding the cost of .

P^r ^^^^ ^^
competition afd demand o
^mmodity m a market. The law of price determination and cost price which are :
(d) Statistics and the study of distribution : Statistics are helpful in calculation of
national income in the field of distribution. Statistical methods are used in solving
the problem of the dismbution of national income. Various problems arise diÎ to
o7lttfc7datr "
^^ ^ with"hrhelp
et/eo- other econormst, have to make bricks." -Marshall

1^
Thus, statistics is useful in the various fields of economics. It gives statement of

facts, direction to solve problems, evolution of economic laws and helps in economic
planning. Economic laws in the modern economic world are based on mathematics
and statistics which help to form econometric models; these models are helpful in
solving economic problems. On this basis we can call economics a Science of
Human welfare and statistics as an Arithmetic of Human welfare.
Statistics and Economic Planning
Statistics is the most important tool in economic planning. Economic planning is the
best use of national resources, both human and natural. Planning without statistics
is a leap in the dark. Every phase in planningdrawing a plan, execution and review
is based on statistics. The success of a plan is dependent upon sufficient and
accurate statistical data available at all these stages.
The comparison of the stage of development of one country with other is possible
only with the availability of statistical data. There are a number of problems of
underdeveloped countries, e.g., over population, lack of industries, lack of
agricukural development, lack of education etc. These problems can be fully viewed
and understood only by getting the actual figures for different areas. Similarly,
general review of progress in all fields of economic development needs the help of
statistical data and statistical methods. Priorities of expenditure of a national budget
can be determined through the comparative study of past performances with the
present. Thus, planning without statistics is a ship without radar and compass.
Statistics and Business Planning
Business activities can be classified as under :
f"
L
BUSINESS
1
I
Internal Wholesale Retail
International
Import
Export
i of Trade
^-1-1 t
Banking Transport Insurance Wterehousing Packmg

Advertisement
Mf
18
vw 11 ^^'^tistics for Economics-Xl
of statmical method have to be followed The it
the producer to f the pnces of
steps
ô^rd""'
method, of .tast,ea.
profttable trade he must know what the ZoZ, ''
celling activities. For
would last. This is very .mportant or
demand
epo for var.os co.mod,t.es and
at a^d
he has to forecast when the dLaXodd Ll": nf "Tf

of reserves he must have. Similarly he ^st
^-We what amounts
h.s deposttors, otherwise his bak wol fTôT rh

transaction ,s required where statistical toTls tt iX-b^^
hfe e^rrtt^r that is !

what proportion of the. capS
decde' i
payments of matured policies
^ Proportion kept ready for
n>.ght fix for the same. In fact no mod^Xanirr
they
without analysis of the complex faJ^rthrLr"" ^

business analysis statistical tools are afeolt; Tfential
analys^p tz: p":^-lt:tsere 717
^ ^^ ^
Statistical tools of collection, classification L uncertainties,

data are used in all ma,or functioTstfinterpretation of
material control, budgetary control, fmanc aTclro^f T"'' "
^nd so on.
'
control, cost control, personnel management
Statistics and Government

\9
like that of crimes, taxes, wealth, trade etc., so that there is no obstacle for the
promotion of economic development. Such policies may develop the economic
status of the people and the nation, depending upon the accuracy of the statistical
law. Statistics is indispensable for all important functions of the ministries of the
state. Above all the ministry of planning takes into account statistics of various
fields of economy. Keeping in view the increase of global price rise, the ministry
plans and makes policy to import oil in 2010, which depends on expected oil
production by domestic sources and likely demand for oil for the year 2010. The
policy of family planning can be made effective in controlling the population of
country. Thus, statistical techniques are used to analyse economic problems of
country, viz., unemployment, poverty disinvestment, price control, etc. Sometimes
to make plans and policies, planners require the knowledge of future trend. This
trend could be based on the data of past years or recent years. The required data
can be obtained by surveys. For example, production poHcy of 2010 depends on the
consumption recorded in past years and recent years which decides the expected
level of consumption in 2010. This helps the planners to make the production policy
for the future. The Ministry of Finance is responsible for preparing the annual budget
of the country for which reliable statistical data of revenue and expenditure is
necessary. In short, statistical tools are of maximum utility in the governance of
state and formulation of various economic policies.
f'i
umitations of statistics
Statistics is very widely used in all sciences but it is not without limitations. It is
necessary to know the misuses and limitations of statistics. The following are the
limitations of statistics.
1.
It does not study the qualitative aspect of a problem : The most important
condition of statistical study is that the subject of investigation and inquiry should
be capable of being quantitatively measured. QuaHtative phenomena, e.g., honesty,
intelligence, poverty, etc., cannot be studied in statistics unless these attributes are
expressed in terms of numerals.
2.
It does not study individuals : Statistics is the study of mass data and deals
with aggregates of facts which are ultimately reduced to a single value for analysis.
Individual values of the observation have no specific importance. For example, the
income of a family is, say Rs 1,000, does not convey statistical meaning while the
average income of 100 families say Rs 400, is a statistical statement.
3.
Statistical laws are true only on an average : Laws of statistics are not
universally applicable Hke the laws of chemistry, physics and mathematics. They
are true on an average because the results are affected by a large number of
causes. The ultimate results obtained by statistical analysis are true under certain
circumstances only.
4.
Statistics can be misused : Statistics is liable to be misused. The results
obtained can be manipulated according to one's own interests and such
manipulated results can mislead the community.
20
h
(Si.
^ , . ^t^tistics for Economics-XI
observations of mass data nXkrT L
âsed on
to rectify them. Therefor^ itêslnreT" " -...ca, states are a fa/.re m ^

misuse of statistics
statistics by deliberately twisting or man pulat^ne^
^^ ^--e
be mterpreted by a lawyer to prove ^^ZTltTl^^;' " " ^^^ ^^^

tools for grinding their owTa^sf b^
student of commerce and economic , hou^ 1 the
This generally takes place at the time of sefectinZm^^^^^ a
and interpreting analysis of data^
"^^îng comparisons
and^êS-pJT~ - support knowledge of statistics, the truth with the help of his
exercises
1- D.stm8,sh between qualitatrve and quantitative data

3
Dto Tr-characteristics?
M rr
above
and plural sense
obrva'Sn'" cr"'"
-d never with a single
llT"" '' counting." Discuss.
.............
4.
5.
6.
7.
8.
21
16.
17.
18.
19.
20,
Discuss with illustration the importance of Statistics in the solution of social and
economic problems.
"Statistical Analysis is of vital importance for successful businessmen, economists,
administrators and educationists." Discuss with illustrations.
Write notes on : (a) Importance of statistics in modern economic set up, {b)
Statistics in economic analysis.
Define Statistics. Explain its utiHty in the field of economic planning. "Statistical
thinking is as necessary for efficient citizenship as the ability to read and write."
Explain this statement in about 200 words.
"Statistics in these days is indispensable for dealing with socio-economic problems".
How far is this statement true?
What is the importance of Statistics in modern economic set up? Explain giving
examples.
. i- u
"Planning without Statistics is a ship without radar and compass." In the light ot this
statement explain the importance of Statistics as an effective aid to national
planning.
Explain the relationship between Economics and Statistics and discuss how far it is
correct to say that the science of economics is becoming statistical in its method.
Explain briefly :
(a) Statistics,
(b) Statistical methods,
(c) Statistical data, (d) Statistics in economic analysis.

Statistical methods are no substitute for common sense, comment. "The
Government and poHcy maker use statistical data to formulate suitable policies of
economic development". Illustrate with two examples. Mark the following
statements as true or false. J (i) Statistics is of no use to economics without data. (ii)
Statistics can only deal with quantitative data. (Hi) Statistics solves Economic
problems.
UNIT 2
}1:
If
K
^lecton and organisation of data 12
CoUecAion of Primary and S p Organisation of Uata Presentation of Data
Chapter 3
collection of primary and secondary data
What is a Statistical Enquiry? Sources of Data g Primary and Secondary Data
Drafting the Questionnaire Methods of Collecting Primary Data Census and Sample
Surveys Sample Surveys Methods of Sampling Random Sampling Non-Random
Sampling Advantages of Sampling Reliability of Sample Data How Secondary Data is
Collected? Some Important Sources of Secondary Data Census of India
National Sample Survey Organisation (NSSO)
COI
cer are coIJ
Sourct
w
other, statisti
s-XI
what is a statistical enquiry ?
Enquiry means a search for truth, knowledge or information. Statistical enquiry

therefore means a search conducted by statistical methods. There are different
subjects on this earth; some are described by the degree of expression (quality) and
some by the degree of figures or magnitudes (quantity). The application of a
statistical technique is possible when the questions are answerable in figures
(quantity), in other words the first and the foremost condition for the answer to the
questions in statistical enquiry should be quantitative, for instance :
Profit of firms measured in rupees;

Income of families measured in rupees;
Weight of students measured in kg;
Age of students measured in years;
Intelligence measured in marks obtained by students in a particular test.
But, there are questions likeHow great was Jawaharlal Nehru? How brave was
Bhagat Singh? etc., which cannot be answered through statistical methods.
Questions that can be answered in quantity lies within the purview of statistics, viz..
What is the average production of rice per acre in India? What is the total population
of India? How many students are there in a class?
Thus, statistical enquiry means statistical investigation or statistical survey, one
who conducts this type of enquiry is called an investigator. The investigator needs
the help of certain persons to collect information, they are known as enumerators,
and respondents are those from whom the statistical information is collected.
Survey is a method of collecting information from individuals.
Let us observe the following table.
TABLE 1
Production of Finished Steel in India (in Million Tons)
fc^ year
Production
1950-51
1.0
1980-81
6.8
1990-91
13.5
2000-01
30.3
2001-02
31.1
2002-03
34.5
2003-04
36.9
Source : Government of India, Economic Survey 2004-05.

We observe that the production of finished steel in India, is different from one year
to other. They are not same. They varies from year to year. They are called Variables
in statistics which is represented as X, Y or Z variables. The finished steel production

in
ti i-.
24

V V tu f
by x-variable and the production of finished
From the followmg text, we will understand :

1.
What is the source of data?
2.
How do we collect data?
3.
By which method of survey is data collected
. sources of data
BefoT^n' Z" ^^
'^^ta. This is the first stage in statistics!
SOURCES OF DATA
dary
^
Governmern departments RaiZr^cf
'
^^
^reparmgât
cantrîne??""'"'"
external data whij
^âry and secondary
'
25
But, you may have the other choice that of visiting the factory accounts
department, and record the information from the salary register or, may gather this
information from the published report of the factory about the payment of wages.
This is secondary source for an investigator but, for the factory it is a primary
source.
Thus, primary data is collected originally and secondary data is collected through
other sources. Primary data is first hand information for a particular statistical
enquiry while the same data is second hand information for an another enquiry. The
same data is primary in one hand and secondary in the other, e.g., any Government
publication is first hand (Primary) for Government and second hand (Secondary) for
a research worker. Thus, secondary data can be obtained either from published
sources or from any other source, for example, a website which saves time and
cost.
PIHMARY DATA-* PUBLISHED
How Primary Data is Collected
The most popular and common tool is questionnaire/interview schedule to collect
the primary data. The questionnaire is managed by the enumerator; researchers or
trained, investigators. Sometimes the questionnaire is managed by the respondents
also.
MIMTim
Following are the basic principles of drafting questionnaire :
(1)
Covering letter : The person conducting the survey must introduce himself
and make the aims and objectives of the enquiry clear to the informant. A personal
letter can be enclosed indicating the purposes and aims of enquiry. The informant
should be taken into confidence. He should be assured that his answers will be kept
confidential and he will not be solicited after he fills up the questionnaire. A selfaddressed and stamped envelope should be enclosed for the convenience of the
informant to return the questionnaire.
(2)
Number of questions : The informant should be made comfortable by asking
minimum number of questions based on the objectives and scope of enquiry. More
the number of questions, lesser the possibiUty of response. Therefore, normally
\l
(I
I-J
Ni
m.26
.nstrc,.ons about units of measutement shol b^ g.7en
questionnaire, |
investigator. numbered for the convenience of the informant and the

''' sraetsr^s r They
the mformant should ^ abrtr^ve Ae aZ^f "" 'TT' "."''ject.ve. For this the blank
space, e.g.,
^y "smg a tick-mark in
WUch of the folloJng languages you use most for uniting, (Pu, a cross) (.) English
p
M Punjabi
iit,)Vrd>x
(f) Any other q

Sd fnTu^f: 'ir^'s'ts^;^:' ^^^-omd be
Wrong', e.g..
are answerable m'Yes' or 'No'
or 'Right' or
Are you married?
Yes/No
Are you employed? Yes/No

should start from general
These questionsleXle aS In which class do you read? In which subject you are more
interested?
'rr
^-ooses. such
questi-ons should bet Smlt ^^l^rrt^^ ^^^^^^^^^^

A SPECIMEN QUESTIONNAIRE
27
H,.
S.I
Hit:
28 1
Statistics for Economics-xi
Example :
ml" "" "
"f P"- ^'"dents in Universi^-
W How will you solve the wage problem in your mdustry?
work. Such
(a)
Which brand of tea do you take?
(b)
Why do you prefer it?
(16)
T .ssn'r btk"
(b)
Do you love your children?
(c)
Do you beat your wife?
iiethods of collectiiig priiiiiary data

etc. enq in a not
Mer
7.
8.
We^wmg are the methods of primary data collection which a in common use
\ Collection of Primary and Secondary Data
COLLECTION OF DAW
of
29
r
lARY
SECONDARY
Direct Personal Interview Indirect Personal Interview Telephone Interview
Înformation from Correspondents Mailed Questionnaires Questionnaires Filled
by Enumerators
1
Published Sources
-1
Unpublished Bourns
Government Publications Publications of Internal Bodies Semi-official

Publications Report of Committees and Commissions
> Private Publications
(a)
Journals and Newspapers
(b)
Research Institutions
(c)
Professional Trade Bodies
(d)
Annua! Reports of Joint Stock Companies
(e)
Articles, Market Reviews and Reports
etc and collect the desired information. In the same way one can think of personal
Imryof collection of information regarding family budget and living conto Ta group
area. The investigator must be skilled, tactful, accurate, pleasing and should
not be biased. Merits :
1.
Original data are collected by this method.
2.
There is uniformity in collection of data.
The required information can be properly obtained.
There is flexibility in the enquiry as the investigator is personally present.
5" Information can be obtained easily from the informants by a personal interview.
6. Since the enquiry is intensive and m person, the results obtained are normally
reliable and accurate. 7 Informants' reactions to questions can be properly studied.
,,.,
8'. Investigators can use the language of communication according to the
educational standard and attitude of the informant.
Limitations : 1 j u
1. This method can be used if the field of enquiry is small. It cannot be used when
field of enquiry is wide.
J'"
SSf
m
'30
Statistics for Economics-X

2.
It is costly method and consume more time.
3.
Personal bias can give wrong results
""erwise
5. This method is lengthy and complex
ifSifMlSi
m-smrnrn
Merits :
Kiai^ obtained from the third party, it is more or less free froJ
3
of the investigator and the inforrânt I
3. It saves labour, time and money

H iLtJ"'"" """ '
of P'oHems can properl,'
Limitations :
ar in to oh G( in( wt
Mt
Lin
s-XI
Thus, we find that both the above methodsdirect and indirect personal interviews
have certain plus and minus points. For this reason the choice of the method
depends on the nature of enquiry and sometimes we balance the demerits of one
method by '.tsing the other method also for the same investigation. This way we
can counter chec'. the data collected by one method with the other.
(m) Telephone interview : The investigator asks questions over landhne telephone,
mobile telephone and even through website. Various researchers, newspapers,
television channels, mobile service providers, banks etc., use telephone service to
get information from different people, e.g., exit poll, political or economical
opinions, music or dance performance opinion etc. Even sometimes website or
internet are used for obtaining statistical data. These days online surveys through
Short Message Service, i.e., SMS has become popular.
Merits :
1.
Telephone interviews are cheaper than personal interviews.
2.
It can be conducted in a shorter period of time.
3.
The investigator can assist the respondent by clarifying the questions.
4.
Sometimes respondents are reluctant to answer some questions in personal
interviews. Telephone interviews are better in such cases.
Limitations :
1.
Information cannot be obtained from people who do not have their own
telephones.
2.
Reactions of respondents on certain issues cannot be judged; but it
sometimes becomes helpful in obtaining information from respondents.
(IV) Information firom correspondents : In this method, local agents or
correspondents are appointed in different parts of the investigation area. These
agents regularly supply the information to the central office or investigator. They
collect the information according to their own judgements and own methods. Radio
and newspaper agencies generally obtain information about strikes, thefts,
accidents etc. by this method. It is adopted by Government departments to get
estimates of agricultural crops and the. wholesale price index number. It is suitable
when the information is to be obtained from a wide area and where a high degree of
accuracy is not required.
Merits :
1.
This method is comparatively cheap.
2.
It gives results easily and promptly.
3.
It can cover a wide area under investigation.
Limitations :
1.
In this method original data is not obtained.
2.
It gives approximate and rough results.
32
Statistics for Economics-XI f C
r
fij
3. As the correspondent uses his own judgement, his personal bâs may affect the
accuracy of the information sent.
^
nn^'^'TT
correspondents and agents may mcrease errors.
the mo
"
"
^^^ ^^^^ kept con^'entkllt '
Merits :
^^
^his method in cases where
informants are spread over a wide geographical area.

o^pêLri 1 ~
^^ ^^
-- Jess than the cost
3. We can obtain original data by this method

Limitations :
faift?"" ^^^ ^^^ informants. They may
ques^r
3.
misinterpret or may not understand'some
There may be delays in getting replies to the questionnaires
4.
ms method can be used only when the informants are educated or hterate so
that ^ they return the questionnaires duly read, understood and answered
1
' possibility of getting wrong results due to partial responses, and those
IrmrnTreûir ^^ ^^ ^ ^^ ^^^ ^ê splcm:
6. There may be loss of questionnaires in mail. This method is suitable for the
following situations
cTmpef LrS? '' "
questionnaire, Government agencies
compel bank and companies etc., to supply information regularlv to the Government
in a prescribed form. ^ ^ regularly to the
(b) This method can be successful when the informants are educated.
inf( The be j org; and the high
Mer
Limit
1
3.
4.
5.
'Ki
33
Following are some suggestions for making this method more effective and
successful.
(a)
Questions should be simple and easy so that the informants may not find it a
m burden to answer them.
-ui
(b)
Informants should not be required to spend for posting the questionnaires
back
therefore, prepaid postage stamp should be affixed. ic) This method should be used
in a large sample or wide universe.
(d)
This method is preferred in such enquiries where it is compulsory by law to till
the schedule. Thus, there is little risk of non-response.
(e)
The language of the schedule should be polite and should not hurt the
sentiments
of the informants.
(VI) Ouestionnaire filled by enumerators : Mailed questionnaire method poses a
tanber oi difficulties in collection of data. Generally, these filled questionnaires
received to incomplete, inadequate and unrepresentative.
S The second alternative approach is to send trained investigatorsôr
enumeratoi^m M,rmants with standardised questionnaires wl.ich are to be fiUed^jn
ê imêstigator helps the informants in recording their answers. The investâ^rs
shoidd i honest tactful and painstaking. This is the most common method used by
research iSons. They train investigators properly specifically for the purpose of an
enqu^ ^d also tram them in dealing with different persons tactfu ly, to get Proper
answers to Ac questions put to them. The statistical information collected under this
method is
highly reliable.
Merits :
1. It can cover a wide area.

2 The results are not affected by personal bias.
,-,.u
3' True and reliable answer to difficult questions can be obtained through
establishment of personal contact between the enumerator and the informant. 4.
As the information is collected by trained and experienced enumerators, it is
reasonably accurate and reUable.
5 This method can be adopted in those cases also where the informants are
illiterate.
6'. Personal presence of investigator assured complete response and respondents
can
be persuaded to give the answers to the questionnaire.
Limitations : ^
n^
1.
It is an expensive method as compared to other methods of primary
collection of
data, as the enumerators are required to be paid.
2.
This method is time consuming since the enumerator is required to visit
people
spread out over a wide area. 3 This method needs the supervision of investigators
and enumerators. 4" Enumerators need to be trained. Without good interview and
proper traming, most
of the collected information is vague and may lead to wrong conclusions. 5. It
needs a good battery of investigators to cover the wide area of universe and
therefore it can be used by bigger organisations.
I,
If.
P
34
Klot Suiwey or Pre-Te p ^f^^stics for Economics-Xi
a Pre-test or a guidihg survl;
" ^ -ûc.
mam survey. This is done to try out the auetlr
before starting th,
the general mformation about L po^Ja"^^^^

-thods for obtaL the pilot survey
helps in : ^ ê sampled. The information supplied b, [i) Estimating the eosr of ^
avaihbiii, of fc
""
rr.
'he ei needed for
or fan.
0-t.ons and a,so . .He ..proje.enr

(w) Training of field staff " rX"
--
namr,
casus MID SAIWnE SURVEVS

ia) Census method/Census Survey, and (b) Sample method/Sample Survey
.e^VS^td^^.^ "
Have a Cear ndersrad.n, ,
Population and Sample

o all ,he ten,. A par, of .hVlorplZL
ekcon termed as sampling. SupposeTe'âre 500
1 "T'" <>'
School. If we want to know the average wekta
Secondary
W'll get the mformation abont all the fLrhnnd f
each girl and
obtamed by dividing the total weigte of he tn' "
we.ght willbe
CX)VERNMENT SENIOR SECONDARY

Ii
f( P
O S<
UI
gro' Sun
20
Source
s-XI
by taking only 50 girls out of 500 and obtain the average of this part of the total
population. The average of 50 girls reasonably be representative of average weight
of 500 girls. In this case weight of 50 girls is the sample.
Census Surveys
The objective of a census method or complete enumeration is to collect information
for each and every unit of the population/universe. In this method every element of
population is included in the investigation. Thus, when we make a complete
enumeration of all items in population, it is known as 'Census Method" or 'Method of
Complete Enumeration'. In above example, collecting weights of all the 500 girls in
Senior Secondary School is census method of collection where no student is left
over, as each student is a unit.
Following are few examples of census :
1.
The population census is carried put once in every ten years in India. Most
recently population census in India was carried out in February, 2001 by house to
house enquiry to cover all households in India.
2.
Demographic data obtained by census method on death rates and birth rates,
literacy, work force, life expectancy and composition of population etc. are
published by Registrar General of India.
3.
The data relating to estimation of the total area under principal crops in India
are obtained by using village records maintained regularly by Patwari.
Let us review the following census data in the following Table no. 2 regarding
relative growth of Urban and Rural Population in India obtained from Reports and
Economic Survey 2002-2003.
TABLE2
Relative Growth of Urban and Rural Population in India
r-................. Year i f r
UrhaiP Popuiatinn {tn itorpi)
Rural PopttUuioti (m
rmrei) Total Ptipuldtion (m Lrine)
As Perceraage of Total Popukttidn
Urban popuhtion
1901 2.58
21.25 23.83 10.9
89.1
1911 2.59
22.62 25.21 10.3
89.7
1921 2.80
22.32 25.12 11.2
88.8
1931 3.35
24.54 27.89 12.1
87.9
1941 4.41
27.44 31.85 13.8
86.2
Rumi PvpuUition
1951 6.24
29.87 36.11 17.3
82.7
1961 7.89
36.02 43.91 18.0
82.0
1971 10.89 43.93 54.82 19.9
80.1
1981 16.22 52.11 68.33 23.7
76.3
1991 21.76 62.87 84.63 25.7
74:3 .
2001 28.50 74.2
72.2-
102.7 27.8
Source : Census Reports and Economic Survey 2002-2003.

if:.
iti
I7
I (1
36
74
" 'rr
^^
Of India's population. In 2001
74 2 crore persons, out of about 102.7 crore total population lived in around 5 5
lakhs'
i: ifo^lVt 2
urban a;ea. Th
-- or uian areas
T ' Population of around 24 crores lived in
urban areas The urban population formed about 11 per cent and rural population 89
per
rôm I
urban population had gone up to around 28 per cen
n 2001 while still over 72 per cent people lived m rural areas. The above table show
the relative growth of rural and urban population m India since 1901.
The net addition to rural population between 1991-2001 was 1133 crore while urban
population increased by 6.74 crore persons. The decadal growth at frru^d
in1he rlr" T -- ^ mcrease of 2 1 per cent
in the growth rate of urban population m the decade ending 2001 over the
decade^nding
SAMPLE SURVEYS
We may study a sample drawn from the large population and if that sample is
adequate representative of the population, we should be able to arrive at val
7corcSn
Method of collecting of data. In above example, collecting the weights of 50 girls out
of
500 girls m Semor Secondary School is sample method of collectiol In this method
ew students as sample considered for our study.
metnod tew
Following are a few common examples of samplin-
{a) We look at a handful of gram to evaluate the quality of wheat, rice or pulses, etc
A
^^^ '^^^ ^P^" ^1-tric bulbs out of each lot"
[c) A drop of blood is tested for diseases like malaria or typhoid etc
^ ^ fudtrnfof^'tC ^^^
P-^-ion for final
(.) Th^^êlevision network provides election coverage by exit polls and prediction
is
nnnT"'' T ""V^^^'^îcal termmology population or universe does not mean the
total numbe of people m an area; it means the total number of observations or terns
fn
r::att- -- ^ ^^lected from^ a ~
methods of sampling
^^^Broadly speaking, various methods of sampling can be grouped under mam (a)
Random Sampling, and (b) Non-Random Sampling.
37
Let us discuss now the various samphng methods which are popularly used in
practice.
MiTHODS OF SAMPLING
i
Random Sampling (a)
-1
Non-Random Sampling
ib)
Simple or Unrestricted Random Sampling Restricted Random Sampling (f) Stratified
Sampling (//) Systematic Sampling
or Quasi Random Sampling (f/f) Cluster Sampling or Multi-stage Sampling
(a) (to) (c)
Judgement Sampling Quota Sampling Convenience Sampling
random sampling
Random Sampling is one where the individual units (samples) are selected at
random.
It is called as probability sampling.
Random sampling does not mean unsystematic selection of units. It means the
chances of each item of the universe being included in the sample is equal. The
term 'Random Sampling' here is not used to describe the data in the sample but it
refers to the process used for selecting the sample. Following are the methods of
random sampling.
Simple or Unrestricted Random Sampling
This method is also known as simple random sampling. In this method the selection
of item is not determined by the investigator but the process used to select the
terms of the sample decides the chances of selection. Each item of the universe has
an equal chance of being included in the sample. It is free from discrimination and
human judgement. Random sampling is the scientific procedure of obtaining a
sample from the given population. It depends on the law of probability which
decides the inclusion of items in a sample. To ensure randomness, mechanical
devices are used. There are t^vo methods ot obtaining the simple random sample.
They are :
(a)
Lottery Method, and
(b)
Table of Random Numbers.
(a) Lottery Method : A random sample can generally be selected by this simple and
popular method. All the items of the universe are numbered and these numbers are
written on identical pieces of paper (slip). They are mixed in a bowl and then there
starts the selection by draw one by one by shaking the bowl before every draw The
numbers are picked out blind folded. All slips must be identical in size, shape and
colour to avoid the
biased selection.
IMH'
38
metal pieces on which nuZ^tT
Th! d "" "--ên or
device and each time one piece comesrotated by a mechanical

of digits, for instance if the numbe'Ts ZZ
Thisî^ IS us. m drawi::^^-^^:;
u '^^^
""^ber
--
-ry large the above procedures if the disks, balls or slips L not XrouThnf' ^^
T^^^^^ " been a marked tendency to usetSroTrindT^^^^ > T T' "
^^^^ âs
samples. A table of random digkst simply a
the purpose of drawing such ,
by a random process. The follLing of Som ^gS tt^^^^^^^^^^^^ ~ (.) Tippet.

Random Sampling Numbers. There are 10^00 numbe^tânged 4 digits
MG. Kendall and Babington Smith's Random Sampling Numbers, having 1 lakh
ic) Rand Corporation's a million random digits (d) Snedecor's 10000 random
numbers. ie) Fisher and Yates Table having 15000 digits
Rc
2952 3170 7203 3408 0S60
Tippett Numbers
6641 3992 9792
5624 4167 9524
5356
1300 2693
2762 3563 1069

5246 1112 9025
ho
Th
hoi
ave strs ;san [peo
7969 5911
1545 1396
2370 7483
5913 7691
6608 8126
college. We will first nuX aVMOo Tui" f ''"t"''
students, now we will cons J a pagôf ?fp
i'" ^^^ ""'"''"ing the
15 successive number either horLLhy or ^â^ ""
^^
Merits
'
w a universe. There are less
selected.
bas equal chance of being
Regularity begin to operate
^^^ âw of Statistical
(
[Meri 1.
2.
3.
4.
5.
6.
s-XI
3.
This method is economical as it saves time, money and labour in
investigating a population.
4.
The theory of probability is applicable, if the sample is random.
5.
Sampling error can be measured.
Demerits
1.
This requires complete list of population but up-to-date lists are not available
in many enquiries.
2.
If the size of the sample is small, then it will not be a representative of a
population.
3.
When the distribution between items is very large, this method cannot be
used.
4.
The numbering of units and the preparation of the slips is quite time
consuming and not economical particularly if the population is large.
t
Restricted Random Sampling
They are as follows :
(t) Stratified random sampling : In this method the universe is divided into strata or
homogeneous groups and an equal sample is drawn from each stratum or layer at
random. This method is therefore useful when the population of the universe is not
fully homogeneous. For example, suppose we want to know how much pocket
money an average university student gets every month will be taken equal sample
from various strata, namely : B.A. students, M.A. students and Ph.D. students etc.
Stratified random sampling is widely used in market research and opinion polls, it is
fairly easy to classify people into occupational, economic, social, religious and other
strata. There are different types of stratified sampling
{a) Proportional stratified sampling is one in which the items are taken from each
stratum in the proportion of the units of the stratum to the total population.
(b)
Disproportionate stratified sampling is one in which units in equal numbers
are taken from each stratum irrespective of its size.
(c)
Stratified weighted sampling is one where units are taken in equal number
from each stratum, but weights are given to different strata on* the basis of their
size.
Merits
1.
The sample taken under this method is more representative of the universe
as it has been taken from different groups of universe.
2.
It ensures greater accuracy as each group (stratum) is so formed that it
consists of uniform or homogeneous items.
3.
It is easy to administer as universe is sub-divided.
4.
Greater geographical concentration reduces the time and expenses.
5.
For non-homogeneous population, it is more reliable.
6.
When original population is not normal (skewed), this method is appropriate.

V\L
N
m.
40
Demerits
1.
Stratified sampHng is not possible unless some mformation concerning ti
population and its strata is available. concerning u
2.
If proper stratification is not done the sample will have an effect of bias. If
differ, strata of population overlap such a sample will not be a representative one
() Systematic sampling or quasi-random sampling : Systematic sampling is a simo
by preparing this list m some random order, for example, alphabetical order
SMnlr U
the list, stands for any numl
Suppose we have a universe of 10,000 items and we want a sample of 1000, then
^^^
- 10 The method of selecting the first item from the list is to decide at random
f^^t
?hen th "r "'Tu'
Suppose we pTck up Z Z t
Then the other items will be 15th, 25th, 35th, and so on unSl we have got oVr fuH
sal
fullv rw'' T I u"
"
that the list of the univers!
fully random and that there are no inherent periodicities in the list.
Merits
1.
It ^yystematic, very simple, convenient and checking can also be done
quickl]
2.
In this method time and work is reduced much.
3.
The results are also found to be generally satisfactory.
Demerits
random will not be a determming factor in the selection of a sample.
2.
It IS feasible only if the units are systematically managed
3.
If the universe is arranged in wrong manner, the results will be misleading |
to divL and sub
"
^^
to divide and sub-divide a universe according to its characteristics. Thus if a survev

ki be conducted in a country it will first be divided into zones or states l region
t^^^^^ mailer units cities towns and villages and then into localities and hLseToW;
At Jd
non-ranoom sampun6
ccessi 3n No. Date.^............
s-XI
the
:rent
tipler on is ieved
mber. : take from item, mple. irse is
ickly.
!on as
It m e have y is to ;n into .t each nethoc the hsl
of the s, non-ing are
(a)
Judgement or purposive sampHng
(b)
Quota samphng
(c)
Convenience sampHng
'n
Judgement Sampling
This is also called purposive or deliberate sampling. In this method individual items
of sampling are selected by the investigator consciously using his judgement.
Therefore, it requires that the investigator should have a good knowledge of the
universe and some experience in the field of investigation. Obviously, the choice of
samples will vary from one investigator to another. For example, from a universe of
10,000 ladies who use a particular brand of hairdye, the investigator will select a
sample of say, 1,000. His choice of this sample will be such that it is irrespective of
the universe. For this an exercise oi judgement is required.
In order for the judgement sampling to be reliable, it should be free from individual
lies or prejudice. Since the choice of sample is not based on probability it does not
guarantee accuracy and it makes detecting of sampling errors difficult. However,
this methods is useful in solving a number of kinds of problems in universe and
economics.
The purposive or judgement sampling is suitable in the following conditions :
(a)
The number of items in the universe is small to which some items of
important characteristics are likely to be left out.
(b)
When small sized sample is to be drawn.
(c)
When some known characteristics of the universe are to be intensively
studied.
(d)
It is also appropriate for pilot survey.
Quota Sampling
It is a method of sampling that saves time and cost and is commonly used m
surveys of political, religious and social opinion.- Interviewers are allotted definite
quotas of the universe and they are required to interview a certain number from
their quota. Quotas are decided on the basis of the proportion of persons in various
categories. In other words, the investigator is given instructions about how many
interviews should be taken say in a given localitv and what proportion should be
from say upper, middle and lower mcome groups, as by some other classification
which is predetermined. For example, for a study of truancy (running away) from
school in Delhi the investigators are allotted quotas of say 10 schools each out of
which two should be public schools (Boys), one public school (Girls), three Boys'
Senior Secondary Schools, two Girls' Senior Secondary Schools, two Co-education
Schools and from each school he is asked to interview 50 students, taking 10
students each from Classes VIII, IX, X, XI and XII. The interviewer can select any 10
students according to his own judgement.
It is a kind of judgement samphng and provides satisfactory results only when
interviewers are carefully trained and personal prejudice is kept out of the-process
of selection. ' '
hi
!i<
42 ,
Convenience Sampling
Statistics for Economics-XI;
P0.1:;: f'întfri:- lêssr
~ -ce ^
example, for the study of truanrvTr

a school or schools in I neiS^
^ê basis of convenience F.
^^^^^ ^ê invesdgatselec
schools. This method is used wLnê " .V ^^ ^^ convenient for hL to g^trthe not
clear or complete source hst is tâ^lbl" T
^ê sample unit i
easily available lists, such as teleDhLTW
may be obtained W
results obtained by' this mâTntl^^^^^^

unsatisfactory.
^^^ ^ruly representatives of the universe and are
^^HIAGESOF
(I
of dae. bee. Jo,
getting quick results.
therefore, sampling is very useful in
sxhris freîr" a,
. for fc cV^ "^dr m -
method.
2
in some ways more reliable than cenLs
aliow a samplmg mefcd t
fc o,, pos.b,e or E ~ or bote, maufaeLd" fcTar:^;-,,*^ ^dl"'

sampling method. '' P^^^'^le due to the scientific nature of
appropriate e,d . neceiary^Srfctr:?"^^^^^^^^
le otl: Thi
the larf
Statistic
The means a

43
^î^lity of sample data ;
The main purpose of sampling is to collect maximum information with minimum
^nditure of money, time and labour and yet achieve a high degree of -^curacy and
Ability. For ensuring reliability certain principles must be followed. In samphng
method : is presumed that whatever conclusions are drawn from a sample are also
true for the lole population. This presumption is based mainly on the followmg two
laws :
(a)
The Law of Statistical Regularity, and
(b)
The Law of Inertia of Large Numbers. .'r u (a) Law of statistical regularity :
The law of statistical regularity is derived from the
mathematical theory of probability. It says that a comparatively small group of items
chosen at random from a very large group will, on the
characteristics of the large group. Basically, it applied to rWom se^lection. Thus so
in the process of sampling each unit of the universe has an equal chance of being
selected. Therefore, the selected items can be said to be representative of the
universe. Although the law is not as accurate as a scientific law is, it does insure a
reasonable degree of accuracy. Since there is a certam regularity m natural
phenomena, we assume a certain uniformity in nature A random samphng is said to
follow the law of statistical regularity because of this basic uniformity m a
universe.
r , -t- r
lb) Law of inertia of large numbers : This law is also called the law of stability of
mass
data. It is based on the law of statistical regularity. Basica ly, it states that if the
numbers involved are very large, the change in a sample is likely to be very small
in other words, the individual units of a universe very continually but the total
universe changes slowly. That is, large aggregates are most stable than tnaU
Because of the slow change in the nature of total universe this law is called the law
of inertia (laziness) of large numbers. For example, sugar production of factory will
vary significantly from year to year but Ac sugar production of a country as a whole
will remain comparatively s able. Or a g eat Inge may take place in the male-female
ratio of family may appreciably -bange ove a short period, but the male-female ratio
of a country as a whole will
^^
the period, ô take another example, if a. coin is tossed 6 times we may get heaj^s
f^r ^ Js and tails two times. But if a coin is tossed 5^0 times^ there is a high
p^î^ of getting heads and tails 2,500 times each. This happens due to
^^^
I oplation of this law. That is, when one part of large group is changing m one
direction
the other moves in the opposite direction.
Thus, reliability of sampling depends mainly on randomness of selection of data and
the large size of universe, expressed by the above two laws.
Statistical Errors
There is a great difference in the meaning of mistake and error in statistics. Mistake
imeans a wronfcalculation or use of inappropriate method in the collection or
analysis
44
Statistics for Economics-X.
other words, the difference between the approximated (estimated value) and the
actual value (true value) is called statistical error m a technical sense. For examl we
make a' estimation that in a particular meeting, 1,000 persons are there. But we
clnt persons It may be wrongly counted, as 1,030. There is a difference of 30
between the estimate value and counted va ue. This difference is called '...or' in
statistics. But wên weTak*
aTS''^r VrThey arl knowi as mistake . For example, there is a meeting, we sent a
person to count the audience
Sources of Errors
Following errors are likely to occur in collection of data :
ur'l^! origin arise on accoum of inappropriate definitions of statistical
unit scale, or defective questionnaire etc. For example, wrong scale to measun
meLl -'I height to nearest of inch or approximatrTh
differences may also occur due to differences in measuring tapes due tc
manufacturing defect. In Physics or Chemistry such errors of mLsurementrwlI occur
while taking readings on various instruments.
nZZ
incomplete data, madequat.
crsdonna " sample, non-response of respondent, incomplete answers i

questionnaire, misinterpretation of questions in questionnaire, careless oi
unqualified investigators, etc. '-diciesb oi|
drô I'f f^
-"hmetic calculatio
due to clerical errors, arithmetic slips etc. by omitting some figure consideri
wrong value, making wrong totals etc. by respondent L investigator
thrjlta^"''''^'"''^''''" '
statisticians for misinterpret!
Types of Errors
(a) Absolute and relative errors : Absolute error is the difference between the actua
true value and estimated approximate value while relative error is the raTo o absoS
error to the approximated value.absolut
Absolute error = Actual value - Estimated value Symbolically,
Ue = U' -U
wr
the enu mei wh( faul
Relative error = Actual value - Estimated value Symbolically,
Estimated value
e=
U'-U U
Sec furthei obtain alreadj are inv b) unf
s-XI
Here, Ue = Absolute error

e = Relative error U' = Actual value U = Approximate value niustration. Sales of
commodity approximated Rs 497 and actual sale Rs 500. Absolute error (Ue) = 500
- 497 = 3
500-497 3
and Relative error (e) = .006
500 500
Relative error (e) can also be represented in percentage
X 100 = 0.6%.
500
Relative error is generally used in statistical calculations because absolute error
gives wrong or misleading calculations.
(h) Biased and unbiased errors : Biased errors arise due to some prejudice or bias in
the mind of investigator or the informant or any measurement instrument. Suppose
the Hiumerator used the deliberate sampling method in place of simple random
sampling method; then it is called biased error. These errors are cumulative in .ir re
and increase when the sample size also increases. Biased errors arise due to fauli^
jîocess of selection, faulty work during the collection of information and faulty
method of analysis.
Unbiased errors are not the result of any prejudice or bias. They are those which
arise acccidently just on account of chance in the normal course of investigation.
Unbiased errors are generally compensating.
(c) Sampling and non-sampling errors : The errors arising on account of drawing
inferences about the population on the basis of few observations (sampling) are
called sampling errors. The errors mainly arising at the stages of ascertainment and
processing 'of data, are called non-sampling errors. They are common both in
census enumeration and sample surveys.
To avoid these errors, the statistician must take proper precaution and care in using
itfie correct measuring instrument. He must see that the enumerators are also not
biased. Unbiased errors can be removed with proper planning of statistical
investigations.
Statisticians should have none of these errors.
i"
how secondary data is collected
Secondary data are those which are collected by some other agency and are used
for i^her studies. It is not necessary to conduct special surveys and investigations.
We can obtain the required statistical information from other institutions, or reports
which are êady published by them as a part of their routine work. It saves cost and
time which 'are involved in collection of primary data. Secondary data may be either
(a) published or (fc) unpublished.
46

Ji
hm. Sf.
Published Soiu-ces
The various sources of pubhshed data are as under :
(/) Goveênt pubUcations : Different ministries and departments of Central ar
State Governments publish regularly current information along with statistical da on
a number of subjects. This information is quite reliable for related studies. ^ examp
es of such publications are: Annual Survey of Industries, Labour Gaze Agriculture
Statistics of India, Indian Trade Journal, etc.
() Publications of international organisations : We can obtain valuable internation s
atistics from official publication of different international organisations, like, ti United
Nations Organisation (UNO), International Labour Organisation (ILO International
Monetary Fund (IMF), World Bank, etc. .
(Hi) Semi-official publications : Local bodies such as Municipal Corporations, Distri
Boards etc: publish periodical reports which give factual information about heal
sanitation, births, deaths etc.
(iv)
Reports of committees and commissions : Various Committees and
Commission are appointed by the Central and State Governments for some special
study an recommendations. The reports of .uch committees and commissions contai
valuable data^ Some of the reports are : Report of National Agricultu Commission,
Report of the Tariff Commission, the Patel Committee Report e
(v)
Private publications :
(a)
Journal and newâpers. Journals like Eastern Economists, Journal of Industr
and Trade, Monthly Statistics of Trade; and newspapers, like Financial Expres
Economic Times, collect and regularly puWish the data on different fields
( economics, commerce and trade.
(b)
Rêarch institutions. There are a number of institutions doing research o
allied subjects This is the most importarn source of obtaining secondary dat The
National Council of Applied Economic Research and Foundation ( !>cientihc and
ônomic Research are such institutions. Research scholars at ti university level also
contribute significandy to the availabihties of secondai
(c)
Professional trade bodies. Chambers of Commerce and Trade Associatio,
publish statistics relating to trade and commerce. Federation of Indian Chamb of
Commerce, Institute of Chartered Accountants, Sugar Mills Associatio Bombay Mill
Owners Association, Stock Exchanges, Bank and Cooperath Societies, Trade Unions,
etc. pubhsh statistical data.
(d)
Annual reports of joint stock companies are also useful for obtaining statistic
information. These are pubKshed by companies every year.
^^^ ^md^''
s-XI
also, provide valuable data for reseat
Unpublished Data
Research institutions, trade associations, universities, labour bureaus, research
workers and scholars do collect data but they normally do not pubHsh it. Apart from
the above sources we can get the information from records and files of government
and private offices. Limitations of Secondary Data
One should use the secondary data with care and full precaution and should not
accept them at their face value as they may be suffering from the following
limitations:
1.
They may not have been collected by proper procedure.
2.
They may not be suitable for a required purpose. The information which was
collected on a particular base may not be suitable and relevant to an enquiry.
3.
They may have been influenced by the biased investigation or personal
prejudices.
4.
They may be out of date and not suitable to the present period.
5.
They may not satisfy a reasonable standard of accuracy.
6.
They may not cover the full period of investigation.
Precautions in the Use of Secondary Data

The investigator should consider the following points before using th j secondary
data : (a) Are the data reliable?
{b) Are the data suitable for the purpose of investigation?
(c)
Are the data adequate?
(d)
Are the data collected by proper method?
(e)
From which source were the data collected? if) Who has collected the data?
(g) Are the data biased?

. Thus, the secondary data should not be used at its face value. It is risky to use
such statistics collected by others unless they have been properly scrutinised and
found reliable, suitable and adequate.
ijlôfrlant sources of secondary dali|> of india and national survey organisations)

There are various sources and organisations through which statistical data are being
compiled in India. Since India achieved Iiidependence, great and rapid strides have
been made in the field of collection of data. In the context of economic planning,
importance of statistics (data) in the country has become great. Statistics are
necessary for framing and judging the progress of economic planning. The study of
Indian statistics is made under following heads :
I.
Statistical Organisation of India (CSO)
II.
Indian Statistical Material.
48
This can be studied >finder following sections :
(A) Agriculture-Statistics (B) National Income and Social Accounting
(C) Population Statistics
(D) National Sample Survey
(E) Price Statistics (F) Industrial Statistics

(G) Trade Statistics (H) Financial Statistics
(I) Labour Statistics
There are some agencies both at the national and state level, which collect, process
.^nd tabulate statisticar data. Some important major agencies at the national level
are ênsus of ^dia, Narionai Sample Survey Organisation (NSSO), Labour Bureau,
Central Statistical Organisation (CSO), Registrar General of India (RGI), Director
General of Commercial Intelligence and Statistics (DGCIS), etc.
census of india
unique experience of undertaking the biggest census in the world in 1981 and has
also an unbroken record of more than hundred years of decadal censuses Ihe Indian
census is universally acknowledged as most authentic and comprehensive source of
information about our land and people. In 1869 Hunter was appointed Director
General of Statistical Surveys. He not only elaborated the statistical system but also
assisted the statistical surveys of districts and provinces. That later followed into
famous Gazetteers. He advised m conducting of census of India which undertook

explanatory surveys from 1869 to 1872 and thereafter matured into a decennial
census which ever since contmued without interruption. After 1872 the next census
was taken in 1881 and ^nce then it has ^become a regular feature of holding
census every ten years uninterruptedR The Census of India provides the most
complete and continuous demographic record of
T
Independecne was held in 1951 and latest one completed
m .001. The study of population is important for several reasons in overall study of
economic development. Information of demographic characteristics include birth
and death, fertility, sex ratio, age-composition, migration and literacy etc. The
economic Characteristics of ppulation are manifested through workers' participation
m economic
classification of workers m various occupations, employment
The data generated by the Census of India 2001 provide benchmark statistics on
the
people of India at the beginning of the next millennium. This is a mirror of a fair
^presentation of the socio-economic and demographic condition of our people
which
constitute about one-sixth of the human population on this planet. The census
statistics
s useful for assessing theîmpact of the developmental programmes and identify
new
thrust areasTor focussing the efforts on improving the quality of life in our country
Basic
population data fmm Primary Census Abstract. Census of India 2001 gives
information ot population m India as :
TABLE 3
Persons
Males Females
Sex Ratio
1,028,610,328 ^- ^ _" 532,156,772 496,453,536 933

49
national sample survey organisation (ii5s0)
The National Sample Survey (NSS), initiated in the year 1950, is a nationwide, large
scale continuous survey operation conducted in the form of successive rounds. It
was established on the basis of a proposal from Prof. P.C. Mahalanobis to fill up data
gap for socio-economic planning and policy making through sample surveys. On
march 1970, the NSS was recognised and all aspects of its work were brought under
a single Government organisation namely the National Sample Survey Organisation
(NSSO) under the overall direction of a Governing Council to impart objectivity and
autonomy in the matter of collection, processing and publication of the NSS data.
The Governing Council consists of 18 experts from within and outside Government
and is headed by an eminent economist/statistician and the member-secretary of
the council is Director General and Chief Executive Officer of NSSO. The Governing
Council is empowered to take all technical decisions in respect of survey work, from
planning of survey to release of survey results. The NSSO headed by a Director
General and Chief Executive Officer, has four divisions namely. Survey Design and
Research Division (SDRD), Field Operation Division (FOD), Data Processing Division
(DPD) and Coordination Publication Division (CPD). A Deputy Director General heads
each division except FOD. An Additional Director General heads FOD.
Functions of NSSO
The functions of National Sample Survey Organisation are :
(i)
Collection of data on socio-economic conditions, production of small scale
household enterprises consumption etc. on continuous basis in a comprehensive
manner for whole country. A major objective of NSS has been to provide data
required to fill up the gaps in information needed for estimation of national income.
[ii)
Collection of data relating to the organised industrial sector of the country.
{Hi) Supervision of surveys conducted by states in agricultural sector through their
own
agencies and also giving guidance to them for analysing and coordinating the
results of these surveys. The NSSO took a forward view of the data requirements to
planners, research workers and other users and draw up a long term programme.
The programme conducts periodical surveys on :
{a) Demography, health and family planning; {b) Assets, debt and investment; (c)
Land holdings and livestock enterprises;
{d) Employment and unemployment, rural labour and consumer expenditure; and
(e) Self employment in non-agricultural eflterprises.
The data collected by NSSO surveys on different socio-economic subjects are
released tiirough reports and its quarterly journal 'Sarvekshana\ The data comprises
different iocio-economic subjects like employment, unemployment literacy,
maternity child care.
1tr
50
utUisat^n of public distribution system, utilisation of educational of services etc Th
car Aoar; fTolfll . T 2004)-was on morbidity and head
care. Apart from collection of rural and urban retail prices for compilation of
consume
pn.e mdex numbers NSSO also undertakes field work of Annual S^ ^dust^
conducts crop estimation surveys.
^ maustries an
exercises
2.
3.
4.
5.
6.
7.
8.
9.
10. 11. 12. 13.
14.
15.
i-XT
What do you understand by Statistical Enquiry? Explain
d~ft~f
merits anc
Discuss the comparatwe merits of various methods of collecting primary data.

SrsTable^^^^^^^^^^^ "
'
i-tigations-,
What are the similarities and dissimilarities between the two methods-l
questionnaires to be filled in by informants and schedules to be fild in h
enumerators? Explain with examples. *
mat is a questionnaire? Give a specimen of a questionnaire.
Describe the questionnaire method of collecting primary data. What precaution!
must be taken while preparing questionnaire?
precautionf
Write short notes on :
(a) Census of India
{b) National Sample Survey Organisation (NSSO) mat IS Secondary^data? Discuss
the various sources of collecting secondary data, mat precaution should be taken
before using secondary data? Explain
iTZn 1 constructing interview schedules and questionnaires
F ame at least four appropriate multiple choice options for following questions (t)
How often do you use computers? () What is the monthly income of your family?
(m) Rise in petrol price is justified : (iv) Which of the newspaper do you read
regularly ?
Jv) Which of the following most important when you buy a new dress' l<rame two
way questions (with 'Yes' or 'No')
Following statements-true or false.
(/) Data collected by investigator is called secondary data. () There are many
sources of data.
(m) Telephone survey is the most suitable method of collection of data when the
population is literate and spread over a large area.
s-XI
16.
Distinguish between population and sample.
17,
Distinguish between census and sample surveys. List four important types of
sampling : methods. Explain the reasons for preferring sample surveys in the
collection of data.
Name the methods of selecting a sample. Describe the method of stratified
sampling - with merits and demerits.
19.
The Education Ministry is interested in determining the level of education of
unmarried girls in the country. How would you organise a survey for this purpose?
20.
Does the lottery method always give you random sample? Explain.
21.
Do samples provide better resuhs than surveys? Give reasons for your
answer.
22.
Examine the important types of sampling methods.
23.
Distinguish between random sampling and systematic sampling. Give
suitable examples.
24.
Discuss briefly the following :
(a)
Law of inertia and large numbers
(b)
Law of statistical regularity
25.
What do you understand by 'Census' investigation? Explain its suitability with
illustrations.
26.
What do you mean by 'Sample' investigation? Explain its suitability with
illustrations.
27.
Explain briefly the different methods of sampling. Give illustrations.
28.
Give a comparative study of stratified sampling and multi-stage sampling.
29.
Write a critical note of random sampling method.
30.
How would you distinguish convenience sampling with judgement
(deliberate) sampling? Explain.
31.
What do you mean by statistical errors?
32.
Discuss briefly the following :
(a)
Biased and unbiased errors
(b)
Absolute errors and relative errors p; :^ (c) Sampling and non-sampling
errors
Give two examples each of sample, population and variable. Which of the following
methods gives better result and why? (a) Census
(6) Sample
Chapter 4
organisation of data
(b)
Classification
1.
Definition
2.
Objects of Classification
3.
Characteristics of Classification
4.
Methods of Classification Statistical Series
1.
Definition
2.
Types of Series
3.
Frequency Distribution
(a) classification
The quantitative information collected in any field of society or science is never
uniform. They always differ from one to another, e.g., prices of vegetables, students
in different sections, income of families, time in different watches, height or weight
of students. A single item out of all the observations of group as numerical may be
called variate or variable, e.g..
Price of potato is Rs 10.00 per kg, in a group of vegetable prices.
Students in Section A are 50, in a group of different sections.
Income of family D is Rs 10,000 per month, in a group of families.
Time in HA/IT watch is 10.45 a.m., m a group of different watches.
Height of Rajesh is 60", in a group of students.
Variate can also be called 'variable' or 'magnitude' or 'observation' or 'item' or
'measure' or value'.
The characteristics which are not capable of being measured quantitatively are
called attributes. For example, blindness, deafness, literacy, sickness, tall and short,
black and blue eyed, intelligence, aptitude for art and music, etc. They cannot be
measured numerically in the same way as heights and weights, or, price and
incomes. Individuals may be ranked according to quality of attributes. The ranks are
sometimes used as their numerical values for purposes of statistical analysis.
The collected data (either by primary or secondary method) are always in an
unorganised form in schedules or questionnaires or another written form. The
collected data in unorganised form is called RAW DATA. Because of the limitation of
human mind
53
to understand such a complex, varied and unorganised data, it is necessary to make
them available for comparison, analysis and appreciation by proper and suitable
grouping and arrangement in condensed form. The process of grouping into
different classes or subclasses according to characteristics is called classification.
The classified information arranged in a logical and systematic order in a particular
sequence is called seriation or statistical series. The classified information
presented in precise and systematic tables is called tabulation. In other words,
classification is for division of data, seriation is for arrangement of data in a
systematic order and tabulation is for presentation of data in a table.
DEFINITION
According to Professor Connor, "-Classification is the process of arranging things
(either actually or notionally) in the groups according to their resemblances and
affinities, and give expression to the unity of attributes that may subsist amongst a
diversity of individuals."
According to this definition, the chief features of classifications are :
(1)
The facts are classified into homogeneous groups by the process of
classification All the units having similar characteristics are placed in one class or
group.
(2)
The basis of classification is unity in diversity.
(3)
The classification may be either actual or notional.
(4)
The classification may be according to either attributes or characteristics or
measurements.
Classification is grouping of data according to their identity, similarity, or
resemblances For example, letters in the post office are sorted out in groups of
cities and towns of destination, viz., Delhi, Chennai, Agra,- Chandigarh etc.
Similarly, students in a school may be grouped as boys and girls, or according to
age, in library the books and periodicals are classified and arranged according to
subjects, students are classified according to division they secured in certain
examination, animals or plants may be grouped according to origin or structure etc.
OBJECTS OF CLASSIFICATION
The chief objects of classification are :
1.
To present the facts in a simple form : Classification process eliminates
unnecessary details and makes the mass of complex data, simple, brief, logical and
understandable. For example, the data collected in a population census is so huge
and fragmented that it is not possible to draw any conclusion from them. When
these massive figures are classified according to sex, education, marital status,
occupation etc., then the structure and nature of the population can easily be
understood.
2.
To bring out clearly points of similarity and dissimilarity : Classification brings
out clearly the points of similarity and dissimilarity of the data so that they can be
easily grasped. Facts having similar-characteristics are placed in a class, such as
educated, uneducated^ employed, unemployed etc.
3.
To facilitate comparison : Classification of data enables one to make
comparison, draw mferences and locate facts. This is not possible in an unorganised
and unclassified data. If marks obtained by B. Com. students in two colleges are
given, no comparison can be made of their intelligence level. But classification of
students into first, second, third and failure classes on the basis of marks obtained
by them, will make such comparison easy.
4.
To bring out relationship : Classification helps in finding out cause-effect
relationship, if there is any in the data. For example, data of small-pox patients can
help m finding out whether small-pox cases occurred more on vaccinated or
unvaccinated population.
5.
To present a mental picture : The process of classification enables one to form
a mental picture of objects of perception and conception. Summarised data can
easily be understood and remembered.
6.
To prepare the basis for tabulation : Classification prepared the basis for
tabulation and statistical analysis of the data. Unclassified data cannot be presented
in tables.
CHARACTERISTICS OF CLASSIFICATION
It is important that the classification should possess following characteristics :
1.
Classification should be unambiguous : Classification is meant for removing
ambiguity. It is necessary that various classes should be so defined that there is no
room for doubt and confiision and must have a class for each item of data in one of
the classes.
2.
The classes must not overlap : Each item of data must find its place in one
class and one class only There must be no item which can find its way into more
than one class.
3.
Classification should be stable : If classification is not stable and if each time
an enquiry is conducted it has to be changed. The data would not be fit for
comparison. Therefore, the classification must proceed at every stage in accordance
with one principle, and that principle should be maintained throughout.
4.
Classification should be flexible : It should be flexible and should have the
capacity of adjustment to new situations and circumstances. With change in time,
some classes became obsolete and have to be dropped and fresh classes have also
to be added.
5.
Classification should be suitable to enquiry i-Classification should be
according to the objects of enquiry. If the investigation is carried on to enquire into
the economic conditions of labourers, then it will be useless to classify them on the
basis of their religion.
6.
Classification, should have arithmetical accuracy : The total of items included
in different classes, should tally with the total of the universe.
55
ganisation of Data
.O .e. chs. . can be .onped
the following bases :
1. According to time, (Chronological Classification)
2
According to area, (Geographical Classification)
According to attributes, (Qualitative Classification)
According to magnitudes or variables (Quantitative Classification)
For example.
Population of India
1951 35.7
1961 43.8
1971 54.6
1981 68.4
1991 81.8
2001 102.7
OR
2001 102.7
1991 81.8
1981 68.4
1971 54.6
1961 43.8
1951 35.7
Year
Population (in crores)
Year
Population (in crores)
(a)
Alphabetical order (names of the countries)
Country
America Brazil China Denmark France India
Yield of
wheat in
. ' 2,25
kg (Per acre) 1925 127

(b)
439
862
893
Descending order (figures of the second row above) ^
Country "
America China India France Denmark Brazil
Yield of
wheat in ^^^
^^^ ^^^ 225
127
Note 4rLes of Ae conntrTes do no. appear in an alphabe.,cal order in example (b).

For example.
56
Two-fold classification
POPULATION
r
Males
co
to
2ooE
CO
= iS
su
Employed
Females
Married (1)
I
Unemployed
Employed
Unmarried Married Unmarried
(2)
(3)
(4)
Married (5)
i
Unemployed
Unmarried Married (6)
(7)
1
Unmarrit (8)
Second and AM Iges of cLsffaLT " ""
confusion in classification Th..Q in i-u^ u . , . ' cieariy dehned to avoid
we.gh, sales,t'Tts"7rf ^
^^
formation of searisrical feries "7'classification ,s made in tl,

: "r;"
Tu 1
-10
27
58
72
Thus, there are 15 workers in the income group of Rs 100 to 199 77 7 mcome
group of Rs 200-299 and so on. '
'1
(b) statistical series
DEHNinON
other, the resu,. ,s s^^r^^ :""" "'
the division of the data I tt^ flTrr'
"
.he collected and classified" ir^ rprl^êJrr;:;':
"""""
57
STATISTICAL SERIES
Jiasis of bharacter
Z Times Series (on the basis of time)
2.
Spatial Series (on the basis of space)
3.
Condition ^ries (on the basis of condition)
r Series of Individual ^servation 2. Discrete Series 3. Continuous Series

Frequency distribution
Series on die Basis of General Chatc.
ISa^r tr
^ ^^
reference ro sonre .n,e nn..,
,ear,.onrH,weeU, or da. Por example.
^^^ ^ ^^ ^^
Sugar Production of a Factory
^^^ ^^^^ ^^ 2006)
of .he universe under srudy
^^ j,.^coun.ry, sate, cry, town.
village or colony. For example : ^^^^^ ^^ ^^^^^^^

Country
Per Capita
USA France Japan Canada India 5,100 3,900 2,800 2,100 500
City
Delhi Mumbai Chennai Kolkata Bangalore
792 649 573 532 459
58
3. Condition series : A series of values of some variable made according to a
condition is called condition series. Data are presented with reference to some
condition, viz., height, age, weight, income etc. For example :
Weekly Income of 100 Workers
Income (Rs.) No. of Workers
500- 999
35
1000-1499
25
1500-1999
15
2000-2499
20
2500-2999
Series on the Basis of Construction

After collection and classification of data it is the most important job now to
construct the data in an arranged order that is the formation of series for further
study of presentation, analysis and interpretation. This arrangement can be done in
three ways :
{a) Series of Individual Observation, {b) Discrete Series, (c) Continuous Series.
{b) and (c) are with reference to frequency distribution.
Series of Individual Observation
Mass data in its original form is called raw data or unorganised data which can be
arranged in any of the following ways :
(/) Serial order of alphabetical order, (ii) Ascending order, {Hi) Descending order.
The mass data when put in ascending or descending order of magnitude is called an
array. A series of individual observations is a series where items are listed singly
after collection. They are not listed in groups.
Suppose an investigator has obtained the following information from a factory about
the payment of daily wages of 30 workers, which is in unorganised form (Raw Data)
as shown in Table 1.
TABLE 1
Daily Wages Paid to Workers (in Rupees)
60
102
61
101
92
80
87
72
86
73
96
101
92
56
90
58
85
74
83
63
84
62
92
100
56
84
90
86
67
72
TYPES OF SERIES
Statistical series can be clasîêd in the following way :
STATISTICAL SERIES
57
^J^sls of "Character
1.
Times Series (on the basis of time)
2.
Spatial Series (on the basis of space)
3.
Condition Series
(on the basis of condition)

1. Series of Individual observation
-
2. Discrete Series
3. Continuous Series
Frequency distribution
Series on the Basis of General Character
1 Time series. A series of values of some variable according to successive points in
time is called time series. Data are presented with reference to some time unit, viz.,
year, month, week, or day. For example :
Sale in Super Bazar

Sugar Production of a Factory
Year
Production
(in WO tons)
1999 78
2000 75
2001 94
2002 86
2003 89
2004 92
2005 95
(1st week of Jan. 2006)
Day
Sale
(Rs)
Men. 1,892
Tues. 2,757
Wednes.
3,090
Thurs. 2,650
Fri.
2,592
Satur. 3,822
2 Spatial series. A series of values of some variable according to geographical
division of the universe under study is called a spatial series or geographical series.
Data are presented with reference to some geographical division, viz., country, sate,
city, town.
village or colony. For example :
Per Capita Income
Number of Schools
Country
USA
Per Capi^
5,100
France
3,900
Japan 2,800
Canada
2,100
India 500
City
No. of Schools
Delhi 792
Mumbai
649
Chennai
573
Kolkata
532
Bangalore
459
58
Statistics for Economics-XI j
3. Condition series : A series of values of some variable made according to a
condition IS called condition series. Data are presented with reference to some
condition, viz., height, age, weight, income etc. For example :
Weekly Income of 100 Workers
Income (Rs.) No. of Workers
500-999
35
1000-1499
25
1500-1999
15
2000-2499
20
2500-2999
i;
Series on the Basis of Construction
After collection and classification of data it is the most important job now to
construct the data in an arranged order that is the formation of series for further
study of presentation, analysis and interpretation. This arrangement can be done in
three ways :
(a) Series of Individual Observation, (b) Discrete Series, (c) Continuous Series.
{b) and (c) are with reference to frequency distribution.
Series of Individual Observation
Mass data in its original form is called raw data or unorganised data which can be
arranged in any of the following ways :
(/) Serial order of alphabetical order, (ii) Ascending order, (Hi) Descending order.
The mass data when put in ascending or descending order of magnitude is called an
array. A series of individual observations is a series where items are listed singly
after collection. They are not listed in groups.
Suppose an investigator has obtained the following information from a factory about
the payment of daily wages of 30 workers, which is in unorganised form (Raw Data)
as shown in Table 1.
TABLE 1
Daily Wages Paid to Workers (in Rupees)
60
102
61
101
92
80
87
72
86
73
96
101
92
56
90
58
85
74
83
63
84
62
92
100
56
84
90
86
67
72
59
The above raw data can be arranged either in serial order (Table 2) or ascending
order (Table 3) or descending order (Table 4) as given below :
TABLE 2 Arranged in Serial Order
5- No. ^^ y -."" - V (Rs)
S.No. Wages (Rs,
21
60
11
61
92
S. No. Wages IRS,
87
12
86
22
96
92
13
90
23
85
83
14
84
24
92
56
15
90
25
67
102
16
101
26
80
72
17
73
27
101
56
18
58
28
74
63
19
62
29
100
10
84
20
86
30
72
TABLE 3 Arranged in Ascending Order (Wages in Rupees)

56
62
73
84
90
96
56
63
74
85
90
100
58
67
80
86
92
101
60
72
83
86
92
101
61
72
84
87
92
102
TABLE 4 Arranged in Descending Order (Wages in Rupees)

102
92
87
84
72
61
101
92
86
83
72
60
101
92
86
80
67
58
100
90
85
74
63
56
96
- 90
84
73
62
56
FREQUENCY DISTRffiUTION
Before discussing anything about frequency distribution it is advisable to know the
following important terms of frequency distribution under which the two types of
distributions are grouped. The two types are :
(a)
Discrete Frequency Distribution.
(b)
Continuous Frequency Distribution.
60
Terminology of Frequency Distribution
Examine the following two sets of illustrations to clearly understand the basic
termmology of frequency distribution. ^
Set I. Children in Families t
Children
No. of families (f)
01234
25 45 37 15 8
Total 130
Height in Inches No. of Students (f)
56-58 12
58-60 16
60-62
62-64 4
64-66 10
Total 57
diffe^r^t' i' arrangement of items mto a particular order or sequence m
sfuZZ '' '
" Height "f
Frequency : The number of times given value in an observation appears is the

frequencv
four chiljen ^ 10 students m the group of 64" to 66" and 16 students m group of 58
to 60 etc. So the frequency of famihes having no child is 25, frequency of families
havmg 4 children is 8; frequency of students m the group of 6^" to 66^s 10 and
frequency m the group of 58" to 60" is 16.
class^'lrau^nr"'^ ^ Tu^"/^
^^^ quantitative classes is called the
class frequency^.^., out of the five classes of Set II students in a group of 58" to
60"
to 60 IS 16 and of 62" to 64" is 4. There is no instance of a class in Set I
"^SiT't^TlT ^ J
^^
- the total frequency,
e.g., the total 130 and 57 in our set I and set II.
cJJaT^^ distribution : The distribution of observations over the several values is
n ^^ Set n T"
' ^^
children
m tamilies, and Set II is the frequency distribution of heights of students.

Class. It is a decided group of magnitudes, e.g., 56"-58", 100-200, 10-19 4-8
form fhe b'ndar^T I
^^^ magnitudes, which
boundaries of a d^ss, are known as the upper and lower limits, respectivdy For
clTn'^f Set^f^^^^^^^^
'' " '^T "
upper.limit.'Thu's m thi fir"
andTht hf H /
f magnitudes 56, 58, 60, 62, and 64 are the lower limits
respec^v classes
'''
^^ ^^^ ^^^
^mits of their
^^
The above raw data can be arranged either in serial order (Table 2) or ascending
order (Table 3) or descending order (Table 4) as given below :
TABLE 2 Arranged in Serial Order
S. No. Wages
(Rs)
S. No. Wages
(Rs)
S. No. Wages
(Rs)
60
11
61
21
92
87
12
86
22
96
92
13
90
23
85
83
14
84
24
. 92
56
15
90
25
67
102
16
101
26
80
72
17
73
27
101
56
18
58
28
74
63
19
62
29
100
10
84
20
86
30
72
TABLE 3 Arranged in Ascending Order (Wages in Rupees)
56
62
73
84 '
90
96
56
63
74
85
90
100
58
67
80
86
92
101
60
72
83
86
92
101
61
72
84
87
92
102
TABLE 4
Arranged in Descending Order
(Wages in Rupees)
102
92
87
84
72
61
101
92
86
83
72
60
101
92
86
80
67
58
100
90
85
74
63
56
96
- 90
84
73
62
56
FREQUENCY DISTRIBUTION
Before discussing anything about frequency distribution it is advisable to know the
following important terms of frequency distribution under which the two types of
distributions are grouped. The two types are :
.
(a)
Discrete Frequency Distribution.
(b)
Continuous Frequency Distribution.
60
Statistics for Economics-XI Terminology of Frequency Distribution
Examine the following two sets of illustrations to clearly understand the basic
terminology of frequency distribution.
Set I. Children in Families
Children
0
25
45
No. of families (f)
37
15
Total 130
Height in Inches
No. of Students (f)
56-58 12
58-60 16
60-62 15
62-64 4
64-66 10
Total 57
Series is a systematic arrangement of items into a particular order or sequence in
ffe.
different classified categories, as Set I for Children in Families and Set II for
Height of
Students.
Frequency: The number of times given value in an observation appears is the
frequency For example, in the above sets there are 25 families having no child and
8 families having four children; and 10 students in the group of 64" to 66" and 16
students in group of 58" to 60" etc. So the frequency of families having no child is
25, frequency of families having 4 children is 8; frequency of students in the group
of 64" to 66" is 10, and frequency in the group of 58" to 60" is 16.
Class frequency : The number of values in each of the quantitative classes is called
the class frequency, e.g., out of the five classes of Set II students in a group of 58"
to 60" are 16 and students in a group of 62" p 64" are 4, so the class frequency of
the class 58" to 60" is 16 and of 62" to 64" is 4. There is no instance of a class in Set
I.
Total frequency : The sum (total) of the frequencies is known as the total frequency,
e.g., the total 130 and 57 in our set I and set II.
Frequency distribution : The distribution of observations over the several values is
called frequency distribution. For example. Set I is the frequency distribution of
children m families, and Set II is the frequency distribution of heights of students.
Class. It is a decided group of magnitudes, e.g., 56"-58", 100-200, 10-19, 4-8, 7-13
etc.
Upper and lower limits of the classes : The lowest and the highest magnitudes,
which form the boundaries of a class, are known as the upper and lower limits,
respectively For 1 example, for a class of 62-64, 62 is lower limit and 64 is upper
limit. Thus in the first column of Set II, left hand side magnitudes 56, 58, 60, 62, and
64 are the lower limits! and right hand side magnitudes 58, 60, 62, 64 and 66 are
the upper limits of their] respective classes.Organisation of Data
6\
Cias- mterval : The magnitude spread between the lower and upper class limits is
called class interval. It is the span or width of a class which can be obtained by
finding the difference between the upper and lower limits of the class. For example,
for class 64"-66". the class interval is upper limit (l^) - lower limit (/j), i.e., (l^ - l^)
= 66-64 = 2. The class interval in this case is 2, l^ is the lower limit and is theupper limit.
Mid-point : The mid-value which lies half way between the lower and upper class
limits is known as mid-point. Thus, in a class of 62 "-64" the mid-point is
upper class limit + lower class limit 2
or
/2+/1 64+62
= 63
22
Calculated mid-points are the most important values, as being the representatives
of the classes, and are taken for use in further statistical calculations.
Variable : A quantity which varies from one individual to another is known as a
variable or variate. Quantitative characteristics such as income, height, weight,
number of units sold etc., are variables. A variable may be either discrete or
continuous.
Discrete and Continuous Variables
Discrete and Discontinuous Variables are those which are exaci or finite and are not
normally fractions. They cannot manifest every conceivable fractional value, but
appear by limited gradations. For example, children in a family can be either 2 or 3,
but cannot be 2.2, 2.8 or 2.7. It is a descrete variable which is not expressed in a
fraction. In the same way test scores of a cricket match, rooms in a house, workers
in a factory, fans installed in an auditorium, students in a class are all the examples
of discrete variables. The occurrence of the observation will be integers, i.e., 1, 2, 3,

4, 5, 6, ... and so on. Thus the variable is said to be of a discrete type when there
are gaps between one value and the next. For example, in set I; 0, 1, 2, 3, 4 are
discrete variables.
Even fractional values are discrete or discontinuous variables provided there is an
uniform difference from one variable to the other variable. For example, if wage rate
per unit is 50 paise then workers of a factory may get wages in rupees as : 0.50, 1,
1.50, 2, 2.50, 3, 3.50, and so on.
Continuous variables are those that one in units of measurement which can be
broken down into infinite gradations, e.g., weights, heights, incomes, rainfall etc.
They are capable of manifesting every conceivable fractional value {i.e., in
decimals) within the range of possibilities. They fall in any numerical value within a
certain range. For instance covering a distance on a road, by car, say from 0
kilometre to 5 kilometres one never jumps from 0 to 1 km, 1 to 2 km, or 2 to 3 km,
but every fraction of distance from 0 km to 5 km is touched. In other words, the car
must pass through'all the infinitely small gradations of distance between 0 km to 5
km. All the fractional values are continuous variables. Heights of students from 56"
to 58" in our set II for example, cover all the fractional values falling within the limit
of 56 and 58.
II
62
(a)
Discrete frequency distribution, and
(b)
Continuous frequency distribution.
Conslruclion of Discrete Frequency Distribution

1. Prepare a table with three columns-first for variable under study, second for 'Tallv
magnitude to another may preferably be tL satne
column
^^^lustration .. Prepare frequency table of ages of 25 students of XI Class in your
Solution.
Frequency Distribution of Ages of 25 Students
Age
15
16
17
18 19
Tally bars
mill
Total (/)
mi nil . 9
mi
III
Total 4
25
Class interval : The magnitude spread between the lower and upper class limits is
called class interval. It is the span or width of a class which can be obtained by
finding the difference between the upper and lower limits of the class. For
example, .or câss 64"-66". the class interval is upper limit (Z^) - lower limit (/,),
i.e., (l^-/,) - 6t,-b4 - 2. The class interval in this case is 2, is the lower limit and is
the-upper limit.
Mid-point : The mid-value which lies half way between the lower and upper class
limits is known as mid-point. Thus, in a class of 62"-64" the mid-point is
upper class limit + lower class limit 2
or
l2k 2
64+62
= 63
Calculated mid-points are the most importam values, as being the representatives
of the classes, and are taken for use in further statistical calculations.
Variable : A quantity which varies from one individual to another is known as a
variable or variate. Quantitative characteristics such as income, height, weight,
number of units sold etc., are variables. A variable may be either discrete or
continuous.
Discrete and Continuous Variables

Discrete and Discontinuous Variables are those which are exac. or finite and are not
normally fractions. They cannot manifest every conceivable fractional value, but
appear by limited gradations. For example, children in a family can be either 2 or 3,
but cannot be 2 2 2 8 or 2 7. It is a descrete variable which is not expressed in a
traction. In the same way test scores of a cricket match, rooms in a house, workers
in a factory, fans mstaUed in an auditorium, students in a class are all the examples
of discrete variables. The occurrence of the observation will be integers, i.e., 1, 2, 3,
4, 5, 6, ... and so on. ihus the variable is said to be of a discrete type when there are
gaps between one value and
the next. For example, in set I; 0, 1, 2, 3, 4 are discrete variables.
Even fractional values are discrete or discontinuous variables provided there is an
uniform difference from one variable to the other variable. For example, if wage rate
per unit is 50 paise then workers of a factory may get wages in rupees as : 0.50, 1,
1.5U, Z,
2.50, 3, 3.50, and so on.
Continuous variables are those that one in units of measurement which can be
broken down into infinite gradations, e.g., weights, heights, incomes, rainfall etc.
They are capable of manifesting every conceivable fractional value {i.e., in
decimals) within the range ot possibilities. They fall in any numerical value within a
certain range. For mstance covering a distance on a road, by car, say from 0
kilometre to 5 kilometres one never jumps from 0 to 1 km, 1 to 2 km, or 2 to 3 km,
but every fraction of distance from 0 km to 5 km is touched. In other words, the car
must pass through'all the infinitely small gradations of distance between 0 km to 5
km. All the fractional values are continuous variables Heights of students from 56"
to 58" in our set II for example, cover all the fractional values falling within the limit
of 56 and 58.
62
Discrete series : Any series represented by discrete variahdes is called a discrete
series e.g.. Set I of the distribution of children in families is a discrete series.
Continuous series : Any series described by continuous variables is called
continuous series, e.g.. Set II of the distribution of heights of students is a
continuous series.
It is to be noted that a discrete variable series can be presented in a continuous
type of series also, but continuous variables cannot be presented in a discrete
series. Whenever the range of values in a discrete series is too wide, one can have
the choice of a continuous frequency distribution.
Considering discrete and continuous series, now individual observations can be
constructed and condensed in two ways :
(a)
Discrete frequency distribution, and
(b)
Continuous frequency distribution.
Construction of Discrete Frequency Distribution

1.
Prepare a table with three columnsfirst for variable under study, second for
'Tally bars' and the third for the total, representing corresponding frequency to each
value or size of the variable.
2.
Place all the values of the variables in the first column in ascending orderbeginning with the lowest and giving to the highest. The gap between one
magnitude to another may preferably be the same.
3.
Put bars (vertical lines) in front of the values accordingly in the second
column keeping in view the number of items a particular value repeats itself. This
column IS for facility in counting. Blocks of five bars or mi or W are prepared and
some space IS left between each block of bars.
4.
Count the number of bars in respect of each value in the variable and place it
in the third column made for total or frequency.
Illustration 1. Prepare frequency table of ages of 25 students of XI Class in your
school.
.
Va
16, 15, 16, 16, 15, 17, 17,
lo, ly, 16, 15

Solution.
Frequency Distribution of Ages of 25 Students
Age
Tally hens Total if)
15
mill
16
mi nil . 9
17
m^
18
III
19
Total 4
25
63
Illustratxon 2. In a aty 45 famUies were surveyed for the number of domestic
apphances
they used. Prepare a frequency array------------------- ^ 3
2 2 2 2 1 2. 1 2 2 - ^ ^ 3
3324
Solution.
22
37
24
22
based on their replies as recorded below.
2 1 2 2.3 3 3 6 l" 6 2 1 5 1 5 4 3 4 2 0 3 1 4
Frequency Array of Domestic Appliances Used by 45 FamiUes
Number of Appliances
012
3
4
5
67
Tally bars
mill
mi M M miM II M
Total
1 7 15 12 5 2 2 1
45
I |
appliances.
Construction of Continuous Frequency Distribution
"ations are divided mto groups havmg class mtervals. There are two methods of
classifying the data according to class intervals.
(î) Inclusive Method, and

is iiiciuu
J <: QQ 10-14 9 15-19.9 and so on.
uppe. .s e e^cludea. "H-e ''' orrinterva, is the lower o^ f ^ cfass^

second, i.e., 10 to 15.
64
Sometimes lower limits are excluded from their respective classes. For example, if
the students' obtained marks are grouped as 5-10, 10-15, 15-20, 20-25, 25-30 etc.,
we include in the first group the students whose marks are above 5 and up to 10. If
the marks of a student are 10, he is included in the first group. But if a student gets
5 marks, we will have to prepare a group 0-5 to include.
There are various methods by which class intervals can be designated. They are:
{a) By Inclusive method :
10-14, 15-19, 20-24,
25-29
10-14.99, 15-19.99, 20-24.99,

Marks :
25-29.99
5-9,
or Prices in (Rs) : 5-9.99, {b) By Exclusive method : (i) Lower limit excluded :
Marks :
5-10,
15-20,
20-25,
25-30
These are to be
These are to be
10-15,
Lower limits 5, 10, 15, 20, 25, 30 of their respective groups are excluded. () Upper
limit excluded :
Marks :
5-10, 10-15,15-20,20-25,25-30
Upper limits 10, 15, 20, 25, 30 of their respective groups are excluded. However, if
the class intervals are given as 5-10, 10-15, 15-20, 20-25 etc., it is always presumed
that upper limits are excluded in absence of any specific instructions.
(c)
By mentioning lower limits (followed by a dash) : Marks : 520-, 25-,
read as
(d)
(e)
15-,
-15,
-20,
5-10, 10-15, 15-20, 20-25 and 25-30.
By mentioning upper limits (preceded by a dash): Marks : -10,

-25, -30.
read as
10-,
5-10, 10-15, 15-20, 20-25 25-30.
By mid-points of class inter\'al :
Marks:
7.5
12.5
17.5
22.5
27.5
These mid-points are required to be converted into class intervals. Say for first
midpoint (12.5-7.5) and divide the difference by 2, i.e., (5/2). The quotient is added
and subtracted to first mid-point we get, (7.5-2.5 = 5) and (7.5 + 2.5 = 10). We get
thus the class interval 5-10. In the same way intervals of all the mid-points can be
obtained, i.e., 10-15, 15-20, 20-25, 25-30.
(f)
'Open-end' class intervals
In certain frequency distributions 'open-end' class intervals are given as we find in

the example given below :
Marks Below 10 10-15 15-20 20-25 25-30 30-35 35 and above Total
Frequency (f)
10 13 18 8
64
In such cases, values are put on the basis of construction of series. In the above
series '5' in place of 'below' and '40' in place of 'above' may be put. Thus making
the classes as : Marks
0-10 10-15 15-20 20-25 25-30 30-35 35^0
63
Illustration 2. In a city 45 families were surveyed for the number of domestic

appliances they used. Prepare a frequency array based on their replies as recorded
below.
13 2 2 2 2 1 2.1 2 2.3 3 ^ 3 33 2 3 2 2 6 1 6 215 1 5 3 242 7 42434 2 03143

Solution.
I
Frequency Array of Domestic Appliances Used by 45 Famihes
Number of Appliances
0
Mil
MMM 15
MMii 12
II
II
Tally bars
Frequency (f)
Total 45
Thus, from the above table it is clear that out of 45 families 1 is not using any
domestic appliance, 7 using 1 appliance, 15 using 2 appliances, 12 using 3
appliances, 5 using 4 appliances, 2 using 5, 2 using 6 appliances and only 1 family
using 7 domestic appliances.
Construction of Continuous Frequency Distribution
Observations are divided into groups having class intervals. There are two methods
of classifying the data according to class intervals.
[a)
Inclusive Method, and
[b)
Exclusive Method.
(a)
Inclusive Method : Under this method upper class limits of classes are
included in respective classes. For example, if the students obtained marks are
grouped as 5-9, 10-14, 15-19, 20-24, 25-29 etc., in the group 5-9, we include in first
group students whose marks are between 5 and 9. If the marks of a student are 10
he is included in the next class, i.e., 10 to 14. If there are no whole numbers, the
classes can be made 5-9.9., 10-14.9, 15-19.9 and so on.
(b)
Exclusive method : Under this method upper limits are excluded. The upper
limit of class interval is the lower limit of the next class. For example, if the marks
obtained by the students are grouped as 5-10, 10-15, 15-20, 20-25, 25-30 etc., we
include in first group of students whose marks are 5 or more but under 10. If the
marks of a students are 10 he is not included in the first group but in the second,
i.e., 10 to 15.
78
Sometimes lower limits are excluded from their respective classes. For example, if
the students obtamed marks are grouped as 5-10, 10-15, 15-20, 20-25, 25-30 etc
we mclude m the first group the students whose marks are above 5 and up to 10 If
the marks of a student are 10, he is included in the first group. But if a student gets
5 marks, we will have to prepare a group 0-5 to include.
There are various methods by which class intervals can
(a) By Inclusive method :
10-14, 15-19,
20-24, 25-29
10-14.99, 15-19.99,
Marks :
be designated. They are:
20-24.99, 25-29.99
S-9,
or Prices in (Rs) : 5-9.99, (&) By Exclusive method : (/) Lower limit excluded :
Marks :
5_io,
25-30
These are to be
These are to be
10-15,15-20,20-25,
Lower limits 5, 10, 15, 20, 25, 30 of their respective groups are excluded. (ii) Upper
limit excluded :
5-10, 10-15,15-20,20-25,25-30
Upper limits 10, 15, 20, 25, 30 of their respective groups are excluded. However, if
the class intervals are given as 5-10, 10-15, 15-20, 20-25 etc it is always presumed
that upper limits are excluded in absence of any specific instructions, (c) By
mentioning lower limits (followed by a dash) : ^'^'ks : 5-, 10152025readas
5-10, 10-15, 15-20, 20-25 and 25-30.
{d) By mentioning upper limits (preceded by a dash): Marks : -10,

-25, -30.
read as
(e)
-15,
-20,
5-10, 10-15, 15-20, 20-25 25-30.
By mid-points of class interval :
Marks :
7.5
12.5
17.5
22.5
27.5
These mid-points are required to be converted into class intervals. Say for first
midpoint (12 5-7.5) and divide the difference by 2, (J/2). The quotiem is added and
subtracted to first mid-point we get, (7.5-2.5 = 5) and (7.5 + 2.5 = 10). We get thus
the
class '"tâl 5 10 In jhe same way intervals of all the mid-points can be obtained, lU
15, 1520, 2025, 2530.
(f)
'Open-end' class intervals
In certain frequency distributions 'open-end' class intervals are given as we find in

the example given below :
Marks Below 10 10-15 15-20 20-25 25-30 30-35 35 and above Total
Frequency (f)
10 13 18 8 5 3
64
In such cases values are put on the basis of construction of series. In the above
series 5 m place of below and '40' in place of 'above' may be put. Thus making the
classes as Marks 0-10 10-15 15-20 20-25 25-30 30-35 35-40
ganisation of Data
65
ciples of Grouping
There is no hard and fast rule for grouping the data, but following general principles
ay be kept in mind for satisfactory and meaningful classification of data :
[a)
It is advisable to have total number of classes between 5 and 15. The
preference for the total number of classes depends on the numbers and figures to
be grouped, the magnitude of the figure and possibility of simplified calculations of
further statistical studies.
[b)
Odd figures for example 3, 7, 9, 11, 27, 33 etc. should be avoided for class
intervals. The choice for the class intervals should be either 5 or a multiple of 5. It
simplifies our further statistical calculations.
[c)
Lower limit of the class as far as possible, should be 0 or a multiple of 5.
[d)
For maintaining continuity and correct classes exclusive method of preparing
classes is adopted.
[e)
The class interval should be equal for all classes.
(/) As far as possible open-end classes should be avoided. For example,

Marks Below 5 5-10 10-15 15-20 Above 20
The first and the last classes are open-end classes; the first is open at the lower-end
and last at the upper end. For statistical calculations the open-ends should be
closed. Maintaining the regularity of the class intervals we can close these groups
as 0-5 and 20-25.
(g) For frequency distribution, we prepare a table having three columnsfirst for
variables, second for 'Tally bars" and the third for the total representing
corresponding frequency to each class.
Simple Series and Cumulative Series : We have seen in the above illustrations the
erns of simple series of discrete type and continuous type (Using inclusive and
exclusive [lods of class intervals). In simple series the frequency is shown against
each value or in cumulative series the frequencies are progressively totalled. See
the following tration :
Simple Series
r . Disi^^ti'^pe ; V -
Continuous Type
I Marks
Marks No. of Students
No. of Students
10
0-10
20
10-20 8
30
15
20-30 15
40
20
30-40 20
50
13
40-50 13
66
Statistics for Economic
Cumulative Series
Less than
Marks
Less than
10
Less than
20
Less than
30
Less than
40
Less than
50
No. of Students {c.f}

12 (4 + 8) 27 (4 + 8 + 15) 47 (4 + 8 + 15 + 20) 60 (4 + 8 + 15 + 20 + 13)
More than
Marks
i No. of Students (i
More than
i 60
More than
10
56 (60^)
More than
20
48 (60-12)
More than
30
33 (60-27)
More than
40
13 (60-47)
Now, we can read students getting less than 10 marks are 4, less than 20 marks 12,
less than 30 marks are 27 and so on.
In the same way the students getting more than 0 mark are 60, more than 10 mai
are 56, more than 20 marks are 48 and so on.
Illustration 3. From the following table given below of monthly household expenditi
(m Rs) on food of 50 households;
(a)
Obtain the range of monthly household expenditure on food.
(b)
Divide the range into appropriate number of class intervals and obtain the
frequei distribution of expenditure.
(c)
Find the number of households whose monthly expenditure on food is (/)
less than Rs 2000 (ii) more than Rs 3000
Monthly Household Expenditure in (Rupees) on Food of 50 Households
(c
(e (;
1904 1559 3473 1735 2760
2041 1612 1753 1855 4439
5090 1085 1823 2346 1523
1211 1360 1110 2152 1183
1218 1315 1105 2628 2712
4228 1812 1264 1183 1171
1007 1180 1953 1137 2048
2025 1583 1324 2621 3676
1397 1832 1962 2177 2575
1293 1365 1146 3222 1396
(g)
Sit )atten nethoi lass, j (lustra
Solution.
(a) Finding the highest and lowest expenditure on food of 50 households to get
range by the following formula.
Range = L - S
rj^ .
65
msatton of Uata
.viples of Grouping
There is no hard and fast rule for grouping the data, but following general principles
ly be kept in mind for satisfactory and meaningful classification of data : la) It is
advisable to have total number of classes between 5 and 15. The preference for the
total number of classes depends on the numbers and figures to be grouped, the
magnitude of the figure and possibility of simplified calculations of further
statistical studies. _
.,,r,
(b) Odd figures for example 3, 7, 9, 11, 27, 33 etc. should be avoided for class
intervals. The choice for the class intervals should be either 5 or a multiple ot 5. It
simplifies our further statistical calculations. ic) Lower limit of the class as far as
possible, should be 0 or a multiple of 5.
(d)
For maintaining continuity and correct classes exclusive method of preparing
classes is adopted.
(e)
The class interval should be equal for all classes.
(f)
As far as possible open-end classes should be avoided. For example,
Marks Below 5 5-10 10-15 15-20 Above 20

The first and the last classes are open-end classes; the first is open at the lower-end
and last at the upper end. For statistical calculations the open-ends should be
closed. Maintaining the regularity of the class intervals we can close these groups
as 0-5 and 20-25.
rf
(P) For frequency distribution, we prepare a table having three columnsfirst tor
variables, second for 'Tally bars" and the third for the total representing
corresponding frequency to each class. Simple Series and Cumulative Series : We
have seen in the above illustrations the terns of simple series of discrete type and
continuous type (Using inclusive and exclusive lods of class intervals). In simple
series the frequency is shown against each value or I, in cumulative series the
frequencies are progressively totalled. See the following
ration :
Simple Series
Discrete Type
% Marks
10 20 30 40 50
Continue
No. of Students
4 8 15 20 13 0-10 10-20 20-30 30-40 40-50
66
Cumulative Series
Less than
Marks
Less than Less than Less than Less than Less than
10 20 30 40 50
4 8 15 20 13
No. of Students {c.f.}

12 (4 + 8) 27 (4 + 8 + 15) 47 (4 + 8 + 15 + 20) 60 (4 + 8 + 15 + 20 + 13)
More than
Marks
More than
More than
10
More than
20
More than
30
More than
40
i No. of Students {t \ 60
56
(60-4)
48
(60-12)
33
(60-27)
13
(60-47)
Now we can read students getting less than 10 marks are 4, less than 20 marks 12,
less than 30 marks are 27 and so on.
In the same way the students getting more than 0 mark are 60, more than 10 ma
are 56, more than 20 marks are 48 and so on.
Illustration 3. From the following table given below of monthly household expendit
(m Rs) on food of 50 households;
(a)
Obtain the range of monthly household expenditure on food.
(b)
Divide the range into appropriate number of class intervals and obtain the
frequeu distribution of expenditure.
(c)
Find the number of households whose monthly expenditure on food is (/)
less than Rs 2000 (ii) more than Rs 3000
Monthly Household Expenditure in (Rupees) on Food of 50 Households
1904 1559 3473 1735 2760
2041 1612 1753 1855 4439
5090 1085 1823 2346 1523

1211 1360 1110 2152 1183
1218 1315 1105 2628 2712
4228 1812 1264 1183 1171
1007 1180 1953 1137 2048
2025 1583 1324 2621 3676
1397 1832 1962 2177 2575
1293 1365 1146 3222 1396
Solution.
(a) Finding the highest and lowest expenditure on food of 50 households to get I
range by the following formula.
Range = L - S
'^ganisation of Data
where,
L = Longest value, and S = Smallest value
Here, L = 5090 and S = 1007

Range = 5090 - 1007 = Rs 4083 (b) Dividing the class interval of Rs 500, we get
4083
67
500
= 8.166
Now, we decide 9 classes to include all the given values preparing a continuous
frequency distribution by exclusive method (excluding upper limit).
Frequency (Excluding upper limit)
Household Expenditure (Rs)
1000-1500
miMTHiTHl
1500-2000
MM III 13
2000-2500
Ml
20
Tally bars
Frequency (f)
2500-3000
3000-3500
II
3500-4000
4000-4500
II
4500-5000
5000-5500
0
1"
Total 50
(c) (i) Number of households whose monthly expenditure is less than Rs 2000 (i.e.,
1000 - 2000)
= 20 + 13 = 33 Households (ii) Number of households whose monthly expenditure
is more than 3000 (i.e., 3000 - 5500)
= 2 + 1+ 2 + 0 + 1 = 6 Households 1. Illustration 4. Form a frequency distribution
from the following data by inclusive rthod taking 4 as the magnitude of class
intervals taking the lowest class as (10 - 13). obtain class boundries and mid-values.
31
23
19
29
22
20
16
10
13
34
38
33
28
21
15
18
36
24
18
15
12
30
27
23
20
17
14
32
26
25
18
29
24
19
16
11
22
15
17
10
68
Solution.
Statistics for Economics-M O
Class interval
10-13 14-17 18-21 22-25 26-29 30-33 34-37 38-41
Tally bars
mini mini mill mi
Frequency (f)
875421
Total
40
Oass Boundaries
In above illustration 10-13 14-17 io 91 ^c of inclusive method of construction of
coin nor f ' ^^^ I
or discontinuity between upper uZ S Xs ' w I ê find 'gap
1 between the upper limit of the fct dasfia and rZT ^^
we find a ';gap' of 1. The contmuity of tie vaLtk ^^^^^^^
adjustment m the class interval. classified data is obtained
Steps
""""" class and ehe pp
14 - 13 = 1 2. Divide the difference by 2
1
Mid-point =
2
(c)
m.v. =
li+h
nil
[ methoc Also ol
31 38 12 18
where,
L = Longest value, and S = Smallest value
Here,' L = 5090 and S = 1007

'
Range = 5090 - 1007 = Rs 4083
(b) Dividing the class interval of Rs 500, we get

4083
67
500
= 8.166
Now, we decide 9 classes to include all the given values preparing a continuous
frequency distribution by exclusive method (excluding upper limit).
Frequency (Excluding upper limit)
Household Expenditure (Rs)
1000-1500
MM MM
1500-2000
MM III 13
2000-2500
Ml
2500-3000
3000-3500
II
3500-4000
4000-4500
II
2i
4500-5000
5000-5500
Tally bars
Frequency (f)
20
10
1"
Total 50
(c) (i) Number of households whose monthly expenditure is less than Rs 2000 [i.e.,
1000 - 2000)
= 20 + 13 = 33 Households () Number of households whose monthly expenditure
is more than 3000 (i.e., 3000 - 5500)
= 2 + 1+ 2 + 0 + 1 = 6 Households Illustration 4. Form a frequency distribution
from the following data by inclusive bod taking 4 as the magnitude of class intervals
taking the lowest class as (10 - 13). obtain class boundries and mid-values.
31
23
19
29
22
20
16
10
13
34
38
33
28
21
15
18
36
24
18
15
12
30
27
23
20
17
14
32
26
25
18
29
24
19
16
11
22
15
17
10
68
Solution.
Class interval
10-13 M
14-17 mini
18-21 mini
1 Tally bars Frequency (f)
22-25 mîi 7
26-29 m^
30-33 nil i
34-37 n 1
38^1 1 i i
Total 40
f^.Iass Boundaries
In above illustration 10-13, 14-17, 18-21, 22-25, 26-29 and so on are class Um of
mclusxve method of construction of contmuous frequencv distribution. We S 'Z or
discontinmty between upper limit of a class and lower limit of next class Fo elS
JTnT: trotftr' f ^^^
ifL dat Ii;^ " ^^
Steps
14 - 13 = 1
2.
1
Divide the difference by 2
- =0.5
3.
Subtract the value obtained from lower limits of all the classes (- 0 5)
4.
Add the value obtained to upper limits of all classes (+ 0 5)
are itri^Ld'^"'""" " ^^ each cL

Mid-point = Upper class limit+Lower class limit
2
m.v. =
Ink 2
lelativ
It i factual 1
ganisation of Data Now we get
69
Illustration 5. Prepare a frequency distribution by inclusive method taking class
interval of 7 from tbe following data :
imits japs' nple, s 14, d by
lit of
Class iiêrval
frequency (f)mid values (m.v.).
9.5-13.5
11.5
13.5-17.5
15.5
17.5-21.5
19.5
21.5-25.5
23.5
25.5-29.5
27.5
29.5-33.5
31.5
33.5-37.5
35.5
37.5-41.5
39.5
15
22
Total 40
28
17
29
21
23
27
18
12
10
20
16
12
33
27
21
15
36
27
18
32
31
29
18
14
13
15
11
37
32
28
26
24
20
19
25
19
20
Solution.
Frequency Distribution (Inclusive Method)
class
Tally bars
Frequency (f)
0-7
miMmi
15
8-15
miMTHi
15
16-23 mm nil
14
24-31 mimi 1
11
32-39 M
Total 60
^tive Frequency Distribution
It is sometimes required to show the relative frequency of occurrences rather than
ual number of occurrences in each class of frequency distribution. If actual
frequencies I expressed as per cent of the total number of observations, relative
frequencies are ained.
70
Individum
]
2
3
4
5
Money (Rs)
114 108 100 98 106
Individual
6
7
89
10
Money (Rs) Individual
109
11
131
117
12
136
119
13
143
121
14
156
126
15
169
Money (Rs)
Individual
"-'igclllisc
frequencies. Solution.
16
17
18
19
20
182 195 207 219 235
Money (Rs)
75-100 100-125 125-150 150-175 175-200 200-225 225-250
Frequency Distribution (Excluding upper limit)
OJ
lof 7 :
Tally bars
Frequency (f)
Mil
Total
2742221
Relative frequency (%)
20
10 35 20 10 10 10 5
100
Soli
(Assuming the class interval of Rs 25) of
Frequency Distribution of Money
Money (Rs)
50-100 100-150 150-200 200-250
Tally bars
MMii
Total
Frequency (f)
1 12 4
3
Relative frequency (%)
5 60 20 15
dative ]
It is ! (ictual nuj exprei obtained.
,35. We take a ..e,
anisation of Data
69
Class interval
Frequency (f)
9.5-13.5
11.5
13.5-17.5
15.5
17.5-21.5
19.5
21.5-25.5
23.5
25.5-29.5
27.5
29.5-33.5
31.5
33.5-37.5
35.5
37.5-41.5
39.5
mid lvalues {m.v.)
Total 40
fflustration 5. Prepare a frequency distribution by inclusive method taking class
interval
28 9 4 4 1
Solution.
17
15
22
29
21
23
27
18
12
10
20
16
12
33
27
21
15
36
27
18
32
31
29
18
14
13
15
11
37
32
28
26
24
20
19
25
19
20
Frequency Distribution (Inclusive Method)

Class Tally bars
0-7
mimm15
8-15
miMM 15
16-23 mm 111!
24-31 MM 1 11
Frequency (f)
14
32-39 M
Total 60
lative Frequency Distribution
It is sometimes required to show the relative frequency of occurrences rather than
Illmber of occuLnces in each class of frequency distribution If actual frequencies
^pressed as per cent of the total number of observations, relative frequencies are
ained.
90
Illustration 6 In a hypothetical sample of 20 individuals the amounts of money them

were found to be :
Individual
Money
Individual
(Rs)
Individual
(Rs)
Money
Individual
(Rs)
114
109
11
131
16
182
108
117
12
136
17
195
100
119
13
143
18
207
98
121
14
156
19
219
106
10
126
15
169
20
235
frequencies. Solution.
Frequency Disttibution (Excluding upper limit)
Money {Rs) Tally bars
Frequency If)Relative frequency (%)
75-100
II
10
100-125
Mil
35
125-150
nil
20
150-175
II
10
175-200
II
10
200-225
II
10
225-250
Money
Total 20
100
(Assuming the class interval of Rs 25)

Frequency Distribution of Money
Money (Rs) Tally bars
50-100
100-150 150-200
Mmiii nil
200-250
III
Total 20
12 4
J 60 20 15
100
-XI
vith
ganisation of Data ^^
quency Distribution with Unequal Classes
Data are sometimes given in unequal class intervals. Such series are used when
there f great fluctuation in data. For example :
ative
1 Set I
Set II
Set
III
pfass Frequency
Class Frequency
Class Frequency
0-5
2-A
5-10
2-6
X+Y
10-20 Z
2-8
X+Y+Z
20-30 A
7-20
8-10
30-50 B
20-40 B
10-12 B
50-75 C
40-60 C
12-14 C
x)ss of Information
Raw data is grouped by making equal or unequal class frequency distribution, say 15, 5-10, 10-15 or 0-5, 5-7, 7-12, 12-20 and so on. By making such classes there is
loss of information of individual observation. Further, the statistical analysis is based

on die mid-points of these classes without giving any importance to individual
observation. ^ such, the significance of individual observation is lost.
livariate Frequency Distribution
We have so far studied above frequency distributions involving single variable only,
uch frequency distributions are called univariate frequency distributions. Often we
come aoss data composed of measurements made on two variables for each
individual items.
example, we may study the weights and heights of group of individuals, the
marks .uiined by a group of students in two different subjects, ages of husbands and
wives for group of couples, etc. A frequency table where two variables have been
measured in the ue set of items through cross classification is known as 'bivariate
frequency distribution" ntervalB 'two-way frequency distribution'. Various values of
each variable are grouped into ious classes (not necessarily the same for each
variable).
lUustration 7. Following figures give the ages of 20 newly married couples in year,
jresent the da ! of husband t of wife {of husband ! of wife
Solution. We are given two variables : (i) age of husbands, and (ii) age of wives. We
Id represent the data in the form of a two-way frequency distribution so that we are
to show the ages of husbands and wives simultaneously. This is also called bivariate
\cy distribution.
24
26
27
25
28
24
27
28
25
26
17
18
19
17
20
18
18
19
18
19
25
26
27
25
27
26
25
26
26
26
17
18
19
19
20
19
17
20
17
18
72
r
. -I i '1 i.fV
Age of husband (years)
24
25
26
27
28
Total (/)
17
Bivariate Frequenqr Distribution , Age of wife, (years)
Statistics for Economics-Xll
I (1) III (3) I (1)
(1) (1) (3). (1)
(1) (2) (2) (1)
20
I
(1) (1) (1)
Total (
25742
20
Illustration 8 Tbe data given below relate to the heights and weights of 20 nersc
66" IT class Tnterval 62^
64 -66 and so on and 115 to 125 lbs., 125 to 135 lbs. and so on.
S.N.
1
2
3
4
5
6
7
8
9
10
Solution.
Height
S.N.
Weight
170
70
11
163
70
135
65
12
139
67
136
65
13
122
63
137
64
14
134
68
148
69
15
140
67
124
63
16
132
69
117
65
17
120
66
128
70
18
148
68
143
71
19
129
67
129
62
20
152
67
Height
Inches
lbs.)
6466
6264
Height
-------,
66
6S70
7072
Totali
115-125 125-135 135-145 145-155 155-165 165-175

II (2) i (1)
1 (1) 1 (1) II (2) 1 (1)
II (2) 11(2) i (1) 1 (1) 1 (1) 1 (1)
Total (/)
1 (1) 111 (3)

456311i
20
71
anisation of Data ^ûency Distribution with Unequal Classes
CData are sometimes given in unequal class intervals. Such series are used when
there eat fluctuation in data. For example :
ions. 64",
iO
W Set I
Setll
Set III
Frequency
Class Frequency
1 0-5
2-A
5-10
2-6
X+Y
10-20
2-8
X + Y+ Z
7-20
8-10
t20-30
,30-50
20-40 B
10-12 B
J&-75
40-60 C
12-14 C
Frequency
a (f)
KS of Information
Raw data is grouped by making equal or unequal class frequency distribution, say
-5, 5-10, 10-15 or 0-5, 5-7, 7-12, 12-20 and so on. By making such classes there is
loss of information of individual observation. Further, the statistical analysis is based
on ' mid-points of these classes without giving any importance to individual
observation, such, the significance of individual observation is lost.
,jiate Frequency Distribution
We have so far studied above frequency distributions involving single variable only.
1 frequency distributions are called univariate frequency distributions. Often we
come uss data composed of measurements made on two variables for each
individual items. example, we may study the weights and heights of group of
individuals, the marks ained by a group of students in two different subjects, ages of
husbands and wives for oup of couples, etc. A frequency table where two variables
have been measured in the set of items through cross classification is known as
'bivariate frequency distribution' i'two-way frequency distribution'. Various values of
each variable are grouped into
ous classes (not necessarily the same for each variable). Inhistration 7. Following
figures give the ages of 20 newly married couples in year.
24
26
27
25
28
24
27
28
25
26
17
18
19
17
20
18
18
19
18
19
25
26
27
25
27
26
25
26
26
26
17
18
19
19
20
19
17
20
17
18
(of husband t of wife ! of husband t of wife
Solution. We are given two variables : [i) age of husbands, and (ii) age of wives. We
lid represent the data in the form of a two-way frequency distribution so that we are
to show the ages of husbands and wives simultaneously. This is also called bivariate
icy distribution.
72
Bivariate Frequency Distribution

Statistics for Economics
(years)
24
25
26
27
28
17
Total (/)
I (1) III (3) I (1)
18
19
I
(1)
(1)
III
(3)
(1)
6
(1) (2) (2) (1)
20
(1) (1) (1)
Total i
25742
______20
You are required ro
nterval 62"S.N.
1
2
3
4
5
6
7
8
9
10
170
135
136
137 148 124 117 128 143 129
Solution.
Height
70 65 65
64
69 63
65
70
71 62
S.N.
11 12
13
14
15
16
17
18
19
20
Weight
163
139 122 134
140 132 120 148 129 152
Height
70
67 63
68
67 69 66
68 67 67
Bivariate Frequency Distribution Inches
lOrganisation of Data
73
_:
exercises
uestions :
I Distinguish between variable and attribute. Explain with examples, i Define
classification. Explain the objects and characteristics of classification. ! What do you
understand by classification? Explain the methods of classification of j data giving
suitable examples.
; Is there any use in classifying things? Explain with illustrations. ^ Explain discrete
and continuous variables with examples. Define series and explain the different
types of series. Define Frequency Distribution. State the principles required to be
observed in its formation.
8.
Explain with illustration the 'inclusive' and 'exclusive' methods used in
classification of data.
9.
Distinguish between univariate and bivariate frequency distribution.
10.
Distinguish between discrete and continuous variable.
11.
What is loss of information in classified data?
12.
Do you agree that classified data is better than raw data?
13.
What is a relative frequency distribution? Illustrate. Write short notes on the
following :
I (a) Classification and series.
[b)
Geographical and chronological classification.
(c)
Exclusive and inclusive class-intervals, i (d) Discrete and continuous series. I
[e) Simple and cumulative frequency. I (/) Equal and unequal class frequency
blems :
Prepare a statistical table from the following data taking the class width as 7. by !
inclusive method :
28
17
15
22
29
21
23
27
18
12
10
20
16
12
33
27
21
15
36
27
18
32
31
29
18
14
13
15
11
37
32
28
26
24
74
I
i^v
50
57
58
51
53
62
64
60
61
51
64
55
55
52
60
65
58
60
52
63
56
56
58
64
63
62
60
54
62
54
54
60
65
60
62
59
56
63
52
53
62
53
61
61
59
the following marks in

lowest class
interval
frequency table taking
69
33
91
53
63
69
70
36
80
78
52
51
73
73
92
64
55
49
74
57
95
70
64
57
75
80
42
85
43
29
77
65
73
95
76
53
86
73
40
83
43
76
84
72
75
57
58
59
62
65
67
87
81
84
61
75
85
81
58
81
the
4.
47 69 78 62 72 43 87 61 84 23
Change the following into continuous series and convert the series into 'less than'
and more than cumulative series :
Marks (mid-values) No. of students
5.
5
15
25
35
45
55
12
15
Marks obtained by 24 students in English and Statistics in a class are given below
S.No. Marks in English

Statistics j
Marks in Statistics S.No. Marks in English
22
16
13
23
16
23
16
14
25
17
23
18
15
23
17
23
16
16
22
17
23
16
17
27
15
24
17
18
27
16
23
16
19
26
18
.8
25
19
20
28
19
22
16
21
25
19
10
23
18
22
24
16
11
24
18
23
23
17
12
24
17
24
25
19
"
^^
Marks in ]
^ganisation of Data
tin a survev it was found that 64 famiUes bought milk in the following quantities a
parSar Inth. Quantity of milk (in litres) bought by 64 famthes m a month.
.O
99 9 22 12 39 19 14 23 6 24 16 18 7
i y. p i I i i iH i i
1 Comrert the above data in a frequency distribution making classes of 5-9, 10-14
and
J so on.
-u1
I: The marks obtained by 20 studends in Statistics and Economics are. given below.
. r _____.
Vviii*i/~vn
Marksin
10 11 10 11 11 14 12 12 13 10
Marks in Economics
20
13
24
21
12
23
22
11
22
21
12
23
23
10
22
23
14
22
22
14
24
21
12
20
24
13
24
25
10
23
Marks in Statiaics
Marks in Eammcs
8 Prepare 'less than' and 'more than' cumulative frequency distributions of the
^
140-150 15.160 160-170 170-180 180-190 190^200
Ino. of workers : 5 10
20
\./
'.
I Find out the frequency distribution and 'more than' cumulative fi^quency^^ble .
below :
10
30
40
50
60
Quantity(kg) :
17
22
lociqo
If class mid-points in a frequency distribution of a group of persons are : 125, 132,

139, 146, 153, 160, 167, 174, 181 pounds, find (î) size of the class intervals, and
(b) the class boundaries.
PRESENTATION OF DATA
g^^lfeftwr^ Prcssentaiion
-4nmaiic Presentation
Chapter 5
tabular presentation
' 1.' - Introduction
2.
Definition and Objectives of Tabulation
3.
Essentials of a Satisfactory Table
4.
Parts of a Table Types of Table
J" jjji
w.
b.
".e da. eUH.
as we,. J^tJZ riLX

There are four methods of presentation. They are : eral people.
(i) Text presentation, (it) Semi-tabular presentation, (ni) Tabular presentation, and
(iv) Pictorial presentation.
(i) Text Presentation
\^Jabular Presentation
^^
increased from an extremely low figure of less than 2 lakhs in 1950-51 to over 46
lakhs in 1990-91. There was around ten-fold increase in this sphere between 1991
and 2004-05 as the number of landline connections increased to 4.42 crore besides
4.5 crore mobile phones. Thus the number of telephones stood 9.7 crore in March ?
C05. With Wnifold increase in telephone connections, the teledensity [viz., the
number of telephone connections per hundred persons) has increased from 3.6 in
2001 to 6.7 m 2005.
() Semi-Tabular Presentation
Semi-tabular presentation is both through tables and paragraphs, This method is
not often used, but is useful when figures are required to be compared along with
one or two sentences of explanation.
^ (Hi) Tabular Presentation
Tabular presentation is a systematic presentation of numerical data in columns and
rows in accordance with some important features or characteristics.
(iv) Pictorial Presentation
Pictorial presentation is visual form of statistical data in diagrams and graphs.
and objectives of tabuutio c
Systematic presentation of data is one of the most important consideration in
statistical j work and it is done through the use of tables. A statistical table is an
arrangement of I systematic presentation of data in columns and rows. Tabulation is
the process of fpresenting in tables. Tabulation is a process and the outcome of
which are statistical Itables. In brief, tabulation is a scientific process involving the
presentation of classified ata in an orderly manner so as to bring out their essential
features and chief iracteristics.
According to H. Secrist, "Tables are a means of recording in permanent form the
alysis that is made through classification and of placing juxtaposition things that are
,nilar and should be compared". According to Tuttle, "A statistical table is the logical
listing of related quantitative ta in vertical columns and horizontal rows of numbers,
with sufficient explanatory and alifying words, phrases and statement in the form of
titles, headings and notes to make and full meaning of the data and their origin.''
bjectives of Tabulation Statistical data arranged in a tabulated form have following
important objectives: I 1. They simplify complex data and the data presented are
easily understood.
2. They facilitate comparison due to proper systematic arrangement of statistical
data in different columns.
78
It

3.
They leave a lasting impression without any confusion.
4.
They facilitate computation of different statistical measures namely averat
dispersion, correlation etc.
5.
They present facts in minimum space and unnecessary, repetition and
explanatic are avoided and required figures can be located more quickly.
6.
Tabulated data makes easy for summation of various items and errors and
omissions can easily be detected.
7.
Tabulated data are good for references and they make it easy to present
intormation on graphs and diagrams.
^^^m of a satisfactory ti^^
The following are the essentials or characteristics of a satisfactory table :
1.
ma
Attractive : A table should be attractive to draw the attention of readers. To
It so, care should be taken in determining its size, proportion of columns and rov
writing of figures, etc.
2.
Manageable size : The size of the table should be neither too big nor too sma
loo much of details should not be given in a table. If the table is too large becomes
confusing to the eyes and there is great difficulty in following the lir and columiis at
a glance. If more details are to be given, then a number of sr tables should be
preferred to one big table. So, it should be simple and comp.
3.
Comparable : The facts should be arranged in a table as to make comparis.
between them easy, because, comparison is one of the chief objectives of tabulatio
Whenever it is necessary, average, percentage, proportion, etc., should be given
the table to facihtate comparison.
4.
According to objective : A table should be according to objective of statistic
investigation.
^^
easily understandable,
should be complete within itself containing all the explanations necessary to mi

clear the meanmg to items. Units of measurement must be clearly stated such,
price m rupees" or "weight in kilograms". Columns and rows should be numl when It
is desired to facilitate reference to specific parts of a table
nSffr ''
scientifically prepared. All the requir
ru es of tabulation should be carefully observed. A table should have a suitab

title, proper captions and stubs, source, footnotes etc. Certain figures which are I
be emphasised should be in distinctive type or in a 'circle' or a 'box' or ber^^
thick lines^ A table should have miscellaneous columns for the data which can
be grouped m the classification made. Large numbers are hard to read and dif
to compare therefore, they should be approximated e.g., up to the nearest
79
Wlabular Presentation
OF ATi
A good table . an art. ^ ^ng
a^tference
1 Table number : A table should ^B ^^^ etc.) or numbered (say 1,

in the future. A table must be codihed ê A, ^ ^
2, 3, 4 etc.) whenever more than orê table ^s^ prepa ^^^^^ ^^ ^ ^^^^^
^^^^^^^
either at
the centre on the top anove rnc^^^
Sometimes table number
the table number is given refers to the chapter or section

like 1.2 and 2.4 are also used. In ^
ôuld mean second table m
and second digit to its order. ^^the fourth table in second first chapter or section
and Table 2.4 wo
chapter or section. ^ ^^ or a catch title written 2. Title : There may be a
V'^^^^Se^ be W, clekr and self explanatory,
in few words. Title given above of all lettering used m the
The lettering of the title should be ^he most pr
^^ ^^^^^ ^^^ ^ê
table. A complete title explams of classification of data.

field to which the data are -^êd jf â) bas. of
3. Captions and stubs (Column he^^ ^^^^ by smbs^
^^^
headings given to columns a e caUed captio ^ ^^ ^ be numbered

Both stubs and captions ^ôuld be ^^^^^^
^^^ and stubs
rfof cStôns verticaUy and stubs

. ^^rtable :lt con^ms je ^^^^
part of the table. This table ^ôuld be mad^^^^^^^
in view the purpose of
arrangement of items
b^ excluded,
in columns and rows and : (0 alphabetically W Items in a table may be arranged

^progressively, and (vt)
geographically, (Hi) chronologically,
million tons. . ^
sSnif cance which are to be
the table It is a phrase or a statement
6. F.o.e, : I. is placed "om of tte ta^ ^^ ^

which contains
systems and keys like puttmg star(s)
table. Footnotes can be identified by vanom sys
^^ ^^ 3
or signs (say etc.) or ^ Umitattons of data,

a, b, c, d etc.) Footnotes m also necessa.7 to sp y f
diei is any or to explain me
, ^rce note should be
7. Source : ta case of the 'j'^XalnTst ^taon, name of the pubUsher or

at ti:" o^-.. is usefu, to the reader to
fi^ and gather additional information.
80
\'L
structure of table
Number Title
(Head note, if any)
Statistics for Economics-Xll
ifcsiEswwaiiisaMJB^ aw
_________
Footnote : Source :
- ----
table 1 Literacy Rates in India

Year
Rural
1951 19.02
1961 34.30
1971 48.60
1981 49.60
1991 57.90
2001 71.40
Source : Economic
45.60 66.00 69.80 76.70 81.10 86.70

Total
27.16
40.40
45.96
56.38
64.13
75.85
Rural 'Females
4.87
urttan 22.33
10.10 40.50
15.50 48.80
21.70 56.30
30.60 64.00
46.70 73.20
Total
(Per cent)
Persons
8.86 15.35 21.97 29.76 39.29 54.16
Rural
12.10
22.50
27.90
36.00
44.70
59.40
The table clearly shows that
per cent among females. This shows
Urban
34.59 25.40 60.20 67.20 73.10 80.30
Total
18.33
28.30
34.45
43.57
52.21
65.38
per cent in 2001, while it
that there is a general bias
Total
81
globular Presentation
against female education and in our conservative society, girls still get
discriminated in the matters like health, nutrition, education, etc. iii) Literacy rate in
urban areas was high at 80 per cent in 2001 than rural areas where ^ ^ ^t rs less L
60 per cent. This clearly speaks of inadequate facilities of education avÎbL in the
rural areas as well as comparatively lower willingness of the conservative rural folk
to go to schools for education. Illustration 1. In a sample study about coffee drinking
habits m two towns, the
^tal coffee drinkers were 45% and Males non-coffee
were 55%, Males non-coffee drinkers were 30% and Females coffee drinkers were
15%.
Represent the above data in a tabular form. before
Solution. Let us calculate the missing percentages of the above information before
representing the data in a tabular form.
STOWN A 100
TOWN B 100
1
Non-Coffee drinkers drinl(ers
35 40
Non-Coffee drinkers drinkers
30 25
TABLE 2
Coffee Drinking Habits in Towns A and B
(in percentages)
Coffee Drinkers
Non-Coffee Drinkers
82
Alternative Solution
104
TABLE 3
Coffee Drinking Habits in Towns A and B
{in percentages]}
SBSSsSiePlSlillBJi
Toum A
Town B ^
CoffeeNon-Coffee Total CoffeeNon-coffee
Total ]
Drinkers
Drinkers
Drinkers
Drinkers
Males 40
20
60
25
30
55
Females
35
40
15
30
Total 45
55
100
40
60
100
.1
45
Illustration 2. Of the 1,125 students studying in a school during 2005-2006, 720 are
Hindus, 628 are boys and 440 are science students. The number of Hindu boys is
392, that of boys studying science 205 and that of Hindu students studying science
262; finally, the number of science students among the Hindu boys was 148. Enter
these frequencies in a table and complete the table by obtaining the frequencies of
the remaining cells.
Solution.
TABLE 4
Faculty
Boys
Girls
Hindus
Non-Hindus Total Hindus
Non-Hindus Total J
Total 1
Non-Hindus Total Hindus
Science Arts 148 244

57 179
205 423
262 262 458
178 227
440 j 685 1
114 214
Total 392
405
236
628
328
169
497
720
121 48
235
1125 j
niustration 3. Census of India 2001 reported that Indian population had risen to 102
crore of which only 49 crore were females against 53 crore males. 74 crore people
resid m rural India and only 28 crore lived in towns or cities. While there were 62
crore nc workers Population against 40 crore workers in the entire country, urban
population an even higher share of non-workers (19 crore) against the workers (9
crore) as comp; to the rural population where there were 31 crore workers out of 74
crore populatic Represent the above information in a tabular form.
I Tabular Presentation Solution.
83
TABLE 5 Growth of Population in India
(figures in crores)
Source : Census of India 2001.
Males : 53 crore Females : 49 crore
fs of tables
Table can broadly by classified as under :
A.
From the point of view of purpose :
(i)
General purpose tables.
(ii)
Special purpose tables.
B.
From the point of view of originality :
{/) Original tables. (ii) Derivative tables.

C.
From the point of view of construction
(i)
Simple or single tables.
(ii)
Complex tables.
library
i ble provides of
ts^s^SSllt^^^^
it eaiy to make comparisons and clear relationships.

wMcH co.ai . inroa.o i. .ê ae fom, in wUch they are origi^lly collected
-sSl^ciurX^^^^^^^^ -â .o. ...era,
purpose tables.
J,
SsfT
f
u
84
Simple and Complex Tables
.
table 6
of Students in a School
Marks
0-10 10-20 20-30 30-40
Total
15 12 28 5
60
Double or WWay Tabte (Double Tabulation)
,, , ,
table 7
I---i" a School
Mirt,
'^"tsZa^^'J (T-ble Tabulation)
dlustration : g'Îs mto Sec A. and b in our following j
r^- , table 8
According .o Mari.. Se. and Section
^ \ : ^ ^ ^^^^^^^^ "" ...........

ular Presentation
85
The above table can even be called as manifold table, higher order table or ma^
2lon Z "lh we can increase the number of charactensttcs, more sections,
" rh'aX"is needed when a number of characteristics are to be simultaneously ii But
as more characteristics are included, the table becomes more complex, and
, may be confusing to the reader. If the field of investigation is not big, the data
have not too many
future use and thirdly when ,he table requirements are varymg. ifabulation wiU be
more accurate than the manual process.
EXERCISES
tions :
I State the advantages of Tabular Presentation of data.
i Describe the major functional parts of statistical tables. Draw a structure of a table
I
ExpLn bnefly the main characteristics of a good statistical
Whai are the points to be taken into accomit while preparing a table? IxpTarand
discuss the various types of tables used in a survey after the data have
, î:^!rt;ween tabulation and classification. Explain the objects of tabulation.
^ Discuss briefly the importance of tabulation.
^ . , u, '
I What is a statistical table? Discuss briefly the essentials of a good table.

1 What are the objects of tabulation?.
i following industries :
...
Fishing, coal mining, iron-ore mining, cloth and wool industries.
hArepare a blank table to show the distribution of population according to sex and ^
four religions in three age groups in Delhi and Mumbai.
y ^ five
2006.
Statistics for Economics-Xli weêTrL"""'
--op" in - ws following d. J
Town A 51% 16% 18%

Town B 54% 28% 20%
p Males in Total Population ' Smokers
Male Smokers ; J Tabulate the above data.
- Preset the following information in a suitable table
oi
Wong ro a trade un, 20M
T ""
of which 1290 were men Sn Z h ^ u

students according to :
(a)
Faculty
(b)
Class
(c)
Sex id) Years
''' """ ""i

<> 1^80
mformafon regarding the college]
8,
Social Sciences, Commercial Sciences. Under-graduate and Post-graduate classes.
Male and Female. 2005 and 2006. Tabulate the following
JXaSSe^^^^
of the total sales during the yeaT
"^P^cfvely. Texnles accounted for 30%
pesttt^
t
Ls
Town A
Town B
60% people were males 40% were coffee drinkers, and 26% were male coffee
drinkers 55% people were males, 30% were coffee drinkers, and 20% were male
coffee drinkers
Chapter 6
digrammatic presentation
Introduction
Importance and Uses of Graptis and General Rules for Constructing Diagrams Types
of Diagrams
A.
One-dimensional Diagrams
B.
Pie Diagrams
Limitations of Diagrammatic Presentation
Other methods of presentation.

rORIAL PRESENT^
r
1
Presentation
resentation
ONE-DIMENSIONA^DIAGRAMS
(/) Simple Bar Diagram-(i7) Sub-divided Bar Diagram (i/i) Multiple Bar Diagram (/i^
Percentage Bar Diagram (v) Broken Bar Diagram (vA Deviation Bar Diagram
-TWO-DIMENSIONAL DIAGRAMS (f) Rectangles (fO Squares
'//A Circles and Pie-diagrams -THREE-DIMENSIONAL DIAGRAMS (!) Cubes (iO
Cylinders (I/O Blocks etc. PICTOGRAM CARTOGRAMS OR MAPS
GRAPHS OF FREQUENCY DISTRIBUTION (i) Line Frequency Graph
Histogram (Hi) Frequency Polygon (iV) Smoothed Frequency Curve (Frequency
Curve)
'Ogive' or Cumulative Frequency Curve GRAPHS OF TIME SERIES (A One Variable
Graphs (Ii) Two or more than two Variable Graphs (i/0 Graphs of Different Units
fr
88
r =a
conunon or representing the statisticalT^^^^^
xs the most popular an
are appeahng to the mind through the eyL as the^ of Presentatior

For the purpose of simplifying an^tter^p'Tas ''h
chapter and some iZonZ Znr
used m presenting statistical informal ^
^^^^ W diagrams m this
^ are commonly
and uses of graphs and

1. They are interesting, attractive and impressive h.
.I
fluctuations of the statistical values bv^n? ' ^^^ ^^^nd and interested in going
through tiffûre's^.e^"^ ^^^^^ -ho is not âgrams are used for publicity
XââX'"'
TW save time and energy of
say without any stram on' mmd a"d knowl^^^^^^^^^ ^^^^ ^êy warn to
data simple and intelligible
knowledge of mathematics as they make the)
quick comparisons. becomes easy Thus, diagrams can be used for ]

4. They have universal utility Sinr^- c
presentation of graphs anjîa^^ SLv I T'^ ^^
^y Ae!
journals, newspapers, board meeting etc D L^T ^^ ^ " exhibitions, fairs,

information to the common man TW are wideT
Particularly to givj
and other fields. Diagrams play arimorttr'1 " campaigns.
m the modern advertising
^ ^ ^^ an importarn role
hke median, quartiles, mode etc. Twf is dSt^^^ ^

Central Tendency of this book.
^âpter on Measures of]
whjes for constructing

I
dCf
- Be acuêl through p.ee. Uei
general rules are observed :
"
advantageous if following
conveys main facts depicted by the Sa^m T^n ^^ but short.

given It must be brief, self expLato^ a^d^^^^^^ sub-headings can also be
for Identification and for purpose TrefereJe
ê used
Digrammatic Presentation
89
i
..J
The :i7e of the diagram should be neither too big nor too
paper. It should be attractive, neat and appealing to the eyes, so that peoples
attention is automatically drawn towards it. . , ,
'ilîlifp
'poputoton- or 'productton' on Y-ax>s and -years' or 'months "n X-ax,.
4 Scak A diagram should be drawn with the help of geometric - ^
scale slould be selected to su.t far as possible be in even numbers or multiple ot 5,
lU, /u, zo, luo
'months' on X-axis. . û v onH Y
. A iÂ^^ The 'sc/j/e' of measurement on both X-axis ana i
sl'zrrrf ^^ f U târor^rVftX ^nJt
through different colours, shades, dotting, crossing, etc., an index must g for
identifying and understanding the diagram.
the source from which data have been obtained, more effective than a complex one.
types of diagrams
There are various types of geometric forms of diagrams used in practice as shown
on
following two Geometric forms of diagrams :
A.
One-dimensional Diagrams
B.
Pie Diagram
A ONF-DIMENSIONAL DIAGRAMS
lionaMiagrams are also called ^^^^ JthXiror:!
used in practice. They are called one-dimensional because of height of the bar
90
significance and not the width of the bar Foil " u

(-) Simple bar diagram
(b)
^^
^^^ ^ypes of bar d^
Sub-divided bar diagram
(c)
Multiple bar diagram id) Percentage bar diagram (e) Broken bar diagram (/)
Deviation bar diagram (a) Simple Bar Diagrams The
variable can be presented, A Jimple^rdlTlrc^ b'^
vertical base. It is used for vistil ?
"" horizontal o,
production, population, sa,es,Xt e^dilr

one category either in years, months wks et T
or groups. All the bars L be brau^LZ
attractive.
^fonnation of
Tu
or shading to make them more
simpfc bar diagram the scale is detet^ned'^teiTof ^

Illustration 1. Draw a br A:,
""
of computer softw^r
relating to expo,;
-Xcôre. ; T/oo'
"
" the series,
--- 2000.. ' .OOf-0.
, &oomfc Survey. 2002-03 p 144) Solution.
export of computer software (1997-2002)

Scale : 1 cm = Rs 7,000 crore
Y
42000 35000
ff 28000-S O
r 21000^ 140006,500
36,500
''
28,350
17,150
10,940
YEARS
Fig. 1
2001-02
"tr rrr aw
; vertical base showing horizontal bs as under :
Alternative solution - Vertical base.
^ V ^vU
w T Years on X-axis; Value (Rupees m -ôres on Y-ax s W 2 Years on Y-axis; Value

(Rupees m crores) on X-axis.
Scale : 1 cm = Rs 7,000 crores.
Export of Computer Software (1997-2002)
Scale : 1 cm = Rs 7,000 crores
2001-02
2000-01
1999-00
1998-99
1997-98 0
36,500
28,350
4 17,150
10,940
. 6,500
r
7000
14000 21000 2^00 3M00 42000 Rupees (in crores)
.. above o e ui^L ^ - ^^^^

i the export of computer ^^^^^^^ the software export have
,crores) m 1997-98 to Rs per year for last four years.
-TwoXtl^rr;!: o"^^^^ .o^ -nomlc survey .00.0. are
,,
....______Dri>>a nhanaes
given below :
Poodgrains Production
(in million tons)

Wholesale Price Changes
52-WeeteAverageJnflat^^
'1999-00 -01 -02 -03 -04
X (Provisional) Average up to Jan. 14, 2006. e First advance estimates (Khanf only).
.-05 -06
1999-00 -01 -02
.03 -04 -05 -06
Fig. 3
92
ReauirPnt^^t j
'
.he guZrr/a Sir
given
^^^^t^stics for Economics-X
(h) Sub-divided Bar Diaeram TJ, j

In general sub-divfdedo;!^^^^^^^
^Component Ba
values of the given data is to be dividedTo v^no

F-t of all a bar representing total s CwrXn
'ê to.
Z ^^
proportion to the values given in the dat^ S/ ?

be'used to d^sttguish-os-g
, P^^s i, dotting or designs can
remember that the various componentrshouFd be t '

tndex' IS to be given alongwith the Lgram to ?
" ^^^^ bar.
Illustration 2. Draw a snir.Kl ^
differences.
Draw a suitable diagram to represent the following mfoâtion :

Year
2001 2002
2003
2004
2005
Trains
Murder
108 131 97 102 75
Solution.
Robbery
82 115 144 70 68
Loot
321 386 352 285 245
Total
511 632 593 457 388
CRIME IN RUNNING PASSENGER TRAINS (2001-2005)
Scale : 1 cm = 200 crimes
800
600co m
E - 400-1 O
a loot e robbery
murder
200 - _
' ^îa
2001 pnno -----^-2002 2003 YEARS

2004
jr
2005
Fig. 4
(c)M between t inter-relaC of drawin; In this cai spacing isi in a set, d be given. '
93
Qigrammatic Presentation îfU^wôfD^riation
S.E. Asia West Asia Africa
Other Regions Total
d,agram to represent the above data.
Ltion. Suh-d.v.aea bar a,a.ta,n .s sn,.ab.e to the ahove data.
YA
100
Q Other Regions Africa pfi West Asia
o-E. Asia
2003-04
2004-05
YEARS
Fig. 5
94
,
Statistics for Economics-}
Illustration 4. Draw a suitable diagram of the following data :

Statement of CrimeJnR^g Passenger Trains
Solution.
Year
Murder
Robbery
2001 108
82
321
2002 131
115
386
2003 97
144
352
2004 102
70
285
2005 75
68
245
Loot
CRIME IN RUNNING PASSENGER TRAINS (1998-2002)

(Scale ; 1 cm = 100)
500
4001
2 300H
tr o
200
looses
321
352
285
B Murder Robbery Q Loot
245
tons during the same fortnight last vear(ronnf TK ? T'
during the first fortnight of DecemberToo ^ 2 ssloo^f
f""
and 41,000 tons for exports as against 1 54 000 ton /
consumption
exports during the sam"! fortnigriast sfasfm^ (t) Present the data in a tabular form
(Hi) Present these data diagrammatically.
95
Digrammatic Presentation Solution.
(/) Presentation of data in a tabular form.
i Stock
Fortnight Sugar Production, Off-take for Internal Consumption, Export arU Stock
in Sugar Mills in India.
December, 2000
(figure in thousand tons)

December, 2001 , (First fortnight)
Production Off-take from Mills Export Stock

Source : muiau du^î
378 154 Nil 224
387 283 41 63
---------
export and stock which we have calculated. (Hi) Diagrammatic presentation of

above data by
(a)
Sub-divided bar diagram
(b)
Multiple Bar diagram
INDIAN SUGAR MILLS ASSOCIATION REPORT

(Fortnight Sugar production, off-take for internal consumption, export and stools in
Sugar Mills in India Scale : 1 cm = 50,000 tons.)
MULTIPLE BAR DIAGRAM
SUB-D'VIDED BAR DIAGRAM
400350300250iction K
8,000 1
200-
tories
150-
iption 1
lil for
50-
100-
grams B
0-
Dec. 2000 Dec. 2001 (First fortnigh) (First fortnight)

Dec. 2000 (First fortnigh)
Dec. 2001 (First fortnight)
Fig. 13
96
Proceeds per Chair Factory A (Rs)
Factory B (Rs)
Wages Material Other Expenses 160 120 80 200 300 150

Total Selling Price
360 400
Profit or Loss ()
(+) 40(-) 50
650 600
1 he percentages are calculated as under :

Ptrcentaj^^ (For Percentage Bar Diagram)
Proceeds per Chair i-______
Factory A (%)
j Wages 1 Material Other Expenses

Total Selling Price
90 100
Profit or I oss (+)
(+) 10
OT
UJ 4
m ^ a.
3
tr
97
Digrammatic Presentation
% COST Y
chmr 3. pnofit amo loss
40 30 20
108.3 100
Factory B (%)
33.3 50 25
100^ , , . n PROFIT AMD LOSS

: 1 cm = 20%
factory b
factory a
(t UJ
60-
QZ
CO
40"
UJ
lU
Qrj
20'
cc
o:
-20
M other Expenses Q Material Wages wm Profit or Loss
Fig. 8
. c .pries in which some values may Broken Bar Diagram : Sometimes we may S^
reasonable shape
each bar is written on the , b a suitable dragram.
Year
Number of students
2001 2002 2003 2004 ^___-
25 48 375 125
neces^to brsn^ -^ ^
98
Statistics for Economics-XI 3 NO. OF STUDENTS .N SCIENCE (2001-2005)
Scale : 1 cm = 25 students
200175f2
150-
2
LLI Q 125?
CO
100-
u.
o
d
75-
2
50250-2002 2003 2004
YEARS
2005
Fig. 9
net 'i^r: ê^lîpt tt^ t.e
export, etc., wh,ch have both
" "" "
n plus and minus values to plot th.ron

the base l.ne and negative vales bell'fbatTe"
Year
1998
1999
2000 2001 2002
Export
47 125 20 94 120
Import
30 115 39
no
125
(Rs in Lacs)
Balance of Trade
17 10
/
-19 -16 -5
99
Digrammatic Presentation . Solution.
BALANCE OF TRADE (1998-2002)
Scale 1 1 cm = 5 lacs
Y
25 -20 -15 -I
CO O
CO lU LU ti. =3 CC
10 5 0
-5 -10 -15
-20 -25
gg Surplus Deficit
u
t
1998
1999
2000 YEARS
Fig. 10
2001
2002
B. PIE DIAGRAMS
_^
^^^^^ ^^ ^^^^^^^ These
Pie diagram or circular diagram is ^^^^
^ comparatively easier to draw,
diagrams are very useful in emphasising
exhibited. Circles can
With circles and sectors, totals as well as compêm parts ca

^^^^^
be drawn by making the^/
^^^^ ^^^
ÎgllmL ^called I p.
angle at the centre is 360 or 2%. I hereio , _ ^

Pie diagrams are very POP^^-^J/JJ"
oercentage breakdowns by
represent the
portioning a circle into various parts ^ various parts will indicate

Lvernment expenditure
Transport,
and
different
the expenditure over different heads l^ke^
pornons^^^^^^ ^^^^^^^^
heads Namely, food, clothing.
Education, etc. Similar^ expenditure of ^^^ ^^ components or the

rent, education, etc. If the series is
diagrams are less effective than
difference among the components is very small, then pie a g

bar diagram.
Steps for Construction of Pie Diagram percentage of respective totals. Pie
helpful for comparison.
100
- ke ,o be equal to 360-. ,t ,s teê^ h" ""
ry to express each part proportionately

^rees.S.ceipercetotthetotaWalne,se,alto^.3..,.hepercentages
oahe .mponent parrs wl be now converted to degrees by .n,t,ply.g each of
Degree of any Component part = Component value
simultaneously for comparison tbrralTrh
"
proportional ro the square roots ^
^^^^^
-"-a.. . is common
position on the circle. Now, with this K ^^ o'clock

centre with the help ofp^r t] "â o t
iTete to f ^
^ ^^^ component, the new line drawn a
circumference. The sector so obtained wi^
the
component. From this second line a ble nowT""'
^^^^^^^ ^^^
equal to the degree represented by second c^Z
^^ ^^^ ^--^re
the portion of the second component Sîh 7 representing

component parts can be coZuTd '
-P-senting differen?
Be distinguished
Illustration 9. Constmrr o a-break-up of the cost of
Item Expenditure
Labour Bricks Cement Steel Timber Supervision
%
Ltgrammauc Fresentation _
^^^^ percentage into
So..>o. Before draw, 3.6" , we

Labour
Bricks
Cement
Steel
Timber
25 % 15 % 20 % 15 % 10 % 15
Supervision
Fig. 11
n-
of
three textile items in
percentage
Items
Readymade Garments Cotton Textiles Wollens Textiles
Years
2003-04
Total
52.2 19.1 28.7
2004-0S
100.0
/
41.7 23.3 35.0
100.0
102
Solution. (Degrees of angle are rounded off)
Items
Redymade Garments Cotton Textile WoIIen Textile
Total
2003-04
%
52.2 19.1 28.7
100.0
Degree of angle
188 69 103
360
2004-0S
%
41.7 23.3 35.0
100.0
Degree of angle
150 84 126
360
export of textile items
2003-04
2004-05
Fig. 12
Illustration 11. Represent the following data by a pte diagram.
basfs of 360 r
basis of 360 taken as equal to the total of the values.

Family X
Family Y
1.
Food 2.
Clothing 3. Rent 4.
Education 5. Miscellaneous (Including
Saving)
400 250 15r 40 160
640 480 320 100 60
Total 1000 1600
103
the
digrammatic Presentation
>ms of Expenditure
Rs
1.
Food
2.
Clothing
3.
Rent
4.
Education
5.
Miscellaneous (Including Saving)
Total
Square root
400 250 150 40 160
1000
31.6
400
x360
= 144
Family Y
Rs
_ , ___i
1000
^x360 = 90
1000
^360 = 54 x360 = 14-4
1000 1000 1000
x360 = 57.6
360
640 480 320 100 60
1600
40
640
1600 480
x360 = 144
1600 1600 1600 1600
x360
= 108
x360 = 72
x360 = 22.50
x360 = 13.50
360
Radii of circle are determined m proportion 3.2 : 4 (31.6 : 40). Wore the radU of
arcle accordmg to avaUabUtty of space 3.2
are :
Family X : Radius -y = 1-6 cm
4
Family Y : Radius - = 2 cm
expenorrure of family x and y
Food im] Clothing m Rent B Education B Miscellaneous
FAMILY X
FAMILY Y
Fig. 24
104
limitations of diagrammatic presentation
Statistics for Economics-xl
fo/lowng points rememberedmterpretation of diagrams, tlie
WHmS-Ot^^^^^
" a .i.e,r capacity to g,ve
.n the,r basic fnncti^rrsytdTrj

2. Diagrams can show
presentation.
and tje dte^rb^Lrl^^^-Tt'''""'"-^' in diagrams.
facts are not possible to show
by tables etc. they can misrepresent facts

diagram for visual Presentation of" n"^^
^^ ^ P-icular
and the object of presentation. Therefore, it shLld be m.^ t ^^^ data

A well constructed simple and attractive Ltam sho
âre and caution,
easier to understand at a glance; sucrpresentatiotr^^

newspapers, magazines and journals
^^^ mformadon is
be seen in financial reports in
2.
3.
4.
5.
6.
Questions :
a-::
feplam the various rules of drawing a diagram.

TpLin JT "ftheir utility, txplam M bar diagram, and (b) pie diagram
Digrams are less accurate but more effective than tables in presenting the data
' rc^mtlstc:: " "-wmg.
W Composition of the population of Delhi by reltgion H Agnculture production of five
states of India.
What are the merits and limitations of dtagrammatic representation of stat,st.cal
Explain the following with illustration M Sub-divided bar diagrams, and W Multiple
bar diagrams.
8
9.
105
iigrammatic Presentation
(Write short notes on the following 1(a) Percentage bar diagram , (c) Deviation bar
diagram 1 (e) Multiple bar diagram.
(b) Broken bar diagram (d) Sub-divided bar diagram
iLt the following data by simple bar diagram.
PRODUCTION OF COAL (Million Tons)
Production pillion Tons)
bar diagrams
DEMAND AND AVAILABILITY OF STEEL (Thousand Tons)
Exports (Rs in crores)
4. Present the following data by sub-divided bar diagram.
total import
Food Fertilizers Mineral oil Others

Total
2001-02
2002-03
474
795
125
298
341
1,113
2003-04
1,789 1,951
2,729 4,167
(Rupees in crores)
2004-05
988 323 1,042 2,394
4,744 /
Represent the foJlowine l .
e diagram. 'i-e He,p
for Economics-x\
Sunp.e Bar diagram. J
Yi^f
.. . :-----
' 7.
Export (Rs in crores) Import (Rs in crores)
2002 ~~2m
73
80
85
70
72
74
_2004
ZOOS
8.
Food Clothing Rent
Education Miscellaneous
Farntly A (Rs)
Family B (Rs)
P'Xpettdiiure
9 TU --i^ 1440
' ^'iree year's result of XTT ri T _
^-
".e fCowmg rab...
107
Ipigrammatic Presentation
ntmaiic 11
B (Rs)
3
75
100
175
150
30
25
20
25
-----
Price per Unit Quantity Sold Value of Raw Material

Other Expenses
________
Show the following data by percentage bar diagram^^
L^^
of a product . bar
chart :
COST PÔTRPDS AND fROm AND LCTJ^
Cost per table :
(a)
Wages
(b)
Other Costs
(c)
Polishing
Total Cost
Proceeds per table Profit (+) Loss (-)
Chapter 7
cmpbic presentation
3.
sw
Construction of Graphs Graphs of Frequency Distribution Line Frequency Graph
Histogram
Frequency Polygon Frequency Curve
:
asiiiiiifa*
Graphic presentation gives i rr
as a tool of analysis.
"
(Line Graphs,.
^^
... ------- of graphs;
109
.j
axes. (See Fig. D-
equal parts called qaadrants
.^j
of origin 'O' which represent^
Quadrants : G-ph pa^ys ^mded " ^^^
^^ ^ Y are posttrve.
Fig. 1
.ea. - - - ^^^ -V-Tdata. d.et
.e^lu-'rS^^Str;: S^rrXs . ol tue, re. ''Ttôl senes graph X-axts
^^ ^
^^^^^^ ^
110
JJ
OF FREQOEIICr
scale wid, d,e difference of lO^wS T ' " "" wasting too much of space of â7h pSr
^ S'^Ph
require a lot of space so that Xîs is
T",T'" "" ""
portion of the scL may be t

use of 'kinke, fe' in ^phtc pr^tTê Figi'r"" " '
frequency graph
Scale : 0.75 cm = 10 Rs on X-axis
0.75 cm = 10 Workers on V-axis
S'graphs..
axis
(b)
Histogram
(c)
Frequency Polygon
(d)
Frequency Curve or Smoothed Frequency Curve ie) Cumulative Frequency
Curve or 'Ogive'
(a) Line Frequency Graph
fluency array, on graph by which the line is drawn. represents the frequency of that
variable on
kaphic Fresentation
111
Heieht in incht
60"
90
61"
80
62"
120
63"
140
64"
132
65"
70
66"
40
Nc
-~d----f)
^ Metlwd
{. X-axis for variables under study (Heights in inches)
2.
Y-axis for frequencies (No. of students)
3.
Draw a vertical line on each value equal to the length of each frequency
4.
Both the axes must be clearly lebelled and scale of measurement clearly
shown. X-axis can conveniently be determined according to the need of the
problem. We can
have three varieties of X-axis. Taking the above illustration they are :
(a)
Use of kinked hne
(b)
Starting from 59"
,.^,.
(c)
Starting from 60" (use thick line to read the data properly). See the graphs
given
{d) Both axes must be clearly labelled and the scale of measurement should be
clearly shown.
Solution.
HEIGHTS OF STUDENTS
Scale
140 120 -
100 -
lU
Q
3
is
80-
LL
o
60 -
40 -
H
20
(a) using kinked line
1 cm = Frequency 20 Students 1 cm = r on X-axiis
Fig. 13
il2
Statistics for Econo
>mtcs~}
STARTING FROM 59" (X-axis)

- iF-pu 20 StudL onV-axis ^ I cm _ 1 on X-axis
Scale 1 starting FROM 60"
^ = Frequency 20 Students on Vâxls^ 1 cm = 1" on X-axis

yf
(b) Histogram
'
which each
and also called a frequency histo^m : '' " ' ^^-dimensional diagram
Cases of Constructing Histogram
U) Histogram of Equal Class Intervals { Histogram when Mid-points are given
Histogram of Unequal Class intervals
Method
1. X-axis for variables under study (Marks) .y-axis for frequencies
are
freq
Thus is pn
()K
n
obtai
113
\ Graphic Presentation
class with frequency.
3.
oe. reW.
4.
Both the axes must oe ucdny clearly shown.
Solution.
histogram
Scale : 1 cm = 10 Marks on X-îs

1 cm = frequency 4 on Y-axis
1-
in for all the classes and the frequencies
In the above illustration 2, class mterval is 10 for all

SSe!rr:
-Se for each class can be deaded(c^^
frequency)
Class (Marks)
0-10 10-20 20-30 30-40 40-50 50-60
Class frequency (f)
4 10 16 22 18 2
10 X 4 = 40 10 xlO = 100
10 xl6 = 160 10 x22 = 220 10 xl8 = 180 10
Total Area = 720
Total frequency^^;^^______^ - ^ interval
Histogram = ên ^ff^^^Tora the following aisnr,bu,ion of total marks
ojrr^-"'a'^Sjra Boara H.
114
Method
Marks (Mid-points) No. of Students (f)
150 160 170 180 190 2008 10 25 12 7 3
Graf
mid-poirns
different classes from the given
2. X-axis for variables under study

5:
(Marks). 4 iTZ r fr^qês (No. of Students).
with frequency
he clearly shown. ..... '
the measurement should
bet^ sS::^^ first mid-pomt, get the difference

^vide the difference by 2, /.e., 10/2
of
we get lower and upper lim.
=5~
Thus, the class decided is 145 ~to 155 ^ ^ = ^^^ - "PP- H.^"
U^g the same -jet ^h^
mid-points as under :
No. of Students : g IQ
^25
^hri ways : ^
See the Figs, below : ^
^^^ Starting from 135 marks.
(iii) I
ni
Solution.
histogram kinked line method
Scale : 1 cm = 10 Marks on X-axis 1 cm = 5 Students on V-axis
histogram x-axis-starting
from 145 marks
Scale : 1 cm = 10 Marks on X-axis 1 cm = 5 Students on V-axis
165 175 185
marks Fig. 7
Sd Nc histogi
Metho 1. 2.
3.
4.
115
^Graphic Presentation
histogram X-AXIS^starting from 135 marks
Scale
1 cm = 10 Marks on X-axis 1 cm = 5 Students on V-axis
i
UJ
o
3
u. O
dZ
135 145 155 165 175 185 195 MARKS
Fig. 9
205 215
S.
Hit) Histogram of Unequal Class Intervals 'Tst^lo 4. Repse. .he fonowing^âns of
of Workers
.he Cass are unequal, frequencies n.us. he adiusred, otherwise .he his.ogram
would give a misleading picmie.
'^"I'^Take .he class which has d>e lowes. class in.erval.
2. Do no. adius. .he frequencies of
i,erval.
^rr^^^^^^ each .ecanê of h.s.ogram hu. widths will be according to class

limits.
116
Thus, the adjusted frequencies are :
histogram
Scale : 0.5 cm = Rs 5 on X-axis
1 cm = 5 Workers on V-axis
daily wages in rs
Fig. 10
japhic Presentation
Histogram : When Class Intervals are given by " Method
^ IllustrLn 5. Constru^^ '
r -Jji^s ^ Students W
117
5-9 10-14 15-19 20-24 25-29 30-34
4
17 25 32 13 6
Solution.
inrliisive method (where lower and upper
Note : Since the class intervals are given ^
.^d upper limits of
Adjustment : Find the difference between lower hmn^ _

and so on.
Adjusted Class Limits
Marks Students (f)
4.5- 9.5
9.5-14.5
17
14.5-19.5
25
19.5-24.5
32
24.5-29.5
13
29.5-34.5
histogram
Scale : 1 cm = 5 Marks on X-axis
1 cm = 10 Students on V-axis
9.5 14.5 19.5 24.5 29,5 marks
Fig. 24
118
(c) Frequency Polygon () Without histogram.
Statistics for Economic^y,
Method
J ^^^^^^^^
loISo" --20-30 5
30-40 12
40-50 15
50-60 22
60-70 14 4
" - !>uitaDJe histogram kepnm
2- the of the '"Ho " T
""""P'-
3. Jotn these md-pi f ^.de of each rectangle

ciearly sro^^^"^' ^^^^^ ^^êlied and the scale of the meas Solution.
measurement should
histogram and prequencv polygon
JO on X-axis 1 cm = 5 Students on y-a*is
25'
CO
20-
&
UJ
s
15-
1co
u.
o
10-
d
2
50- Histogram
-Frequency Polygon
Fig. 24
jj^
While drawing the frequency polygon, we observe that some area which was under
the histogram has been excluded and some area which was not under histogram
has been included under frequency polygon. This dotted area which was under
histogram but is not under the frequency polygon. This dotted are is excluded from
the area of frequency polygon. But the shaded area has been included under the
polygon. This was not under histogram. Thus there is always some area included
under the frequency polygon instead ot the area excluded from histogram.
Therefore, the total area excluded from the histogram ts equal to the area mcluded
under frequency polygon.
(ii) Frequency Polygon : Without Histogram
und"^ ^^^ illustration, we can get the frequency polygon without histogram as
Method
1.
Take the mid-point of each class interval.
2.
Scale of X-axis can either be decided on the basis of class interval or midpoints
3.
Join the points plotted for the mid-points corresponding to their frequencies
by straight lines. We will get the same figure as obtained by the first method (i.e.,
with histogram).
BJ
Hr
Mui-pomts
15
25
12
35
15
45
22
55
14
65
Solution.
No. ofstfj^nirw 1
frequency polygon
Y Scale : 1 cm = 10 Marks on X-axis 1 cm = 4 Students on V-axis
Fig. 13
120
Illustration 7 V
St'^t'stics for Economics-XI
exa JSr
-ks secured by 25 s,ude,s i an
2.1
in
- - " " - - - - . ,, Solution.

Frequency Distribution of Marks Tally Bars
Gi foi
Marks
20-29 30-39 40-49 50-59 60-69
m(
Total
-^xuxc preparing 1 exclusive method, i.e..
No. of Students (f)
2
58
64
25
~1MS Students (f)
19.5-29.5 29.5-39.5 39.5-A9.5 49.5-59.5 59.6-69.5 2 5 8 6 4
J--'-WUTtlUN
Scale : 1 cm = lo Marks on *-axis 1 cm = 1 Student on V-axis
i*
marks Fig. 14
121
Graphic Fresentation
lllusmtion 8. We have the following data on the daily expendttute on food (in
rupees) fot 30 households inâlocaU^: ^^^
- - s r/o r/s r/o .s
(a)
Obtain a frequency distribution using class intervals : 100-150, 150-200, 200250, 250-300 and 300-350
(b)
Draw a frequency polygon.
ju
r-^nt \c) What per cent of the
households spend less than Rs 250 per day, and what per cent
spend more than Rs 200 per month? Solution, (a)
lit
Monthly Expenditure on Food (Rs)
100-150
nil
150-200
mil
200-250
mimîii
250-300
300-350
11
A.
Total
30
Tally Bars
13
(b)
frequency polygon
Scale : 1 cm = Rs. 50 on X-axis
1 cm = 2 Households on V-axis
* X
100 150 200 250 300 350 EXPENDITURE IN RUPEES
Fig. 15
400
122
No. of households (f) . -
fc) Ont of ^sn J, u Statistics for Economics-X

^^
Hence 76.6% spend less tha.
xtlr '' ^^
spend more than
(d) Frequency Curve or Smoothed Frequency Curve

generalVby^'el^^^^^^^^^
frequency curve. It is drawn
area mcluded ,s ,ust the same asÎ Tthf poL^^^^ "u ^ ^^^^ ^^^"he required to
be done carefully to ge^ co rect "eS Smoothing the frequency polygon
shows neither more nor less area of the rectanLs of .h v
drawn with care
frequency polygon to get a smoothed freq^ ett
"
histogram for the data given in IllustraZ 8 fo^ U"
^^ constructing
frequency curve
Scale : 1 cm = Rs. 50 on X-axis
1 cm = 2 Households on V-axis
200 250 300
expenditure in rupees Fig. 16
>X
350 400
We observe that :
123
statistics. It is a uni-modal distribution curve.
histogram, frequency polygon and frequency curve
_____1------ I _____.riôl
124
JJ
ie) y-Shaped Curve (Curve E) : In this case, maximum frequency'is at the ends of rh.
(e) Cumulative Frequency Curve (Ogive)
I-
O" the graph paper by rwo
(a)
'Less than' method
(b)
'More than' method
Illustration^^Draw^^ for the following data :

Marks
0-10 10-20 20-30 30-40
Ma. of StHdents
44
7 10
Marks
40-50 50-60 60-70
No. of Students
12
obra,,g mar,.
S" ^^^^^^^^
125
of each class .g in above illustration, the number of students obtain,ng marks more
In 0 .s 50; moi; than 10 is 46; more than 20 is 42; and so on.
Cumulative Frequency Distribution
Marks
Less than 10 Less than 20 Less than 30 Less than 40 Less than 50 Less than 60 Less
than 70
No. of Students
(c.f-)
4
8
15 25 37 45 50
Marks
More More More More More More More
than 0 than 10 than 20 than 30 than 40 than 50 than 60
Nr. of Students (c.f.)
50 46 42 35 25 13 5
We get a rising curve in than method', if the above
case of 'less than method' and declining curve in case of 'more cuLlative
frequencies are plotted on the graph paper.
""Ilet the cumulative frequencies of the given frequencies either by 'less than
method'
or 'more than method'. 2 X-axis the variables under study
3.
Y-axis - calculated cumulative frequencies
4.
Plot the various points and )om them to get a curve (i.e., ugiv
5.
be clearly lebelled and the scale of the measurement should
be clearly shown. ,
Cumulative
'Ogive on Graph Paper
(Cumulative Frequency Curve)

by 'less than' method
Scale : 1 cm = 10 Marks on X-axis
1 cm = 10 Students on V-axis
by
Scale
more than' method
1 cm = 10 Marks on X-axis 1 cm = 10 Students on V-axis
>X
10 20 30 40 50 60 70 80 MARKS
10 20 30 40 50 60 70 MARKS
Fig. 18
Fig. 19
126
JJ
FAv
by less than' method
Scale : i cm = 10 Marks on X-axis 1 cm = 10 Students on V-axis
Less than method
Fig. 20
^
ce for .he ,oHoi, dis,h.o of
Weekly Wages
Workers (f)
100-109
110-119
/ 13 15 32 20 8
120-129
130-139
140-149
150-159
Method
1. Must the lower and upper of he classes.
>jet cumulative frequencies
Both the axes should be iX l beM T
clearly shown.
and
ale of the measurement should be
127
Graphic Presentation Solution,
Adjustment of da- limits and calculation
of cumulative frequencies by less than method.
99.5-109.5 109.5-119.5 119.5-129.5 129:5-139.5 139.5-149.5 149.5-159.5
7
13 15 32 20
8
7 20 35 67 87 95
ogive (less than method)
ocale 1 cm = Rs. 10 on X-axis
1 cm = 20 Workers on V-axis
be
..........Fig. 21J
and indicate the value oÂeî^ ----------128
Solution.
It I
Marks r\ r- Number of Students
Cumulative Frequency (Less than) c.f
Cumulative Frequency (More than) c.f
0-5 5-10 10-15 15-20 20-25 25-30 30^35 35^0 1 7 10 20 13 12 10 14 9 ----- 1
7 17 37 50 62 72 86
95 88 78 58 45 33 23 9
than' ogive
Scale . cm = 5 Marks on X-axis
1 cm = 20 Students on /-axis
or h
Kg. 22
129
^ graphs of time series
, ^ , , .......
Time series can be sbown on the graph paper. The information arranged over a
period of time (e.g., years, months, weeks, days etc.) is termed as a time series.
Presentation of this type of information by hne or curve on the graph paper is of
great use in economic statistics. These graphs are known as hne grapjhs or
histograms, or arithmetic hne graph. (a) General Rules to Construct a Line Graph
1.
As the time (year, month, week) is never in negative (i.e., in minus figures),
there is no need of using Quadrant II and III.
2.
Year, month or week according to the problem, is taken on X-axis. Give titles
to X-axis and Y-axis.
3.
Start Y-axis with zero and decide the scales for both the axes. For example,
on every 1 cm for Y-axis one may represent an equal gap of 50 students and 1 cm
for X-axis a gap between 2000 arfd 2001. X-axis can start either from 1999 or 2000
(See Fig. 23).
4.
The pair values will give different dots on the graph paper. For example,
values corresponding to time factor are :
Years Students
2000 50
2001 150
2002 100
2003 150
2004 200
2005 225
2006 200
These dots obtained of pair values are joined by straight line which is called line
graph or histogram (See Fig. 23).
students (2000-06)
Scale : 1 cm = 50 Students on V-axis

300250CO
H
Z 111 200Q
Z)
H
OT
150-
O
d
100-
Z
500-
/
/
/
S
/
/
2000 2001
2002
2003 2004 YEARS
Fig. 23
2005
2006
130
5. It is not advisable to
by a straight iine and not by a curte
"
-is r ^^^^ of un.

m One Variable Graph
Kendriya Vidyalaya
Method
1998-99
1999-00
^ê given below
J" Ae dots
2000-01 2001-02
2002-03
2003-04
2004-05
120
400
567
490
760
834
750
Gra Wh
in v (yea timt orig
largi <
year Y-as smal line ; two reqa porti line, I
1 Select X-ax for the time factor (years).
2.
Select Y-ax. for variables under study (students)
3.
Gble title and scales to X-J Ld C
ô Its value and .. the. by
STUDENTS-KENDRIYA VIDYALAYA (1998^)5)

Scale : 1 cm = 200 Students on V-axis
z
UJ Q =3 Ico u.
od
Sc
2001-02 2002-03 2003-04 2004-05' YEARS

Fig. 24
J Graphic Presentation
What is a False Base Line?
131
't rlvldTuse faUe base Ue according to ne^ of tbe ptoblent. Keeping
doln^^ .o out tequiretnents by using False ^se Line) mustrafon No.
stude^ ts ^ one tûsaud .n e.b
n-bet of
wmmmmM
P" : . . C
T in crranh r nresentation See Fig.
Dortion of the scale may De omiueu wm^n ^ciix ---- ,

that is the use of False Base Line in graphic presentation (See Fig. 25).
illustration 13. Present the following information on the graph paper.
Year__________
Students
2U00 1120
2001 1380
2002 . 1587
2003 1490
2004 1760
2005 1734
2006 1675
STUDENT&-<30vt. higher sec. school (20(hm6)
Scale : 1 cm = 200 Students on r-axis
2000 2001 2002 2003 2004 2005 2006 YEARS
Fig. 25
132
Year (1)
Agriculture and allied sectors (2)
Industry (3)
1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

7.2 0.8
9.1 11.8 6.0 5.9 4.0 6.9
5.0 -
0.9 9.6 -
1.9
Services (4)
7.0 10.3
7.1 9.0 8.3
8.2
Gr (d)
Wt
as
axi
data as * rime series graph. estimated sectoral growth rate ,n gdp at factor cost
t>Cdle : 1 cm = 2 per cent growth rate in years
-----Services
Agriculture and allied sectors Industry
YEARS
Fig. 26
133
IGraphic Presentation
1(d) Graphs of Different Units
different units, we will have two different scales.
When two values are given into two ^^"erent unn , ^^ ^^^
Year
1997-98
1998-99
1999-00
2000-01 2001-02 2002-03
Quantity (in, '000 tons)

9 10 12 11
14
15
Value (Rs. in crores)
300 596 782 900 762 640
Solution.
Average of Quantity: 12 Approximately Average of Value : 695 Approximately
trade of tea in quantity and value (1997-2003)
qcale 1 cm = Quantity 3 thousand Tons
or7-axis : 1 cm = value in RS. 150 crore
Quantity
-S-Rupees
1997-98
134
Two figures of graphic presentation
10000
exports (Provisional)
(US $ IMillicn)
Statistics for Economics-Xl\
are shown below to understand time series graph. ^ IMPORTS (Provisional)
(US $ Million)
5000
Fig. 28
m
Questions :
TSL^ Name ehe ,e.e.
^ - - .apb . prepared. 7.
berween -Bar draâr^'irH
JO- Wha, a 'Cumulat,;
^^
Give iUusrrarion.
! r Tr' '"O'-ency curve

fop rXt"iara presented . rbe *en an the class intervals h^trtheTa.t^X''""'"
pS -
f the ess than type- ve and
s.gn,f,cance of Rs 715 f^r the gtven of da "
'"-e
13.
Sm Vim
^^^
What is a false base hne? Under what conditions would its use be desirable? What is
meant by (a) Histogram, and (b) Ogive? Explain their construction with the help of
sketches.
Distinguish Histogram and Historigram clearly with illustrations. What is a smoothed
frequency curve? Discuss briefly various types of frequency curves.
Explain the importance of graphic presentation of data. 19. Describe the procedure
of drawing histogram when class intervals are (i) equal, and (ii) unequal.
i4. 1516.
17.
18.
Probl^^s :
^ The frequency distribution of marks obtained by students in a class test is given
40-50 3
below:
. Marks
: 0-10 10-20 20-30 30^0
No. of Students : 3 10
14
10
Dtaw a histogram to represent the frequency distribution of marks. Comment on the

shape of the histogram.
What is histogram? Present the data given in the table below in the form of a
Histogram:
Mid-points : 115 125 135 145 155 165 175 Frequency : 6 25 48 72 116 60 38 3/
Make a frequency Polygon and Histogram using the given data / Marks Obtained
: 10-20 20-30 30-40 40-50
/Number of Students :
12
4. Draw Histogram from the following data : r Marks Obtained

Number of Students :
: 10-20 20-30
10
In a certain colony a'sample of 40 households was selected. The data on daily

income for this sample are given as follows :
200
120 350 550 400 140 35085
200
15
30-40 15
22
40-50 10
185 22
50-60 14
50-70 6
195
3
70-80
4
70-100 3
5.
180 170 210 430
110 90 185 140

110 170 250 200
600 800 120 400
350 190 180 200
500 700 350 400
450 630 110, 210
170 250 300
(a)
Construct a Histogram and a frequency polygon.
(b)
Show that the area under the polygon is equal to the area under the
histogram. (Hint. Get a frequency distribution table to obtain a continuous series).
136
JJ
Frequency - f s '''''
'st: it: S...
15-19, 20-24TQ
(b) What percent of th^ hr. u ij '
Size of classes
t'::;
-- -- ao-z^
Students
. 30-3.35-.
^ 10 15
"'Z; ^
Workers : 9 12 15
Weekly Wages of
B cia .
; 'tr '"^r ".^r

cZ''^""
Frequency : 4
^ ^^ 1^-24 24-30 30-36
u.
. 0-.
3.30 3..0-...0 .0.0 .O-.O
Companies : 2
^
a-OOO.o^, , 35 3. 3. .0 ^ ^
iwi
137
Waphic Presentation
I P^ .e foUo. -a ^^^^^^^^^ tr r " \ Profit (Rs in ^^
65
80
95
graph from the
Ps "
--- --------------------------Im-hnrtv
Year
'T99"o-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
,,
12 25 31 29 27 35
U. 'p:;:::^ co. aa .ot. proauct.o of a scooter ma

; company.
Year ^ Production f? (in units) 1 Total Cost I (Rs in lakh)
2001 8500 24
2001 2003 2004 2005
9990 117001330015600
29
34
45
49
<53t
TICAL TOOLS AND INTIRPRETATIOlf ii
Average
p^^
ye, of Correlap
l-rtion to lBde lVbe
Chapter 8
nusmcs of centum, tendency

Weaning and Importance ----Objects and Functions Of Averages
Characteristics of a RepresentatL Averaoe
Three Orders Of Measurement
Arithmetic Average or Mean J-'st of Formulae and Abbreviations
MCAMte AND IMPORTANCE
the whole group is ealleH 7
briefly average Th^ j /
observations. An average is a fi. J generally
<êntral tendency or êasur^T, ^^P^^^^^ts
marks of students -n a , '' ^^ everyday

income of hctnr ,
As satisfy
fl
represents the marks of aM . !i' the average
139
According to Croxton and Cowdon : "An average value is a single value within the
range of the data that is used to represent all of the values in the series. Since the
average is somewhere within the range of the data, it is sometimes called a
measure of central
value."
According to KeUoy and Smith : "An average is sometimes called a measure of

central
tendency because individual values of the variable usually cluster around it."
and functions of averages
1
To represent the salient features of a mass complex data : It determines a
single figure' of the whole series. It is a tool to represent the salient features of a
mass of.complex data. It is helpful in reducing the mass information into a single
value for drawing.general conclusions. It is difficult to generalise anythmg from the
ages of crores of Indian People. But if it is said that the average age of an Indmn is
55 years one can draw conclusions about health conditions of the people. Thus the
purpose of an average is to represent a group of individual values in a simple
manner, so that the mind can get a quick understanding of the general size of the
individuals in the group.
2
To facilitate comparison : Averages are useful for comparison. The average of
one group can be compared with averages of other groups. For example, the
average marks of students in section A can be compared with the average marks of
students in section B, easily at a glance or the average monthly sales of
Department A are compared with average monthly sales of Department B.
3
To know about universe from a sample : Averages also help-to obtain a
picture of complete group by means of sample data. In statistical enquiries, very
often, sample method is used. The mean of a sample gives a good idea about the
mean ot the
population.
4
To help in decision making : Averages are helpful for making decisions in
planning in various fields. For example, a sales manager may need to know the
average
number of calls made per day by salesman in the field. A railway officer will require
information regarding the average number of passengers carried by rails on the
various passenger runs. Averages are valuable in setting standards, estimating and
planning and other managerial decision areas.
5
To trace mathematical relationship : When it is desired to trace the
mathematical relationship between different, groups or classes, an average
becomes essential. Definiteness can only come, they are expressed in averages.
i gh^tl^ of a repiuesentjirive average >
As the average represents statistical information and it is used for comparison, it
must
satisfy the following conditions : .
uiju-
1 It should be simple to calculate and easy to understand : An average should be

calculable with reasonable ease and rapidity only then it can be wide y used. It
should not involve heavy arithmetical calculations. If the calculation of the average
Statistics for Economics-XI ude,d by pLons of ordln^rSltn 'e.
"""
are not separated the aver^cotton cloth per mill, if big and small mills cotton mill
industry fnTdfa s^pUt'
u
^^ ^^^^ ^
female workers, adillt worts
^^^ ^^
OF MEASUREMENT
There are three orders of measurement.
1.
Measures of first order.
2.
Measures of second order.
3.
Measures of third order.
141
students).
kfNDS OF STATISTICAI- AVERAGE
Moving Average
.....^.........^
Arithmetic Mean] tSeometric Mean or Mean X ,
! Harmonic Mean (HM)
(GM)
Progressive Average Composite Average -^Quadratic Mean

Specialised Average (Index Numbers)
Of the above mentioned average, mean, median, mode are mo^
'"M^lirt cl of qualitative data which caunot be measured quantitatively for rdatiou to
all the values, naturally, median should be the choice.
which has highest demand, most fashionable garment, etc.
142
JJ
I
1.
Meaning
2.
Calculation of Arithmetic Mean
3.
Mathematical Properties of Arithmetic Mean
4.
Miscellaneous Problems
^ Merits and Demerits of Arithmetic Mean

(B) Weighted arithmetic average or Weighted Mean
(b) Short Cut Method (Assumed Mean Method) ic) Step Deviation Method
Let us see the calculations m the following senes.
(A)
Series of Individual Observations.
(B)
Discrete Series.
(C)
Continuous Series.
A. Series of Individual Observations

of vûpdLtS^^^^^^^
we .e
1010+1020+1030 3060
--= Rs 1020
/.e., average wage taken by the workers is Rs 1020 Direct Method ; Symbolically,
Mea
1M
/.(
M
Alten
where denote
Worker
Wages (Rs) X
A B C 1010 1020 1030 X

N = 3 - 3 XX = 3060
Special 1. I
these
ieasures of Central Tendency
1.
Obtain IX by adding all the values of variables.
2.
Divide the total by number of observations (N). Symbolically,
+ +......x
X 143
N
- XX 3060 A.
= Rs 1020
N3
Therefore, average of the workers is Rs 1020
where, X =. Arithmetic mean
SX = sum of all the values of observations
/.e., X, + X, + X3 + ..... X
N = Number of observations
Alternative equation
- Iv
X = Sx,
n
where, the symbol X is the 'Greek alphabet called sigma and is used xsi
mathematics to denote the sum of values.
n - total number of observations
Lx = the sum of n values
t
= i X (1010 + 1020 + 1030)
3060
= Rs 1020
iSpecial Features of Arithmetic Mean
1. If we replace each item of observation by the calculated mean, then the total of
these replaced values will be equal to the sum of the given observations.
Workers
Wages (Rs) Mean

V- v=' -
1010 1020
1020 1020
1030 1020
N = 3 ZX = 3060
3060
NX = IX 3 X 1020 - 3060
144
2 The sum - -Workerc
Statistics, for Economics-d
rv, 7:r-.------------1
AB
C
N=3
Wages (Rs) X
X-X
1010 Xj 1020 X^ 1030 X3
^X = 3060
-10 0 +10
2(X-X) = 0
Symbolically, ^X-X) =0
Alternatively, ^ ~ ^ ^^^^^ ' ^^Ô) + (1030 - 1020) 0
- K + Jf^ + + ...xj -nx = (1010 + 1020 + 1030) - 3 X 1020 = 3060 - 3060 = 0
Short-Cut Method (Assumed Mean Method)
get the anthmetic. mean the total of tt deZl-? ^^^^^ calculated. To total ,s
divided by the number of ^^^^"I-ted. This
assumed mean.
observations and finally the product is added to the
b]
r Worker
^ A (d)
A B C lOlu 1020 1030

N=3
0 10 20
Id =30
Measures of Central Tendency . 145

- Steps :
1.
Decide assumed mean {A), i.e., Rs 1010.
2.
Calculate deviations of items from assumed mean (d).
3.
Get the sum of the deviation {Jd), i.e., 30.
4.
Use of following formula.
X= A + 1010 + = 1010 + 10 = 1020 N
i.e., average wage taken by the workers is Rs 1020.

where, A = assumed mean
d = X - A, deviations of X variables from assumed mean
"Ld = Z (X - A), i.e., sum of the deviations of X variables taken from

assumed mean.
N = number of observations ^
Step Deviation Method
We can further simphfy the short cut or assumed mean method. All deviations taken
by assumed mean are divided by common factor.
Symbolically (Assumed mean = Rs 1010)
Worker
Wages
1010 .0
1020 10
1030 20
N=3
X-A
Id'=3
Steps
1.
Decide assumed mean, i.e., Rs 1010.
2.
Calculate the deviations of items from assumed mean (d).
3.
Divide these deviations by common factor, i.e., C = 10.
4.
Get the sum of step deviation (Zd'), i.e., 3.
5.
Use of following formula :
-Ld'
X=A+
N
= 1010 + J X 10
= 1010 + 10 = Rs 1020 i.e., average taken by the workers is Rs 1020.
146
where v a u for Economics-XI
wnere, X = Arithmetic Mean

'"lit <iev,a. of X vanabies fron, assumed mean
d' =
brcom'r flz"" ~ - C - Common factor T ,
^ = Number of observations
- - fo^m. .usa,ons, done

(a) Direct method Direct Method
rr^^^^^^ .neome of ten wor.ees
Workers Daily Income (in Rs)
Solution.
in a factory.
A
H
"3^
T
J ^6^
l>Jiiy Incuwe [Rst X

ZX = 2400
X = ^ il^
N ~ \o ^ rupees.
The average daily income of workers is Rs 240.
St
1. 2.
3.
4.
'Measures of Central Tendency
147
asures of fêntrai. lenui^nc^y
Dlustration 2. Calculate the anthmetic mean of the marks given m illustration l by
he short-cut method (Assumed Mean Method).
Worker
ABCDEFGHI
J
Daih income (Rs.)
N = 10
120 150 180 200 250 300 220 350 370 260
X-A
JdJ
-50 -20 0
+50 +100 +20 +150 +170 +60
Id. = +400
Steps :
1 Decide assumed mean, suppose A = 200.
v-A-d
2.
Calculate the deviations from assumed mean, /.e., A A - ^
3.
Get the total of the deviations calculated from assumed mean (d).
4.
Use the following formula :
X=A+
= 100 +
400
N - "" 10 = 200 + 40 = 240 rupees
The average daily wage of workers is Rs 240. 1 w
niustration 3. Calculate the anthmetic mean of the marks given m illustration 1 by
step deviation method.
.t^'i
Worker
ABCDEFGHI
J
Marks X
X-A <<i) .
120 150 180 200 250 300 220 350 370 260
-50 -20 0
+50 +100 +20 +150 +170 +60
X-A
m
-8 -5--2 0 +5 +10 H.+2
+15 +17 +6
Id' - 40
148
Steps :
1- Decide assumed mean, suppose 4 = 200.
X
^C
JJ
N
= 200
X 10
10
= 200 + 40 = 240 rupees The average dady wage of wbrkers is Rs 240
B. Discrete Series
Students .-Marks :
Solution.
A 50
B 100
c
50
D
150
E 100
F 50
G
150
H 100
I
50
J 100
tx
200
400 f^x.
HO tTC
- - each, 4
.00 each and .
ieasures of Central Tendency Steps :

1.
Multiply the frequencies with variables (fX).
2.
Get the sum of the products (I^fX).
3.
Divide the total by number of observations {Lf or N).
/1+/2+/3+/
149
Z/X ^f
900 10
or
S/X N
= 90 marks
where,
E/X = sum of the products of variables and their frequencies f- Frequency
'
N = L/j i.e.. Number .of observations

fx = Product of variables with their respective frequencies
Direct method :
Illustration 5. Following tables gives the marks obtained by 100 students in a class.
Calculate the arithmetic mean.
Marks : 10
No. of Students : ^
Solution.
20 10
30 40
40 20
50 25
10 Xj 5 A
50 f^X^
20 Xj
200 f^X^
30 X3 40/^3 .
40 X, 20/;
1200 /3X3
800 f^X^
50 X, 15 f^ 1250
E/ = N = 100
IfX = 3500
Steps :
1.
Multiply the frequency with the variable X.
2.
Get the sum of the product (LfX).
3.
Divide Z/X by total number of observations, i.e., S/" or (N).
ISO
t

X=
or
N
3500 100
If
= 35
Average marks of students is 35. Alternative equation :
where,
^ = -Îfx n ''
n
' 100 J_
100 100
" + 200 . 1200 . 800 . 1250] " 3500 = 35 Marks
^ 100 x 35 = 3500
= -475 + 475 = 0
Aver Step
taken by calculate
-XI
^^^
Short-Cut Method (Assumed Mean Method) : We can use this ^method to calculate
arithmetic mean in order to simplify arithmetic calculations. The followmg formula is
used :
Ifd
X=A+
N
Here,
A = Assumed Mean N = Number of observations f - frequency
X - A, i.e., deviations of variables taken from assumed mean Lfd = Sum of the
product of frequencies and their respective deviations Dlustration 6. Calculate the
average marks of students given in Illustration 5 by short cut method.
Sliort-Cut Method (Assumed Mean Method)
cies
25)]
Marks
10 20 30 40 50
5 10 40 20 25
N - 100
-20 -10 0 +10 +20
-100 -100 0
+200 +500
= 500
n of
:heir
Steps :
1.
Decide assumed mean, suppose A = 30.
2.
Calculate the deviations from assumed mean, i.e., X - A = d.
3.
Multiple deviations by frequency and get fd.
4.
Add the product of deviatioiis and frequency.
5.
Use the following formula :
Ifd
X=A+
= 30 +
N
500 100
5)
= 30 + 5 = 35 Average marks of students is 35.
Step Deviation Method : We can further simplify the short-cut method. All deviations
taken by assumed mean are divided by common factor. The following formula is
used to calculate the arithmetic mean by step deviation method.
152
til; V
Here,
X = A.m., C
N ^ ^ A = Assumed Mean N = Number of observations C - Common factor f =
frequency
-
' Step deviation
'''' ' fr^f
-d ehe. .especve
devSrtrd/^^''"^ -"ents given , Iu.aeio 5 b, seep

Steps ;
1.
Decide assumed mean, suppose A = 30.
2.
Calculate deviations from assumed mean, /.../x - A = d.
3.
Divide deviations by common factors ^Zii. ^ common factor = Q 10
4.
Multiply step deviations 'by frequency
5.
Add the product of step deviations and frequency
6.
Use the following formula.
50
= loo ^ 10 = 30 + 5 = 35
Average marks of students is 35
153
C. Continuous Series
In continuous series, the method of calculations of arithmetic mean - ê ^^ ^ the

case of discrete series. The only difference is that m continuous series mid-pmnts ot
trcSsfLrvals are required to be obtained. The following equation can be used
to get the mid-points.
Mid-point = Here presents lower limit and presents upper limit, ..g., the
mid-point for a class 5-10 can be obtained as : ^^ = 7.5.
After obtaimng the mid-points, we can use all the ^^-e meôds
o^ca^^^^^^^^^^ of arithmetic mean in the same way as we used m discrete
series. These methods are.
(i) Direct method, () Short-cut method, and {Hi) Step deviation method.
Direct Method
.. .
Marks
0-4
4-8
8-12
12-16 1
lliuil. Marks (X)
No. of Students (f) Mid-points (m)
0-4 4-8 . 8-12 12-16

14
X/^ = N = 15
4 A 2 A 1/.
2 wij 6 m^ 10 W3 14 m. 8 48 f,m, 20 f,m,
Lfm = 90
Steps :
1.
Obtain mid-points (m) of the classes, i.e.,
Here, /, = lower limit and = upper limit

2.
Multiply the frequency with mid-point (fm).
3.
Get the sum of products (Lfm).
4.
Divide Sfm ky total number of observations (N).
S'ii
ll
154
l'!.- V.'
Symbolically,
JJ
/1+/2+/3+.../ X - Mean marks are 6. Alternative Equation

X=
where, = total of frequency (E/)

^ frequeLts cl-points of classes and their respective
V = ^ X [(4 X 2) + (8 X 6) + (2 x 10) + (14 x 1)]
J_
15 1
X [8 + 48 + 20 + 14]
x90=90
15
15
= '6 Marks.
Special Features of Arithmetic Mean
1. Thyotal of frequencies multiplied by Arithmetic Mean is always equal to the sum
ôf the product of mid-points of various classes and their respLive frequtd"
.
NX =-Lfm
15 X 6 = 90
IhlT
of mid-points from arithmetic mean being multiphed by
their frequencies is always equal to ZERO. '
'""uipuea oy
Efim-X) =0
= 4(2 - 6) + 8(6 - 6) + 2(10 - 6) + 1(14 - 6) = -16 + 0 + 8 + 8 = 0
Short-Cut Method (Assumed Mean Method)
u u ^ ' . ÂK^d
Illustration 9. Calculate arithmetic mean of Illustration 8 by short-cut method.

155
)01U11UU. Marks XNo. of Students f Mid-point m ------ m-1 d
/a --
0-4 4-8 8-12 12-16 4 8 2 1
0 32 16 12
1 6 10 14
N = 15
0 +4 +8 +12
60
Steps :
1.
Obtain mid-points.
2.
Decide assumed mean (A = 2).
3.
Calculate the deviation from assumed mean, i.e., m - A = d.
4.
Multiply deviation by frequency and get fd.
5.
Add the product of deviation and frequency.
6.
Use the formula :
IM
N
X=A+
=2+
60 15
=2+4=6
Mean Marks are 6.
rcl.e ..hmetic mean of msa.o 8 by rbe deviation
method.
Solution.
I'. ' '
m-A
tS6
Steps :
for Economics-XI
1- Obtain mid-points.
2.
Decide assumed mean (A = 2)
3.
Calculate the deviations from assumed mean M =
4.
Divide deviations by conmion faaor
(Common factor = C < e 10)

5.
Multiply step deviation b; frequency.
7: ui't^^'frrmr
fr^-ncy.
-y 15
=2+X4
15 ^
A^ w . =2+1x4 = 6 Mean Marks are 6.
worSlfXory"^-'-
^^ folWin, distHbuôn of daily wages of
Daily Wages (Rs)

Below 120 120-140 140-160 160-180 Above 180
No. of Workers
10 20 30 15 5
80
confidl^;,tfr r^tl^S:;- - - . .ose the ends Calculation of mean.
J?aily Wages (Rs) (X)
100-120 120-140 140-160 160-180 180-200
Measures of Central Tendency Applying formula, we get
lfm
If
11700
157
X=
or
lfm N
80
= 146.25
Mean wage of workers is Rs 146.25.
Illustration 12. Following information pertains to the daily income of 150 famdies.
Calculate the arithmetic mean.
Income (Ks) No. of families
More than 75
85
140
95
115
105
95
115
70
125
60
135
40
145
25
150
Solution. First, get the class frequencies from given more than c inxuiative
frequencies.
Jncome jRs) (x)
75-85 : 85-95 ;:..95-105 105-115 f15-125 125-135 135-145 145-155
(f)
10 25 20 25 10 20 15 25
N = 150
Mid-points
m-100
(m)
80
-20
90
-10
100
110
+10
120
+20
130
+30
140
+40
150
+50
m~lOO 10 id')
-2 -1 0 +1 +2 +3 +4 +5
m
-20 -25 0
+25 +20 +60 +60 +125
Ifd! = +245
Applying formula.
X=A+
Id' N
= 100.1^x10
= 100 + 16.33 = 116.33

ll
Arithmetic Mean is Rs 116.33.
tiJ'ii 158

Charlier's Accuracy Check
CO
"P ^y given by Charher while
computing arithmetic mean by the short-cut method and the step deviatiL
methodTa
frequency distnbution m discrete and continuous series). The formX iâf le"
^f{d + 1) = -Lfd' + Zf
Equal values on both sides of the above formula is a proof of correct calculations We
add one more column to a table of calculations prepared in discrete and contiCus eri
?hTcoLn ifrrr'- ^^^ calculatrngTmr
^ Illustration 13. Calculate the mean for the following marks obtained in Statistics
bv 50 students. Also apply Charlier's accuracy check for verifying calculations '
f-f = 0-10 10-20 20-30 30-40 40-50 "50-60 Students :
7
3
20
10
Solution.
to a of tl
Marks Students
X
m-lS d
fd'
f(d'* 1)
10 ) d'
0-10 10-20 20-30 30-40 40-50 50-60 4 6 20 10 7 3

5 15 .25 35 45 55 -10 0
+10 +20 +30 +40 -1 0 +1 +2 +3 +4
-4 0 +20 +2C +21 +12 0 6 40
30 28 15
N= 50
Arithmetic Mean, X = A + ^ x C
-Lfd = 69
md' +1) = 119
N
= 15 +
69 50
X 10
= 15 + 13.8 = 28.8 Hence mean marks are 28.8 or 29 approx. Applying Charher's
test :
md' + 1) = Lfd' + Zf 119 = 69 + 50 119 = 119 Hence, the calculation is correct.
H hi 2.
of obi
H X
ires of Central Tendency
^^^
ithematical Properties of Arithmetic Mean

The arithmetic mean has the following important mathematical properties : 1. The
sum of the deviations of the items from the arithmetic mean is always equal to zero.
Mean is a point of balance and sum of the positive deviations is equal ô the sum bf
the negative deviations.
Marks x~x
X
5
-10
10
-5
15
20
+5
25
+ 10
LX = 75
nx-x) = o
-_
^~N5
= 15
Z(X - X) = Le., Ix = 0
Here, Ex or E{X - X ) = Total of the deviations from arithmetic mean. In case of

discrete and continuous series Zfx or I,f(X - X) = 0 2. We can calculate the combined
arithmetic mean from the means and the number of observations of two or more
related groups. The combined mean formula is as under :
(f) Ttvo related groups :
- _ N1X1 + N2X 2
A 1.2 - -77~T7
NI+N2
Here,
X J 2 = Combined mean of two groups
X1 = Mean of first group
X2 = Mean of second group
Nj = Number of observations in
the first group N^ = Number of observations in the second group
() Three related groups :
- _ N,XI+N2X2+N3X3
X
U,3 x,=
N, =
Combined mean of three groups
Mean of first group
Mean of second group
Mean of third group No. of observations in first group
No. of observations in second group No. of observations in third group
160
Tû ,
The formula can be extended for more groups

groupraVuIl?''^^
of combined mean of more
Combined Mean
X
1.2.3..
=
+ N, X2 +N3X3+ ..Nj(
Ni+N2+N3+..N
of /o'Sr inÎL? cllcd^^^^^^^^^ rr ^
seaions A and B.
l-alculate the combined mean of all the students of
Solution.
Section
: I.
40 Xi 60 N,
35 X2
No. of Students
40 N,
Here,
N, = 60, N^ = 40, X, = 40 and Xi = 35
^ ^ (60x40)+ (40x35) 60 + 40 ~
_ 2400 + 1400 100
38 the
3800 100
= 38 marks.
"
^ ^ marks.
--
ttere ar^n"4?s:udrsrâ^dt
^-
<n sîon . are 40, fmd out
^rt s'^lS^r'''^
Section
No. of Stilts
Mean _
40 Xi 60 Nj
? X2
40.N,
H
Combined mean (Xi,2) =38
161
-N2X2
where.
V- N1 + N2
2 = 38, Nj = 60, N^ = 40 and Xi = 40 (600x40) + (40XX2)
38 = 38 =
60 + 40
2400 + 40X2
100 _ 3800 = 2400 X 40 X2
- 40X2 = 3800 - 2400
40X2 = 1400
X2 = 35 Marks Hence, mean of the students of section B is 35 marks.
Illustration 16. The mean marks of 100 students of combined sections A and B are
38 marks. If the mean marks of section A are 40 and that of section B are 35. Find
out the number of students in sections A and B. Solution.
M
Mean No. of Students
100
A
40X1 ? N,
35X2 ?N,
Combined Mean (Xi,2) = 38

_ N1X1 + N2X2 N1+N2
Here Xi,2' = 38, Xi = 40, X2 = 35 and N^ + N, = 100
Hint. 1. N^ = (100 - Nj)
(Nix40) + (100-Ni)x35
=-Too
3800 = 40 Nj + 3500 - 35 N^
2. 40 Nj - 35 Nj = 3800 - 3500
5 Nj = 300
Nj = 60
Hence, the students in section A are 60 and in Section B are (100 - 60) = 40.
162
3 The sum of rh
12
3
4
5
XX = 15
Set I ---(X - 3)
(X)
-2
for Economics-XI
-1
+1
+2
4
= 10
X
12
3
4
5
Set II ~
X~2
(X-2)^
(x')
(x'^J
-1
+1
+2
+3
9
= 15
--
N5-
^ V ~ ^' ' f taken from mean.

W.
.. ' 'f"' ''^v'^tions taken from any value
cha^:o, eh.. ^^^^^^^

4. Arithmetic mean i. calculated by a simple formula, ,>., h - E
three values of the formula are known, the third can be calculated"
_ J^X
Tf ,
X = or IX = NX
if any two of the

X,
^ ' ^^^^^----1 X
10
30
20
30
30
30
40
30
50
30
i:x = 150
150

163
150
= 30
N
NX = SX 5 X 30 = 150
150 = 150. ^
This property has great utihty in calculatton of wage bills, e.g., average wage Rs
120.
No. of workers 2000.
... Total wage bill = N. X = 120 x 2000 = Rs 2,40,000.
The relation NX = ZX can be easily used for correcting the value of mean, which is
explained in the following illustration. ^
msado 17. -n-e arithmetic mean of a series of 40 as Rs 265. Bnt while calculating
ii an item Rs 115 was misread as Rs ISO. Fmd the correct
arithmetic mean.
Solution.
Since,
_ EX X =
N
EX = NX Here,
X = 265, N = 40
EX = 40 X 265 = 10600
Calculated EX, i.., 10600, is wrong as the us get correct EX by subtracting the
incorrect item and adding the correct item
Incorrect EX = 10600
Less : Incorrect item
1^0
10450
Add : Correct item
Correct
^^X = 10565
Hence, corrected arithmetic mean

= Rs 264.12.
40
Illustration 18. Tie arithmetic mean of a given set of data
(i) in terms of rupees, and (it) in terms of paise.
164
f
Solution. Since
Here,
N NX
-"''e. of observations,
Calculated ZX i c Tnn values. Let us cor^t M u

1, ^
value = 25). ^
Incorrect
correct H (5 observati^s x Rs f^st T
^dd : Corrected balance

of 5 observations (5x5) -25 Correct
es
----
Corrected ZX 525
^^.
N " - = Rs 105
() Corrected mean expenditure in terms of n '
Rs 105 X 100 = 10500
^^
= paise 10500.
ean of 5 items (1, 2 3 4 5 . .
* ' 4, 5,) is 3, I.e.,
1+2+3+4+S EX IS
value, sa. 2. we get tbe
Alisi
(
ll
requ ]
Lo to be < examp class M 2.1 Exa

1
2
3
4
__^
"" "" observations are Rs 5 less ,
IX = IS X = 3
X+2
3
4
5
6
25 5
X~2
-1 0 +1 +2 +3
Xx2
Column 1 : X = 3 (+) Column 2 :X - i: a j j j
(X) Column = 2) = 1
^ = 6 Multiplied 2 = (3 X 2) = 6
51
2 4 6 8 10
30 6
We a
JVIaifc Studo
Cunn before ap Thus Marks
Stud^
165
,
after aadition. s.baction and .uUipôn by
-bcaon and *a.on by *e same

constant to their means.
Miscellaneous Problems
. , u .wUrr^fûc mean These problems are
re^r rb^ê rS^ê mean.
1. In the case of open-end classes Example

Marks
Below 10 10-15 15-20 20-25 Above 25
No. of Students
58
3
4
5
Lower limit of the first class and upp. W o^^ j^^r^^L^niS^^ to be defined by
marking an and last classes. Thus, first
example, the same class mterva IS decided M., 5)
class would be 5-10 and last class 25-30.
2.
In
the
case of
cumulative frequency
distribution
Example
Less than 10 Less than 15 Less than 20 Less than 25 Less than 30
5-10 5
5-15 13
5-20 16
5-25 20
5-30 25
We are given Marks :
^tive frequencies ar;:equired to be converted into ascending class frequencies
Thus we get, ^^^^
Marks : 5-10 1(^5 ^^^^^^
Smdents :
=4
25-30 (25-10) = 5
=8
-^
^^0-16)
tr
m
166
Example :
Statistics for Economics-X,
We are given, Marks : Students
More than 5 More than 10 More than 15 More than 20 More than 25
25 20 12 9 5
5-30 25
10-30 20
15-30 12
20-30 9
25-30 5
.ue^citTef: "r"
above descending cL,a.ive
frequencies. They are : Marks : 5-1 o (25-20) Students : =5

10-15 (20-12) = 8
15-20 (12-9) = 3
25-30
20-25 (9-5)
=4
Merits and Demerits of Arithmetic Mean

Merits : Arithmetic Mean ,s the most popularly used because of the following merits
. 1. It IS simple to understand and easy to calculate.
"
2.
It is based on all the observations of the series Therefore it i.' th
representative measure. ^neretore, it is the most
3.
bias
Its values is always definite. It is rigidly defined and not affected by personal
4.
The calculation of arithmetic mean does not require any specific algement of
îS m SS^~ - - ^-re mathematical

7 It is fluctuations of sampling and ensues .ability m calculations.
/. tt IS a good base for comparison.
nh''o7o?:fcuI onTj^^î^^^^^^^^ 'ê average and
be used with caution
mean should
ffcô 000 a " General Manager's sala;, in a firn,

rnfpe^f Sloor"^'
-P'ovee-y clerk Rs jjoo, typiS^Rs
167
^ Rs on 000+ Rs .S.500 + Rs 4,500+ Rs 2,000 _ g oqO per The average salary will
be--4
month. Average calculation is not - "presenmive^ I. is affected by an extreme value
of Rs 20,000 paid to the General Managet;
,
4
Arithmetic mean can be a value that doe. not extst m the senes at all, ..g.,
the average of 4, 8 and 9 is
= 7, which is not an item of the series.
5
Arithmetic mean gives more impot,nce to the bigger items and less
importance to
titr^cflXaecided inst by observa.on. It needs mathematica. calculations.
(B) Weighted Arithmetic Average or Weighted Mean
1.
Meaning
2.
Uses of Weighted Mean
3.
Calculation of Weighted Mean
(a)
Equal Weights
(b)
Unequal Weights
arithmetic mean gives equal importance tt/aif the ^^^^^ fact, thL are number
One item may be more impot^mt
hirlorl^^^^^^^^
to different
ô^ as jeights. ,n other
wir=ights are figures to indicate d>e relative mtportauce of ,tems.

1, "ve Cual weigh, to different categories of employees in a fao^
2.
WeStled mean is used for comparison of the results of two or more
un,verstt,es
or boards.
3.
,.u^
It is used' to calculate standardised birth rate and death rate.
, 4. It is used in the construction of Index Numbers.
168
Statistics for Economics XI
Calculation of Weighted Mean
The formula for calculating weighted arithmetic mean is as under :
IWX
Xw =
where.
Xw = Weighted Arithmetic Mean W= Weights X = The variables Steps. (/) Multiply

weights by X and obtain WX
Hi) Divide the total (ZWX) by total weights (XW)
Solution.
of
payment of wage per hour by three ways
Simple Arithmetic Mean (x) :

Workers
Man Woman Child 8 6 4
ZX=18
EX
X=
N
8+6+4
18
: : 3 .
= Rs 6 per hour.
(a) Weighted Mean (Equal Weights) : (Xit;)
terSn' - - -- ana
n
Type SWlfittlBil^Bl
Wages (Rs) X
Workers W
Man Woman Child 8X, 6 X, 4X3 50 Wj 50 50 W3

I.W= 150
400 300 X^W^ 200 X3 W3
IWX = 900
---'ires of Central Tendency

169
Xw
X,w, + XM+2W
- =Rs6
LW 150
Weighted Mean is Rs 6.
.n
Thus, weighted arithmetic mean will be equal to the simple arithmetic mean, when
all
: items are given equal weights.
Xw = X Rs 6 = Rs 6.
lb) Weighted Mean (Unequal Weights) : (X^)
Suppose men, women and child workers are 10, 20 and 50 respectively then our
---------Vorkers
lyfJtr 'x
- V - --_U-^^^---^
Man
10
80
Woman
20
Child 4
50
200
l.W = 80
120
ZWX = 400
- SWX 400 Xw =
= Rs 5
LW 80
Thus, the weighted arithmetic mean will be less than the simple arithmetic mean
when items of small vflues are given greater weights and items of big values are
given less
weights.
__
Xw < X
Rs 5 < Rs 6 . u
However, in the absence of given weights, assumed weights can be assigned to the
items on the basis of their relative importance.
But, normally they are not equal. Suppose men, women and child workers are 50,
20 and 10 respectively, then our answer would be different.
Type
Man
Woman
Child
X
Workers W
50 20 10
SW = 80
WX
400 120 40
ZWX = 560
__ ZWX Xw =
560 80
=7
Weighted Mean is Rs 7.
Statistics for Economics-Xl
Thus the weighted arithmetic mean will be greater than the simple arithmetic mean
when items of small values are given less weights and items of big values are given
mor^ weights.
Xw > X Rs 7 > Rs 6
niustration 20. Calculate Weighted Mean by weighting each price by the quantity
consumed.
Articles of
Quantity Consumed
Food
(per kg) 3
Price in Rs
Flour 11.50 5.8

Ghee 5.60
58.4
Sugar .28
8.2
Potato.16
2.5
Oil
20.0
.35
Solution.
fiiBsBslPlSSaHi^B^^^^B Food Articles
kg W
Flour 5.8
11.50
Ghee 58.4
5.60
Sugar 8.2
.28
Price in Rs per kg
Qty. Consumed in
Potato2.5
.16
Oil
.35
20.0
Total
17.89
WX
iMM
66.700 327.040 2.296 0.400 7.000
IWX = 403.436
.Xw =
ZWX 403.436
= 22.55
I.W 17.89 Weighted Mean Price is Rs 22.55.
lUustration 21. From the results of the two schools A and B given below, state which
or them is better.'
Oass
IX
X
XI
XII
Total
School .A
Appeared
30 50 200 120
400
Passed
25 45 150 75
295
School B
Appeared
100 120 100 80
400
Passed
80 95 70 50
295
171
ntf Use Weighted Anthmetk Mean after obtaining homogeneous figures, converting
into percentages.
School A
Class Appeared w Passed
Pass % X
IX X XI XII
30 50 200 120
15000 7500
25 45 150 75
LW - 400
WX
8.33 90 75 62.50
2499 4500
LWX = 29499
School B
Class Appeared W Passed
Pass % X
IX X XI XII
5000
80 95 70 50 80 79.2 70-62.5
100 120 100 80
XW = 400
School A :
WX
8000 9504 7000
EWX = 29504
LWX 29499 _ 73 75 Xw - 400
_ SWX _ School B : Xw School B is better.

29504 400
= 73.76
msa 22. An exannnaaon was held to decide the award of a -hola*
Subject
Statistics Accountancy Economics Business Studies
Weight
4
32
i
Marks of A
63 65 58 70
Marks of B
JAarks of C
60 64 56 80
65 70 63 52
DUSIIICSS jiuunô _-________
Of Ihe candidate gening the highest marks .s to be awarded the scholarsWp, who
should get it?
172
Solution.
Subfect
W
Weight
Marks of A
Marks ofB
X,
WX,
63
252
60
240
65
260
Accountancy 3
65
195
64
192
70
210
Economics
58
116
56
112
63
126
Business Studies
70
70
80
80
52
Total IW = 10
EWXj = 633 SWX^ = 624 EWX3 = 648
Statistics
EW
10
2:WX2
LW
10
624
Marks of C
WX,
52
EWX3 648
^t Vt ./v
O^ I
Weighted Mean of B, Xw^ = ^^^
= 62.4 Marks.
Weighted Mean of C, Xw^ = ^^^ =
Marks.
The weighted Mean of C is the highest, hence he is entitled for scholarship.

OF FORMULAE AND ABBREVIJmONS
[Arithmetic Mean, Properties and Weighted Mean]
Type of Series 1. Individual Observations (Ungrouped data)
Direct Method - ZX
N
Short-cut Method Sfi^ Deviation Mjethod X = A+'^f'xC N
2. Discrete Series (Grouped data)
^N
X-A + ^^f xC N
3. Continuous Series (Grouped data)
- -Lfm ^ N
X=A+N
Mathematical Properties of Arithmetic Mean Here, X-X=x Mathematically. (1) 2.(X X) = 0 ljc = 0 If(X - X )- 0 Ifx = 0 , Properties of Arithmetic Mean (3) E(X - X )Ms the
least, i.e., Ix^ is minimum ZWX Weighted. Mean Xw = ^^
- N1X1+N2X2
Similarly - N1X1+N2X2 + N3X3 N1 + N2 + N3 (4) NX = IX
ii-

173
Abbreviations
X
= Arithmetic Mean. d =
X-A, i.e., deviations of X
variable from
x=
The variables.
zx-
Sum of all the items of the

variable X.
an assumed mean.
U=
Sum of the deviations of X variabic i
taken from an assumed mean. |
N=
Number of observations or (Z/). C =
f=
Frequency.
d' =
Common factor.
X A , i.e., step deviations of C
E/X = Sum of the product of variable (X)
X-variable from assumed mean
and the frequencies (/).

m=
and divided by common factor.
Mid-values. Yd' = Sum of step deviations.
lfm = Sum of the products of mid-points

frequencies
and the frequencies.
A=
Assumed mean
Lfd = Sum of the product of
and their respective deviations.
lLfd' =Sum of the product of deviations
and their respec ive step deviations.

X-X = X, i.e., deviations of X variable
from the mean.
=
Combined mean of two groups. (X- Xf =
X', i.e., square of the deviations
of X variable from mean.

Xi-
: Arithmetic Mean of the first group.
Xw = : Weighted Arithmetic Mean.
X, -
: Arithmetic Mean of second group.
W=
N.
: Number of observations in the first
zwx = : Sum of the product of variable
group.
N, =
: Number of observations in the
: Weights.
X and weight.
second group.
EXERCISES
Questions :
1.
What is a statistical average? Mention different types of averages.
2.
What are the functions of an average? Discuss the characteristics of good
average. Which of the average possesses most of these characteristics?
3.
What is meant by 'Central Tendency'? Discuss the essentials of a measure of
central tendency.
4.
Name the commonly used measure of central tendency.
174
StattsUcs for Economics-XI
5.
Define the mean. Also explain properties of mean.
6.
Why xs arithmetic mean is the most commonly used measure of central
tendency^
Llutionr ""
"""
^^ ^ - fr^q-ncy
-- - ^ -sure
'
ôf the vaês of the vanable from
in
"
unweighted mean?
lU. What are the uses of weighted mean?

II.. Write notes on (a) Central Tendency, and (b) Weighted Mean. Problems :
1.
Calculate arithmetic averages of the following information :
(a)
Marks obtained by 10 students : 30, 62, 47, 25, 52, 39, 56, 66, 12, 24
(b)
Income of 7 families (In Rs) : Also show
590, 575
= o 550, 490, 670, 890, 435,
ic) Height of 8 students (In cm) :

140, 145, 147, 152, 148, 144, 150, 151
2.
.u______________________ " :
Name of batsman Matt

1 Inning
ch I
II Inning
ABCD
60 40 100 20
42
40 80 140 52
,,
^ = 600, c = 147.12 cm.]
Match II
I Inning
irmx
65 15
I Inning
12 15 28 20 14
expenses of following 10 firms
..^,.
II Inning
10 36 18 84 100 70 100
^ = 42.67, B = 56, C= 62.67 and D = 47.33]
Frequency : 6
^ fI^J^/"^
11 Inning
20 50 10 40 26 60 8 46
Calculate mean of the following series

5
Mutch m
10 5
[X= 7.06]
Firms Sales (Rs in '000) Expenses (Rs in '000)
1 50 11
2 50 13
3 55 14
4
60 16
5 65 16
7 65 15
8 60 14
9 60 13
10 50 13
[X= Sales = Rs 58,000, Expenses = Rs 14,000]
ieasures of Central Tendency
Calculate mean of the following frequency distribution
62 64 67 70 73 82 103 176 212 180
Values Frequency
60 54
77 115
n
Calculate arithmetic mean of the followmg data Profit (in Rs) : 0-10
No of shops : 12
18
2/
30-40 20
175
81 85 89 78 _ 50 21 [X: R> 70.94]
10-20 20-30
40-50 50-60
16
[ X = Rs 30.45]
Compare the average age of malînjhe_ two countries :_____________________
population of U.K.
Age Group
0-5 5-10 10-15 15-20 20-25 25-30 30^0 40-50 50-60 60-65
(in lakhs)
214 258 222 157 145 161 267 184 120 100
18
19
20 18 16 14 27 25 19 17
8.
[Average Age India = 25.25 years and UK = 29.404 years] Calculate simple and
weighted ar^hmetic averages of the folbwing items :
Items Weights Items Weights
68 1
124 9
85 46 128 14
101 31 143 2
102 1
146 4
108 11 151
6
110
7
153 5
112 23 172 2
113 17
[Simple Mean = 121.07 and Weighted Mean = 108.71)
Less than 10 Less than 20 Less than 30 Lesi than 40 Less than 50 -:100
_
5 15 55 75
A = OU iViaiivai
Also get 5:f(X-X) = 0
176
11.
12.
13.
14.
15.
Statistics for EconomicsThere are two branches of an establishment employmg 100 and 80 nerso,
rrS
monthly salrfes by thrtwo b^rh
are Rs 27^ and 225 respectively, fmd out the arithmetic mean of the salaries the
employees of the establishment as a whole.
[Combined Mean = Xi,2 = Rs 252.81
to be"49 Tth'by a group of 100 students were found
If Too ; H
obtained in the same examination by another group
of 200 students were 52.32. Fmd out the mean of marks obtained by both th gûps
of students taken together.
^ ^^ 3,
The mean marks of 1 >0 students were found to be 40. Later on it was discovere
Ll ' ^^
^^ -- correspondingTot
-ru
[Correct X = 39.7 Marksl
The mean weight ot 25 boys in group A of a class is 61 kg and the mean weiS
of .5 boys m group of the same class is 58 kg Find the mean weight of 60 b^!
.. , ,
[Xj.2 = 59.25 kg]
Calculate mean ot the following data :

Marks Beloiv : 10 20 30
No. of Students : 5 9 17
40
29
50 45
60 60
16. Calculate Combined Mean
70 80 90 100 j 70_ 78 83 85 [X = 48.41 Marks]
Section
Mean Marks No. of Students
75
50
60
60
55
50
17
[Xi,2,3 = 63.125 Marks]
average ot 31 marks. What were the average marks of the other students.'
-ru
[X2 = 57.25 Marks]!
R^18r4"T
1000 workers of a factory was found to be
taken af29ranri67" 'T?"'
^^ workers were wron^
taken as 297 and 165 mstead of 197 and 185. Find the correct mean.
'
[Corrected Mean : Rs 180.32]!

19. Find the average wage of a worker from the following data
: Above 300 310 320 330 340 350 360 3701 No. of ivorkers : 650 500 425 375 300
275_ 250 100
[X = Rs 339.23]j
177
effip* ........ ^
o. of day
-40 to -30
10
-30 to -20
28
-20 to -10
30
-10 to 0
42
0 to 10
65
10 to 20
180
20 to 30
10
[X = 4.29 C)
21.
A candidate obtains tbe followmg percentage of marks : Sanskrit Mathemat^
84, Economics 56, English 78, Politics 57, History 54, Geography 47. ^ is agreed to
give double weights to marks m Enghsh, Mathematics and Sanskrit. What is he
weighted and simple arithmetic mean?= 68.8, X = 64.43 Marks]
22.
Calculate weighted mean by weighting each price by the quantity consumed:
Food items
Flour
Ghee
Sugar
Potato
Oil
Quantity Consumed
500 kg 200 kg 30 kg 15 kg 40 kg
Price in Rupees {per kg)
1.25 20.00 4.50 0.50 5.50
[Xw = Rs 6.35]
23. Comment on the performance of the students of three universities given below
using weighted mean :
No. of Students are in hundreds
Courses of study
Mumbai
% pass
No. of students
Np. of students
Kolkata
% pass
Cher tnai
No. of students
M.A. M.Com. B.A. B.Com. B.Sc. M.Sc. T-l 83 73 74 65 66 4 5 2 3 3

65 60 1 3 6 7 3 7 81 76 74 58 70 73 2 3.5 4.5 2 7 2
% pass
S2 76 73 76
[Weighted Mean
Mumbai : 72.55, Kolkata : 7U.6 and Chennai : 72.0; Mumbai is better]
24. A distribution consists of three components with total frequencies of 200, 250
and 300 having means of 25, 10 and 15 respectively Find out the mean o^
combined
: distribution.
Chapter 9
TOOTioMHTnaet ui. rmmmvjm
(a)
Median,
(b)
Partition Values (Quart,les), and
(c)
Mode.
median
1.
Definition
2.
Calculation of Median
3.
Mathematical Properties of Median
4.
Merits and Demerits of Median
Definition
êv^r shit t s^r z"-- --- - ---e

sxss
lics-XI Positional Average and Partition Values 201
According to AX. Bowley, "If the number of the group are ranked m order according
to the measurement under consideration then the measurement of the number
most nearly one half ts the median." ^
According to Secrist, "Median of a series is the value of the ttem actual or
estimated
tvhen a sertes ts arranged in order of magnitude which divides the distribution into
the tivo parts.
nL! O''''''
;
'uf "sr
147
151
140
Anurag
Deven
149
M
Suresh
142
At
Mayoor
147
AtuI
144
144
""
heights of 7 students in a class.
Satish
145
145
Himankar
The first and most important rule for obtaining the median is that the data should
be arranged in an ascending (increasing) or descending (decreasing) order. This
arrangement facditates locating the central position so that the series may be
divided into two parts one less than the central value and the other more than the
central value.
'
So, we arrange our data in ascending order as follows :
140
142
144
145
147
149
151
mm
Deven
Mayoor
Satish
Himankar
AtuI
Suresti
f
Anurag
If we arrange the above data in descending order we get : Name of
smdents : Anurag Suresh Ami Himankar Satish Mayoor Deven Height (cm) : 151 149
147 145 144 142 140
From this ordering also we observe that 145 cm or value of the 4th item is the
median.
Calculation of median
(a)
Individual observations.
(b)
Discrete series.
(c)
Continuous series.
Median is the central positional average of given data. That is, median has a
position more or less at the centre of the values and it divides the series roughly
into equal parts.
180
{a} Individual Observations
meiarhetht. ^
^ impute the
Solution.
Name of Students Height (cm.)
Anurag
151
Deven140
Suresh
149
Mayoor
142
Atul
147
Satish 144
Himanka--
145
Name of Students Height (cm.)
Deven140
Mayoor
142
Satish 144
Himankar
Atul
145
147
Suresh
149
Anurag
151
Steps :
1. The above data must be arranged either in ascending or descending order to get
the value of median. Arrange the data in ascending order.
\th
item
2.
Locate the median by finding the size of
3.
Applying the formula, we get
fN+^^
Me = Size of
= Size of
fN + V
th
item
Pos
But
fN
h
the h
7+1
item
= Size of 4'"' item Median is the Himankar's height, i.e., 145 cm

8th tTm
^^
cm, which will be the
tn item m the list, and calculate the median height.

Solution. When the number of items in an individual series is 3, 5, 7, 9, 11 etc. that
'N+iK
th Item will be a whole number.
nil 1
is when it is an odd number, the central item, i.e..
-XI the
f ositional Average and Partition ValuesI g j
But when the number of item in a series is even 2, 4, 6, 8, 10 etc, the central
item, /.e.,
N+V
the item will be in fraction.
Arranging the data in ascending order including the height of Rajesh, we get
et
Name of the Students
Deven140
Mayoor
142
Satish 144
Himankar
AtuI
145
147
Suresh
149
Anurag
151
Rajesh
152
Me = Size of
= Size of
Heii^ht (cm.)
fN + lX^ .
2,+
Item
Item
= Size of 4.5'*' item
Medkn is estimated by finding the arithmetic mean of two middle values, i.e.,
adding the height of Himankar and AtuI and dividing by two.
'&
Size of 4.5"^ item = item + item
2
145 + 147
292
Median height = 146 cm.
Serial No.
Marks Serial No.
Marks Serial No.
17
41
13
11
32
32
14
15
35
11
15
35
33
10
18
16
23
15
11
20
17
38
21
12
22
18
12
Marks
JI
182
Statistics for Economics-XI """sed , an ascending order in the
Serml No.
Marks Serial No.
Marks Serial No.
Marks
1 2 3 4 5 6 11 11 12 ' 15 15 17
7 8 9 10 11 12
32
13 14 15 16 17 18 32 33 35 35 38 41
Median = Size of the
18 20 211 22
J 23
item = Size of the

18 + V
th
= 9.5'^ item
The value of 9.5"' item = .Z^lue of the 9"* item + Value of the 10^'' item
= 11^.21.5.
Hence Median = 21.5 (b) Discrete Series
Illustration 4. Calculate median of the followmg distribution :
Solution.
10
20
30
16
40
26
50
20
60
16
70
80
Marks
10 20 30 40 50 60 70 80
No. of Students
1 8 16 26 20 16 7 4
N =99
Ctwtulatiue frequencies c.f
1=1 10 = 2 26 = 2 52 = 2 72 = 2 88 = 2 95 = 2 99 = 2
16 16 16 16 16 16
26 26 26 26 26
20 20 20 20
16 16 16
up to (c) Cc
nil
the m(
7
7+4
183
Steps :
1.
Arrange the data in ascending or descending order.
2.
Compute cumulative frequencies.
3.
Apply the formula.
Me = Size of
fN + n
th
Item.
4. Median is located at the size of the items in whose cumulative frequency, the
value
of
(N + U
th
item falls.
Median = Size of
= Size of
(N + l
th
2
(99 + ^^
Item
= 50th item
Median Marks = 40 Marks.
Illustration 5. Find out the value of median from the following data : Daily wages (in
Rs) : 100 50 70 110 80 Number of Workers : 15 20 15
18 12
Solution.
Wages in
Number of
Ascending Order
(Rs)
(f)
(c.f.)
50
20
20
70
15
35
80
. 12
47
100
15
62
110
18
80
Cumulative
Workers
Frequencies
Median is the value of

fN + l
rso+iî
or
th
or 40.5'*' item. All items from 35 onwards
up to 47 have a value of 80. Thus the median value would be Rs 80. (c) Continuous
Series
Illustration 6. The size of land holdings of 380 families in a village is given below.
Find the median size of land holdings.
Size of Land Holdings
No. of Families
(in acres)
Less than 100
100-200
89
200-300
148
300-400
64
400 and above
40
39
J'
184
IvV
i
Solution.
Size of Land Holdings (in acres) No. of families (f)
frequencies
0-100 40
40
100-200
89
129
200-300
148
111
300-400
64
341
400-500
39
380
Steps :
1. Compute less than cumulative frequencies.
u
th
item. Do not use
Less than cumulative
2.
Median item is located by finding out size of
the item in continuous series.

3.
Locate the median group in cumulative frequency column where the size of
fN^''
the item falls.
4. Apply the following formula to calculate the median from located group :
c.f. Median = /j + - x i
where, = Lower limit of median group.
c.f = Cumulative frequency of the class preceding the median class. f = Frequency
of the median group.
I = The class interval of the median group. Calculation of Median
Me = size of
= size of
2
380
item
item = 190^'^ item
Median lies in the group 200-300. Applying the formula, we get
--cf Me = /j +
Xi
Ositional Average and Partition Values
where, /, = 200, f = 190, c.f. = 129 f = 148, / = 100
185
Me = 200 + 1^1^x100
= 200
= 200 +
148
61x100 148
241.216
148
. Median size of land holding = 241.22 acres, (ie 50% of the families are having
less than or equal to 241.22 acres of land holdingr^d 50% of famihes are having
more than or equal to 241.22 acres of land
holdings.)
Illustration 7. Calculate median from the following data :
Age (in years)
55-60 50-55 45-50 40-45
Number of
Age
Persons
(m years)
(f)
'7
35-40
13
30-35
15
25-30
20
20-25
Total
Number of Persons (f)
3U 33 28 14
160
I
Note : If the given question is in deseending otdet of values then Wore giving the
question, the dafa is Required to arrange ascending order to calculate less than
cumulative frequencies.
..
Solution. This question has been solved below after arranging the series m
ascending
order. "___
Age in years (Ascending order)
20-25 25-30 30-35 35-40 40-45 45-50 50-55 55-60
No. of persons (f)
14
28, 33 30 20
15 13
7
Cumulative frequency-(c.f.)
14 42 75 105 125 140 153 160
186
In the above example median is the value of lies in 35^0 class interval.
N- , Me = + X i
80-75
f^l
th
or
.1)
ri6o> th
I2;
or
or 80''^ item which

= 35
= 35
30
5x5 30
X5
= 35 + 0.83 = 35.83 . Median Age = 35.83 years
Illustration 8. Calculate the median from the following data :
Value Frequency
(f)
Value Frequency
(f)
Less than 10 4
Less than 50
Less than 20 16
Less than 60 112
Less than 30 40
Less than 70 120
Less than 40 76
Less than 80 125
Solution. If the data are given in the form of cumulative series they have to be
converted into simple series in order to find out the frequency of the median class
which IS needed m calculation of median. Once it is done that rest of the procedure
is the same as in any other continuous series.
Value Frequence (f)
0-10
Cumulative frequency {c.f.)
10-20 12
16
20-30 24
40
30^0 36
76
40-50 20
96
50-60 16
112
60-70 8
120
70-80 5
125
ha' on
Middle item is
ri25
xth
or 62.5* item, which lies in 30-40 group.
lics-XI
187
ich
^ -c.f. Me = /, + - X i
^^ 62.5-40 = 30 + trr- X 10
= 30 +
36 22.5x10
36
= 30 + 6.25 Median = 36.25
Illustration 9. Calculate the median from the following data
Size
Frequency (f)
More than 50
More than 40
40
More than 30
98
More than 20
123
More than 10
165
Solution. e>umulative frequency taoie is oi more man type, in !.u.u eases mc ucua
have to be converted into a simple continuous series and median is calculated of
ascending order series. ,,
be lich me
Size
Frequency (f)
10-20 42
42
20-30 25
67
30^0 58
125
40-50 40
165
Cumulative frequency (c.f.)
ri65Y'
Middle item is ^ or 82.5* item which lies in 30^0 group.
th
eI
N
Me = /j + - X i
^ 30 , iMîZ >, 10
= 30 +
58 15.5x10
58
= 30 + 2.67 Median = 32.67
188
Statistics for Economics-XI Illustration 10. Compute median from the following data
MMues : 115 125 135 145 155 165 175 185 195 Frequency : 6 25 48 72 116 60 8
22 3
he'^^rdls^^Z^: Th 7fT ^^^
of ^he class-intervals of a contmuous
trequency distribution The difference between two mid-values is 10 hence 10/2 - 5 i.

upper limit ot a class. The classes are thus 110-120 170 l^n ^ ^
190-200. '
.... and so on up to -----
Uass-intervals
110-120
120-130
130-140
140-150
150-160
160-170
170-180
180-190
190-200
Total
Frequency
6 25 48 72 116 60 38 22 3
390
_
6 31 79 151 267 327 365 387 390
The middle item is
(390^
th
or 195"' item, which lies in the 150-160 group.
Me = + -
195-151 = 150 + -r^^-X 10

116
= 150 +
44
X 10
116
= 150 + 3.79 Median = 153.79
Illustration 11. if the arithmetic mean of the data given is 28 Find rh. I ^
frequency, and (b) the median of the series. ^ ^^^
Profit per
Retail shop (in Rs) : 0-10 10-20 20-30 Number of
Retail shop
30-40
27
40-50 17
50-60 6
j2
jg

189
Solution.
{a) Calculation of missing frequency. Let the missing frequency of group 30-40 he X.
Profit per Retail shop X
0-10
12
60
10-20 18
15
270
20-30 27
25
675
30-40 X
35
35X
40-50 17
45
765
50-60 6
55
330
N = 80 + X
Number of retail shops f
Mid-point m '
-----1 fm
Y.fm = 2100 + 35X
Applying formula, we get

Ifm
X=
or
28 =
Ifm If " N
2100+ 35X 80 + X
28 X (80 + X) = 2100 + 35 X 2240 + 28 X = 2100 + 35 X 2240 - 2100-= 35 X - 28 X
7X = 140
140
X=
7
= 20
Therefore, the missing frequency is 20. (b) Calculation of median :
Profit (Rs) (X)
Fret,
0-10
12
12
10-20
18
30
20-30
27
57
30-40
20
77
40-50
17
. 94
50-60
100
N=
mcHC\ (f)
(c-f)
100
The middle item is

100^
or 50th item, which lies in the 20-30 ^group.
190
Me = /j + -ly- X
-in ^0-30
20x10
= 20 + -X 10 = 20 +
27 "
27
= 20 + ^ = 20 + 7.407 Median = 27.41.

Illustration 12. In the frequency distribution of 100 famiUes given below, the
number of families corresponding to expenditure groups 20-40 and 60-80 are
missing from the table. However, the median is known to be 50. Find the missing
frequencies. Expenditure : 0-20 20-40 40-60 60-80 80-100 No. of families : 14 ?
TI
15
Solution. Let the missing trequency of the group 20-40 be X and the missing
frequency of 60-80 group be Y.
Now Z/" (total frequency) = 100
i.e., 100 = 14 + X + 27 + y + 15
or X + Y = 100 - 14 - 27 - 15 or X + Y = 44
Expenditure No. of Families (f)
0-20
14
Cumulative frequency (c.f.)
14
20-40 X
14 + X
40-60 27
41 + X
60-80 Y
41 + X + Y
80-100
15
100
Median is given in this problem as 50.

^lOOV*'
Middle item of the series is also interval 40-60. (Given median = 50)
N
or 50* item, which means it lies in the classNow,
Me = /. +
-c.f.
f
Xt
50 = 40 +
50-[14 + X] 17
X 20
50 - 40 =
27^20
f ositional Average and Partition Values191
10 X 1.35 = 50 - [14 + X] 13.5 = 50 - 14 - X
X = 50 - 14 - 13.5 = 22.5 Since the frequency in this problem cannot be in fraction
so X, i.e., f^ wouId be taken as 23.
X + Y = 44 or /j + = 44
/; = 44 - fj or 44 - 23 or 21 Thus the missing frequencies in the question are 23 and

21.
Mathematical Properties of Median
1.
Median is an average of position and therefore is influenced by the position of
items in arrangement and not by the size of items.
2.
The sum of the deviations of the items about the median, ignoring signs,
will be less than any other point. For example :
X
: 10 11 12
Deviations from Median : 2
10
Deviations from
any poirit, (say 10) :
The sum of the deviations taken from median (12), less than the sum of the
deviations taken from an\
13 1
14
2
= t>
-f J
ipomt (1
Merits and Demerits of Median ^^''îîlJAN t

Merits
1.
It is easy to calculate and understand.
2.
It is well defined as an ideal average should be and it indicates the yalue of
the middle item in the distribution.
3.
It can be determined graphically, mean cannot be graphically determined.
4.
It is proper average for qualitative data where items are not converted or
measured but are scored.
5.
It is not affected by extreme values.
6.
In the case of open-end distribution it is specially useful since only the
position is to be known. It is useful in a distribution of unequal classes.
Demerits
1.
For median data need to be arranged in ascending or descending order.
2.
It is not based on all the observations of the series.
3.
It cannot be given further algebraic treatment.
4.
It is affected by fluctuations of sampling.
192
5.
It is not accurate when the data is not large.
6.
Interpolation by a formula is required to calculate median in continuous series
This reqmres the assumption that all the frequencies of the class interval are
uniformly spread which is not always true.
partition values (quartiles)
1.
Definition
2.
Characteristics of Partition Values
3.
Calculation of Partition Values
Definition
When we are required to divide a series into more than two parts, the dividing
places are known as partition values. Suppose, we have a piece of cloth 100 metres
long an^d we have to cut it into 4 equal pieces, we will have to cut it at three
places. Quartiles are those values which divide the series into four equal parts. For
getting partition values the most important rule is that the values must be arranged
m ascending order only. In the case of finding out the median, we can arrange the
data either m ascending or in descending order but here there is no choice-only
ascending order is possible for calculating partition values (Quartiles).
For example, we have the following data of heights of 7 students in a class Name
of students : Anurag Deven Suresh Mayoor Atul Satish Himankar Height (cm) : 151
140 149 142 147 144
145
Therefore, for getting correct results, the data must be arranged in ascending order
in all the cases.
Characteristic of Partition Values
The difference between averages and partition values is as follows :
While an average is representative of whole series, quartiles are averages of parts
of series For example, the first quartile is the average of first half of the series and
third quartile is the average of the second half of the series.
Thus, quartiles are not averages like mean and median. They help us in
understanding
how various "ems are spread around the median. Therefore, the special use of
partition
values IS to study the dispersion of items in relation to the median, that is in
understanding the composition of a series.
Calculation of Partition Values
(a)
Individual Series.
(b)
Discrete Series.
(c)
Continuous Series.

Now we arrange the data (in Illustration 1) in ascending order :
193
Name of Students (cm)
Deven140
Mayoor
142 = Q == First quartile or lower quartile
Satish 144
Himankar
AtuI
145 = Me = = Second quartile or middle quartile
147
Suresh
149 = Qj = Third quartile or upper quartile
Anurag
151
AS we Know tne meuiaii is uic nciîii. iwuim -------------
cm. Now, suppose we have to calculate quartiles. By definition quartiles will divide a
series into four equal parts and so number or quartiles will be three. They are known
as lower quartile, middle quartile and upper quartile. These are also called first,
second and third quartiles.
The middle or second quartile (Q^) is the central positional value of the data, i.e.,
median. The first or lower quartile (Qj) is the central positional value of the lower
half, and third or upper quartile (Q3) is the central position value of upper half of the
data. In the above data, (Q, = 142, Q, = 145 and Q, = 149.
It must be remembered that Q, is always less than Q^ and Q3 (Q^ < Q^ and Q3)
and median falls between Qj and Q3.
(a) Individual Series
Illustration 13. From the following information of wages of 30 workers in a factory
calculate median, lower and upper quartile.
S. No. Wages (in Rs)
1
330
16
240
320
17
330
550
18
420
470
19
380
210
20
450
500
21
260
270
22
330
120
23
440
680
24
480
10
490
25
520 .
11
400
26
300
12
170
27
580
13
440
28
370
14
480
29
380
15
620
30
350
S. No. Wages (in Rs)
194
Solution.
1.
Arrange the data in ascending order.
2.
Locate the item by finding out.
fN+iY^ rN+v""'
and
N+1
Nth
items
Median
Me = size of
N+l
2
th
Item
r 30 + 1* = size of J- item
= 15.5* item
^ size of 15th item + size of 16th item
380 + 400
S. No. *
Wages (in Rs)
120
16
400
170
17
420
3 4 5 210
18
440
240
19
440
S. No. Wages (inRs)
260
20
450
270
21
470
7oi
300 1 ^
22
01
320
23
480
330
24
490
10 11 12 13 14 15 330
480
25
330 350 370 380 380
500
26 27 28 29 30
520 550 580 620 680
F
I
Uj
{b)l I
Calci
= 390 Median is Rs 390.
Positional Average and Partition Values Lower Quartile
195
Qj = size of - size of
rN+n
th
item
(30 + 1
ah
item = 7.75th
= size of item + |(size of - size of 7* item)
= 300 + .75 (320 - 300) = 300 + 15 = 315 .-. Lower Quartile is Rs 315. Upper
Quartile
Qj = size of
= size of
VN+r"'
item
V3O + 1Y''
item
= size of 23.25* item
= size of 23^" item + -^(size of 24* item - size of 23^" item)
= 480 + ^(490 - 480)
= 480 + .25(10) = 480 = 480 + 2.50 Upper Quartile is Rs 482.50.
(&) Discrete Series r ,
uu
Illustration 14. Following are the different sizes and number of shoes m a shoe shop.
Calculate median, first quartile and third quartile.
Size of Shoes
4.5
5
5.5
6
6.5
7
7.5
8
8.5 9
9.5 10 10.5 11
No. of Shoes (f)
4
8 12 15 20 35 50 40 20 15 24 12 5 3
196
Solution.
Statistics for Economics-XI I
Steps
Sue of shues
" -----
4.5
12
5.5
12
24
15
39
6.5
20
59
35
94
7.5
50
144
40
184
8.5
20
204
15
219
9.5
24
243
10
12
255
10.5
260
11
263
dat:
1.
Arrangement of the data in ascending order is necessary.
2.
Calculate less than cumulative frequencies.
3.
Locate the item by finding out :
fN + U
th
fN + V
th
and
Af + 1
th
Wk " ""
"
feo-cy, the tule of
Median
Me - size of = size of
fN + lY'' .
Item
r263+r
th
item = 132th item
First Quartile
= size of 132* pair of shoes = 7.5 size of shoes.
N + l^
th
4
263 + 1^*''
Qj = size of = size of
= size of 66* item = size of 66* pair of shoes
Medial Ap:
item item
lics-XI Positional Average and Partition Values
First Quartile = 7 size of shoes. Third Quartile
197
Q = size of
Vn+T''*
Item
= size of
r 263 + 1^
th
item
= size of 198* item Third Quartile =8.5 size of shoes, niustration 15. Calculate
Median, First Quartile and Third Quartile from the following data:
Solution.
Income
No. of persons
(in Rupees)
800
16
1000 24
1200 26
1400 30
1600 20
1800 5
Income
^H
(in Rs)1
800
16
16
1000 24
40
1200 26
66
1400 30
96
1600 20
116
1800 5
121
Median :
Me = size of = size of
fN + 1
Nth
item
ri2i+i^
th
item = 61* item
= income 61* person
198
Median = Rs 1200
First Quartile
Qj = size of
4
Item
= size of
121+n
Item
= 30.5* item = income 35.5* person Qi = Rs 1,000 Third Quartile
Q. = size of
= size of
(N+l^
th
Item
T21 + n
th
4
item
Thus,
= 91.5* item = income 91.5* person Q, = Rs 1,400 Me = Rs 1,200 = Rs 1,000 Q3 =
Rs 1,400
(c) Continuous Series
Marks Students
Solution.
Me
30-35 14
35^0 16
40-45 18
45-50 23
50-55 18
55-60 8
60-65 3
Marks
30-35 35-40 40-45 45-50 50-55 55-60 60-65
Mo. of students (f)
14 16 18 23 18 8 3
c.f
14 30 48 71 89 97 100
H
199
Steps :
1.
Calculate less than cumulative frequencies.
2.
Median, first quartile and third quartile items are located by finding out
th
n/T\th
u.
(N^
v4.
, and
N
Item m continuous series.
3. Locate the median group, first quartile and third quartile group by cumulative
frequency column where the size of respective fall.
4. Apply the suitable formula to get the value :
Me = /j + - X i
Nr
-C.f.
2.
th
N4
th
, and
fN'
4,.
th
Items
fN) 4]
-c.f.
XI
Median
Median = size of-^ item = = 50* item
Hence, median lies in class 45-50
N , Me = /j + - X i
th
100
where, = 45, ^ = 50, c.f = 48, f ^ 23, / = 5
50-48
Me = 45 + = 45 +
23
2x5 23
X5
= 45.43
Hence, median is 45.4% marks.
200
First Quartile
Qj = size of Hence, Q^ lies in class 35-40
^
14 j
item = = 25* item
-c.f.
XI
where, ^ 35, ~= 25, c.f = 14, / = 16, i = 5
= 35 + 1^= 38.43 16
Hence, first quartile is 38.4% marks. Third Quartile
Qj = size of Hence, Q lies in class 50-55
(N^
th
riooî
Item = ^
UJ
I4J
= 75* item
-c.f.
f
X/
v4.
where, = 50, ' = 75, c.f = 71, f = 18, / = 5
. ^ 75-71
= 50 + = 51.11
lo
Hence, third quartile is 51.11% marks.
niustration 17. Calculate the Median and Q^ using the following data :
Mid-points marks : 5
No. of
15
25
students : 3 10
17
35 7
45 6
55 465 2
75 1
Positional Average and Partition Values 201
Solution. Given mid-points are required to be converted into class intervals.
0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80
3 10 17
76
4 .2 1
Calculation of Median and Q3.
Median
Median = size of
th
U>
r5o^
item =
I2 J
= 25* item
Hence, Median lies in class 20-30
Applying suitable formula to get the median value
"l-c-f. Me = /j + ^^ X i
where I, = 20,^ = 25, c.f. = 13, f = 17, i = 10
2S-1 3
Me = 20 + - X 10
= 20
17 12x10
Hence, Median is 27.05 marks. Third Quartile
17
= 27.05
n
v4y
item = ^^ = 37.5* item
Qj = size of
Hence, Q^ lies in class 40-50 Applying suitable formula, we get
/XT
/ Nl
Qs = K +
v4.
-c.f.
f
X/
3
13 30 37 43
47
49
50
202
. where, = 40,
= 37.5, c.f = 37, f= 6, i = 10
03 = 40.^^,10
. 40 . = 40.83
Hence, third quartile is 40.83 marks.
Illustration 18. Calculate the Median and Quartiles for the following : Marks (below) :
10 20 30 40 50 60 70 80 No. of Students : 15 35 60 84 96 127 198 250
Solution. Before calculating Median and Quartiles, first we convert the given
cumulative frequencies into class frequencies :
[ W. of^tttdentfi
0-10
15
15
10-20 20
35
20-30 25
60
30-40 24
84
40-50 12
96
50^60
31
60-70 71
198
70-80 52
250
127
Total 250
Median. Applying formula, we get
( N^^
Median = size of
v2.
250
Item = - = 125* item

Hence, median hes in class 50-60 Applying suitable formula to get median :
Me = /, + 2
f
Xt
where / = 50,
N
= 125, c.f = 96, f= 31, i = 10 125-96
2
Me = 50
= 50 +
31 29x10
31
- X 10 = 59.35
;. '.Hence, median is 59.35 marks.
i
Tl
in a
Positional Average and Partition Values First Quartile
rN
2)
Nth
item =
250^
Q^ = size of
Hence, Q, lies in class 30-40. Applying suitable formula, we get
E^cf.
= 62.5* item
Xt
62.5-60
= 30 +
X 10
. 30 . ^ 31.04
24
Hence, Q, is 31.04 marks. Third Quartile
fN
th
r250
4J
Q, = size of -J- item =
Hence, Q, lies in class 60-70. Applying suitable formula, we get
4.
= 187.5* item
Q3 = ^
f
XI
203
r"
Hence, Q, is 68.52 marks.
Thns, Q, = 31.04, Q. = Median = 59.35 and Q, = 68.52 marks.
nlustarion 19. The following series relates to the da,ly income of workers employed
in a firm. Compute
(a)
highest income of lowest 50% workers,
(b)
minimum income earned by the top 25% workers, and
(c)
maximum income earned by lowest 25% workers.
204
25-29 30-34 35-39 20 10 5

Daily Income (in Rs) : 10-14 15-19 20-24 Number of workers :
10
15
Before solving it let us understand the question.

1.
As the data are of inclusive class intervals, we are required to convert the
classes into class boundaries.
^.lasses
2.
The data is arranged in ascending order, where
Area of 50% of workers in highest income group

At this point a worker in the centre earning highest daily income of the lowest 50%
of workers (;.e., Median value)
3. The data is arranged in ascending order, where
- 100% data
--------1_ .
H-4 At this point a worker is eaming minimum daily income of top 25% workers .4.Area of top 25% of workers
4. The data is arranged in ascending order, where
Area of lowest 25% of workers
At this point a worker is earning maximum daily income of lowest 25% workers
(i.e. lower quartile value = O,)
qutdln"'
^^
^^^ ^^^
to the given
Positional Average and Partition Values SoiutLoa.

205
DaUy Income (m (X)
9.5-14.5 14.5-19.5 19.5-24.5 24.5-29.5 29.5-34.5 34.5-39.5
5 10 15 20 10 5
5
15 30 50 60 65
(a) Computation of highest daily income in lowest 50% of workers. (Median)
Nth
Median is the value of

th
(65\
item or
Uv
I2j
or 32.5th item which lies in 24.529.5 class interval.

Applying suitable formula to get median value,
N
Me = /j +
-c.f.
Xt
= 24.5 + = 24.5 +
f
32.5-30 20 2.5x5
x5
20
= 24.5 + 0.625 = 25.125 .-. Highest data income of lowest 50% workers is Rs 25.13.
(b) Computation of minimum daily income earned by top 25% workers (Q^)
th
3x65
^ l\
Q, = Value of item =
Hence, Q3 lies in class 24.5 - 29.5. Applying suitable formula, we get
.T,
= 48.75* value
Qs = ^
-c.f.
f
Xt
48.75-30 _ = 24.5 + -TT-x^
= 24.5 +
20 18.75x5 20
= 24.5 + 4.687 = 29.187 Minimum daily income earned by top 25% workers is Rs
29.19.
It,f
Statistics for Economics-XI (c) Computation of maximum daily income earned by
lowest 25% workers (Qj)
Qi = Value of
UJ
item = 4r = 16.25* value
Hence, Q^ lies in class 19.5 - 24.5 Applying suitable formula, we get
Q. = ^
f
XI
= 19.5 + = 19.5 +
16.25-15
15 1.25x5 15
x5
= 19.5 + 0.416 = 19.916 Maximum daily income earned by lowest 25% workers is
Rs 19.92.
Graphical Determination of Median and Quartiles
Illustration 20. Determine median and quartiles graphically from the following data :
Marks : 0-5 5-10 10-15 15-20 20-25 25-30 30-35 35^0 Students : 7
10 . 20
13
17
10
14
9
Solution.
Secc
Akrrifes
. . f Mjr/fes less than
More than cumulative
0-5
100
5-10
10
10
17
93
10-15 20
15
i7
10
83
15-20 13
20
50
15
63
20-25 17
25
67
20
50
25-30 10
30
77
25
33
30-35 14
35
91
30
23
35^0 9
40
100
35
Less than cumulative
Marks more than
N = 100
First Method (only for median). Steps
1.
Calculate ascending cumulative frequencies (less than) and descending
cumulative frequencies (more than).
2.
Draw two ogivesone by 'less than' and other by 'more than' methods.
3
4.
5.
3.
From the intersecting point of two ogives, draw a perpendicular on X-axis.
4.
The point where perpendicular touches X-axis, median value is determined.
207
Second Method (For Median and Quartiles). Steps
1.
Calculate ascending cumulative frequency (less than).
2.
Determine the value by the following formulae :
Me = size of
Qj = size of
Q = size of
th
UJ
item, i.e., ^^ = 50* item

u
Item, i.e..
N4
th
Item, i.e..
100 4
3^100^
= 25* item = 75* item
V^/
3.
Locate 50, 25, 75 values on Y-axis and from them draw perpendiculars or
cumulative frequency curve (ogive).
4.
From these points where they meet the ogive draw another perpendicular
touching X-axis.
5.
The points where perpendicular touches X-axis, Qj, Me and Q^ are located.
208
VehficaUon
Median Group 15-20
Me = /j +
NU
-cf
f
Xt
50-37 ^
13x5
Median = 20 Marks Lower Quartile Group 10-15
-cf
XI
25-17 = 10 + -X 5
- 10
20 8x5
20
Qi = 12 Marks.
= 12
Upper Quartile Group 25 - 30
-cf
xt
ic 75-67 ^ 8x5
= 25. .29
Q, = 29 Marks
Less than method' cumulative frequency curve is the reminder of the rule that at
the
hrst step of calculation of quartiles, the data is arranged in ascending order.

Howeven
median can be ocated on graph even by more than 'ogive' or calculated by
arranging the data m descending order.
^hb^
209
1.
Definition
2.
Determination of Mode
3.
Merits and Demerits of Mode
1. Definition
According to Coxton and Cowden, "the mode of distribution is the value at the point
around which the items tend to be most heavily concentrated. It may be regarded
as the
most typical of a series of values."
x/r j
The word mode comes from French la mode which means the fashion Mode in
statistical language is that value which occurs most often in a senes, that is value
which is most typical. If garment manufacturers say that short collars are now in
fashion the statement implies that maximum number of people now-a-days wear
short collar shirts If we say the mode is size No. 7 shoe, it means in a given data
maximum number of people wear size No. 7. Thus, mode is that value of
observations which occurs the greatest number of times or with the greatest
frequency.
For a better understanding of mode let us look at the following information about
frequency of students in relation to marks obtained.
Marks : 5 10 15 20 25 30 35 40 45 50 : 2 3 25 2 1 18 20 24 14 10
According to the explanation of mode given above, the modal marks will be 15
because maximum number of students (25) have obtained 15 marks each. Although
15 have the highest frequency, a more careful examination of the information
shows that the highest concentration of the frequency is around 40 marks. That is,
m the neighbourhood of 40 marks. There are more frequencies (18, 20, 14, 10) as
compared to the neighbourhood of 15 marks (2, 3, 2, 1). Thus 15 marks are not
^yp.c^/ of the series of valLs. For the reasons given above, 40 marks is the mode
and not 15. Therefore, to define accurately, mode is that value of observations
around which items are most densely
or heavily concentrated.
The mode is defined as the most frequently occurring value. If each observation
occurs the same number of times, then there is no mode in that distribution. If two
or more observations occur the same number of times (and more frequently than
any other observation) then there is more than one mode and the distribution is
multi-modal, as against uni-modal, where there is one mode. If two values occur
most frequently then the series is bi-modal, in case of three values occurring most
frequently then the series is called tri-modal. The mode as a measure of central
tendency has little sigmficance for a bi- or
"Mode is that value of the graded quantity at wh,ch the instances are most
numerous. " -A.L. Bowley "The value occurring most frequently in a senes (or group)
of Hems and around which the other itemâr^ distributed most densely."
210
Statistics for Economics-XI - -
.oae ..
2. Determination of Mode
(a)
Series of Individual Observations and Discrete Series
(b)
Continuous Series
(c)
Graphic Location of Mode
id) Mode from Mean and Median.

(a) Series of Individual Observations and Discrete Series
In a senes of individual observations, the mode can be located in two ways
"
--
a cl^r"""
^^st
^^ ^^^
Marks : 4 6 5 '
in
98
Solution.
10 4 7 6 5 Modal value
8
7
-rks obtamed by 15 students i
7
7 8 8 9 9 10.
(a) (i) Array : 4 4 5 5 6 6 : Mode = 7 Marks
() Discrete Series. Converting the above data into discrete series, we get
Mode = 7 Marks
(b) Discrete Series. In discrete series the mode can be located by two ways :
(i)
By Inspection.
(ii)
By Grouping.
(i) By Inspection. The mode can be determined just by inspection in discrete series,
the size around which the items are most heavily concentrated will be decided as
mode. Illustration 22. Find out mode from the following data :
Wages (in Rs)___
125
3-
175
225
21
275
325
375
' No.- of Persons
Solution. By inspection, we can determine that the modal wage is Rs 225 because
this value occurred the maximum number of times, i.e., 21 times.
{ii) By Grouping. In discrete and continuous series, if the items are concentrated at
more than one value, attempt is made to find out the item of concentration with the
help of grouping method. In such situations it is desirable to prepare a grouping
table and an analysis table for ascertaining the modal class.
In grouping method, values are first arranged in ascending order and the
frequencies against each item are properly written. A grouping table normally
consists of six columns Frequencies are added in twos and threes and total are
written between the values. It necessary, they can be added in fours and fives also.
Column 1. The maximum frequency is observed by putting a mark or a circle.
Column 2. Frequencies are grouped in twos.

Column 3. Leaving the first frequency, other frequencies are grouped in twos.
Column 4. Frequencies are grouped in threes.
Column 5. Leaving the first frequency, other frequencies are grouped in threes.
Column 6. Leaving the first two frequencies, other frequencies are grouped in
threes.
After observing maximum total in each of these cases, put a mark or circle on every
total. An analysis table is prepared after completing grouping table in order to find
out the item which is repeated the highest number of times. If the same procedure
is adopted in continuous series, we shall be in a position to determine the modal
class.
We shall now see how mode is determined by grouping method in a discrete series.
212
Statistics for Economics-XI Illustration 23. Find out mode of a data given in
Illustration 20 by grouping.
Grouping Table
Wages (m Rs)
<l)
125
No. of persons
(3)
'
(6)
11
175
225
21
32
29
27
275
325
ii
35
31
10
12
Analy.sis
Table
6
375
Column No. 125
" 225- -
275,
32S
1
2
3
4
6
Total 1
^^ Smce the value 225 has come largest times, 6 times, hence the modal
visage IS
lUustration 24. Compute the mode from the following :
Size of the item .- 2 3 4 5 6 7 8 9 10 11 12 13
Frequency- : 3 8 10 12 16 14 10 8 17 5 4 i
beW
^^^ be done as shown
lics-XI
213
Grouping Table
2
10
12
16
14
10
10
17
11
12
13
11
22
30
18
22
J:
18
28
21
24
25
_42
35
10
30
40
30
38
26
The analysis can be done separately also as shown below :
!
12
3
4
5
6
Total
to
1
m
32 I
It
j The value of 6 has come the largest times (5), hence mode is 6.
12
531
13
^
214
(b) Continuous Series
applying the following formula? " determined by
Mo = I +
or
Mo = / +Xt
ifl~fo) + {fl~f2)
X /
where, Mo = Mode
/j = lower hmit of modal class /", = frequency of the modal class /o = frequency of
the class preceding the modal class = frequency of the class succeeding the modal
class i = class interval of the modal class
The above formula can also be expressed in the following way :
or
Mo = Mo = /j +
X/
A1+A2
"/"i-Zol + l/i-Zil
Xt
where. Mo = Mode
/j = lower hmit of the modal class
modal class and the frequency of the class before the modal class . precedmg class
(ignoring signs)
'"
A, = (Read delta 2), .. \f _ f^l Jhe difference between the frequency of the
niustration 25. Fmd out the mode from the following frequency distribution Central
snes : 1 , 3 , ^ ^ ^ ^
^^
Frequency ; g ^
10
12 20
12
215
Solution. Since the central sizes are given, we must convert them into class
intervals.
Grouping Table
Qass Imervai
0.5-1.5
1.5-2.5
2.5-.3.5
3.5^.5
4.5-5.5
5.5-6.5 6.5-7.5
7.5-8.5 8.5-9.5
9.5-10.5
(V
6
10
12
20
12 5
32
14
22
32
16
32
17
24
44
10
28
37
Analysis Table
42
20
123456
111 11111
Total 1
111 1
By Inspection Mode lies in the group 4.5-5.5. To determine the value of Mode, we
should apply the following formula.
fi-fo
Xt
where, /j = lower limit of the modal class (4.5) /j = frequency of the modal class (20)
216
fo = frequency of the class preceding the modal class (12) fi = frequency of the
class succeeding the modal class (12) i = class interval of modal grdkp (1)
20-12
Mo = 4.5 + = 4.5 +
= 4.5 +
2x20-12-12 8
X1
40-12-12 8
X1
16
Mode = 4.5 + 0.5 = 5. Illustration 26. Find the mode of the distribution from the
following data :
Below 15
20
10
. ........
" 25
26
" 30
38
" 35
47
40
52
" 45
55
Solution. For calculation, mode of the given distribution first convert the given data
into class intervals.
Grouping Table
10-15 15-20 20-25 25-30 30-35 35-40 40-45
3
10
23
16
28
12
21
14

217
Analysis Table
Column No. lOÎS 15-20 20-2S 25-30 30-3S 35-40
123456
111 11111
1111
Total 1
11
The mode lies in the class 20-25. Applying the formula, we get
fi-fo
where.
Mo = /, +
^XI
/j = 20,/j = 16,/; = 7,= 12, I = 5 16-7

Mo = 20 +
2x16-7-12
X5
= 20 + ^ X 5
= 20 + 3.46 Mode = 23.46
Mode when Class Intervals are Unequal
The formula to calculate the mode from the modal class discussed above, is
apphcablt in a series where there are equal class intervals. When the class intervals
are not equal, before calculating the value of the mode, we must take them equal
and the given frequencies should be adjusted presuming that they are equally
distributed throughout the class.
Illustration 27. Compute the mode from the following data :
Class Frequency
Class Frequency
0-3
3-6
6-10
10-12 12-15 15-18
10
14
16
20
18-20 20-24 24-25 25-28 28-30 30-36

24
14
16
11
10
218
Solution. The class intervals are not equal. They are made equal by combining two
or more classes.
Grouping Table
Class Frequency
(1)
0-6
; a; ;
(V
(4)
4 + 8 = 12
(V
(6)
-]
36
6-12
10 + 14
= 24 -
-1
72
60
12-18
-
16 + 20 .
= 36
74
18-24 24 + 14
98
= 38 -
75
24-30 16 + 11 + 10
= 37 -
Ill
_
43
30-36
=6
Analysis Table
Column No. 6-12
18-24 24-30 30-36
1 2 3 4 5. 6 1
111 11111
Total 1
111 1
The mode lies in the class 18-24 Applying the formula, we get
X/
where
/j = 18, f^ = 38, / = 36, = 37, i = 6 38-36
Mo = 18 +
2x38-36-37
X6
81
= 18 + J X 6 = 18 + 4 = 22. Mode is 22.
219
(c) Graphic Location of Mode
The value of mode can be determined graphically in a frequency distribution.
Followmg
are the steps of locating mode on graph.
1.
Prepare a histogram of the given data.
2.
The highest rectangle will be the modal class.
3.
Draw two lines diagonally inside the modal class rectangle to the upper
corner of the adjacent bar.
4.
From the point of intersection of these lines, draw a perpendicular of X-axis
which gives the modal value.
Illustration 28. Determine the value of mode of the following distribution graphically
and verify the results.
10-20 20-30 30-40 40-50 50-60 12
14
10
Marks
No. of Students Solution.
.0-10 5
GRAPHIC LOCATION OF MODE
Scale: 2 cm = 10 Marks on X-axis 1 cm = 2 Students on V-axis
30 40 MARKS
Verification :
Mode lies in the class 20-30
Mo = /, +
' Ifi-fo-fi
X i, where = 20, f^ = 14, f, = 12, f^ = 10, / = 10
Mo = 20 +
14-12
2x14-12-10
X 10
= 20 + X 10 = 20 + 3.33 6
Mode = 23.33 Marks.
220
is
^ ^"'Tt't
luchZt?
u"
^ ^ perpendicular,
^^^ the per^ndicular
touches the X-axis, gives the modal value. Mode cannot be determined graphicSSy
if two
id) Mode from Mean and Median
(vJ'uvrj'^l't T'r
intl W^
of
distribution curves in Chapter 7'
a symmetrical distribution mean, median and mode are
orZZ Ll ^fl ^^ ' distributicm of frequencies on either side of the maximum;

vakr.L h I 1
^^ber of cases above the mean
value and below the mean value are equal. This relationship does not exist in
moderately
'
will pullâ^lt
Asymmetrical Distribution, (Negatively Skewed Curve)

Negative
X < Me < Mo
Symmetrical Distribution, (Bell-Shaped Curve) Peak
Asymmetrical Distribution, (Positively Skewed Curve)
Positive
X = Me = Mo
Mo < Me < X
of tie (^'^^^"caly distribution, if the distribution tails off towards higher value
lit r conint r" ""'T
^ ^^'-s, positively skewed) and ha
greater concentration m lower values mean and median will be more than the Lde
(X
and Me > Mo). In other words, mode is lowest, i.e., X > Me > Mo.
valufbf Ae^dl'Vyi"^^^^^ distribution, if the distribution tails off towards lower
value of the data and has greater concentration in higher values, (i.e., negatively
skewed),
mean and nêdian are less, then mode (X and Me < Mo). In other words, mode is
highest,X < Me < Mo.
The relationship between mean, median and mode reveals that in a moderatelv
assymetrical (skewed) distribution the median lies between the mode and the
arS^Sc mean, approximately 2/3rd distance from the tpode and l/3rd from the lafTS
relationship is expressed as follows which is given by Karl Pearson
Positional Average and Partition Values 221
Mode = Mean - 3(Mean - Median) = Mean - 3 Mean + 3 Median = 3 Median - 2 Mean
Mo = 3 Med - 2X
In most of the cases if the distribution is moderately asymmetrical, the value of
mode calculated from mean and median would not differ significantly from the
value calculated by other methods. Inhere may be two values in a series which
occur with equal frequency, this IS called b,-modal series. In case of bi-modal
distribution or mode is ill-defined, its value may be determined by the above
formula which is based upon the relationship of mean median and mode. If we know
any of the two values out of the three, we can calculate the third value from the
above relationship.
Dlustration 29. {a) In an asymmetrical distribution mean is 58 and the median is 61
Calculate mode.
{b) If mode in a tolerably asymmetrical distribution is 12 and median is 16, what
would be the most probable mean?
Solution.
Mode = 3 Median - 2 Mean = (3 X 61) - (2 X 58) = 67
Mode = 67.
Mode = 3 Median - 2 Mean
12 = (3 X 16) - 2 Mean 12 = 48 - 2 Mean 2 Mean = 48-12 = 36

Mean = ^ 2
= 18
Mean =18.
musttation 30. The following table gives production yield in kg per hectare of wheat
ot 150 farms m a village. Calculate the mean, median and mode production yield.
Production (in kg) : 50-53 53-56 56-59 59-62 62-65 65-68 68-71 71-74 74-77
No. of farms : 3 8 14 30 36 28 16 10 5
222
Solution.
Production
--
No. of terms f
yield X
Midpoints m m - 63.5 d
I 3 ) d'
fm-63.5]
fd'
c.f
50-53 53-56 56-59 59-62 62-65 65-68 68-71 71-74 74-77 3 8 14 30 36 28 16 10 5

51.5 54.5 57.5 60.5 63.5 66.5 69.5 72.5 75.5 .
-12 -9 -6 -3 0 +3 +6 +9
+12 -4 -3 -2 -1 0 +1 +2 +3 +4
-12 -24 -28 -30 0 +28 +32 +30 +20
3 11
25 55 91 119 135 145 150
N = 150 - i
lfd' = 16
Median :
N
= 63.5 + 0.32 = 63.82 Mean = 63.82 kg per hectare
' \7\th
Median = the size of f
Item
150
th
Item
= the size of
V2
= the size of 75* item Median hes in group 62-65.
To interpolate median, we use the following formula :
N
T -C.f.
Me = /, +
f
where.
N
/, = 62, = 75, c.f =55, f= 36. i =
75-55
Mode
= 62
36
x3
= 62 + 1.666 = 63.67
Median = Rs 63.67 kg per hectare
Grouping table
Analysis Table
223
Rupees
X
(V
No
(2)
(V
(4)
. of receiver
iS)
50-53 3
53-56 8
56-59 14
11
25
59-62 30
22 . if
44
62-65 36
80
66
65-68 28
64
94
68-71 16
44
71-74 10
26
74-77 5
1
54
i!0
31
15
Column No. 59-62 62-65 65-68 68-71

123456
111 -111111 1111
Total 3
224
^Jy .nspection the o,ode hes i the group
applying the Mowing formula, we
Mo = L + _fi~fo_
1 _/_
Xi
Here,
2fi-fo-f2 I, = 62, f^ = 36, / = 30, f^ = 28, / = 3
36-30
Mo = 62 +
= 62 +
2x36-30-28
x3
14
= 62 + 1.285
x3
Mode = Rs 63.29 kg per hectare.
3. Merits and Demerits of Mode Merits
compared to mean LSian Infô f A?""' " most typical and cogent ues orr ^rm^^
2.
Mode is not A i.
''
of shoes etc. vduts L nottt."'' " if the extreme
3.
Mode- can be determined in open-end distribution.
""
-hmetic mean can not be ascertained
5. Mê is helphU in describing the quaUtative character of the product

Demerits
1.
Mode cannot be decided in bi-modal and multi-modal distributions
2.
Mode . not sm^table when relative importance of itemst fctaT
tnt
" "Ot c:;a'ble of algebraic
4. Mode is not based on every item of the series.

-
-- may differ .om one
"Lg"' " Ae size of the class interval decided

Comparison of Mode with Mean and Median
We find that as compared to mean and median, mode is less suitable. Mean is
simple to calculate, its value is definite, it can be given algebraic treatment and is
not affected by fluctuations of samphng. Median is even more simple to calculate
and is almost as stable as mean, although it is influenced by fluctuations and
cannot be given algebraic treatment. Mode is the most popular item of a series and
is also easy to calculate and simple to understand. But it is not suitable for most
elementary studies because it is not based on all the observations of the series and
is unrepresentative. Mode has its own uses and advantages as we have seen, but as
compared to mean and median, it is not so precise and accurate.
OF FORMI
Individual Series and Discrete S
1. Median Me = Size of
fN+l^
V2
th
Item
2. Lower Qj = Size of Quartile
3. Upper Qj = Size of Quartile
fN + 1}
th
I4;
rN+n
Item
4J
th
Item
Me = Size of
th
Item
X, I N/2-c.f. Me = /j + --j. X I
Qj = Size of
l4j
Item
Q3 = Size of
f
fN
.4;
Item
Q3 = + f
'
Mode :
1.
Grouping method for discrete series.
2.
After grouping, decide the Modal Group and use the formula to find modal
value in continuous series
Mos:
Xf
226
exercises
Questions :
Define median. Discuss ks merits and dements.
3
wTT """"
-1-s.
5. Write short notes on :

4
De&rr"'?'
of a dismbution.
"
can be read W ,be
--
5. What is meant by the following ?

(a) Mode (b) Median, and (c) Anthmetic mean
7. Deftne mode. Explain how mode can be read on graph paper> nrâft
and
tendency
-.an
"raTr^ndelf ^
-d,a as measures of
and mode of a frequency

" rtrsLr ^^ -- - --<b) Average inrelligence of srudents in a 'class, and (c) Average production per shift
in a factory .
Median W Arithmetic Mean]
Problems :
Calculate median of the following data :
145
257
130 260
200 300
210 345
198 360
234 390
159
160
178
Fmd out median of the following information : Marks : 10, 70, 50, 20, 95, 55,
42,
[Me = 210]
60, 48, .80 [Me = 52.5 marks]
Positional Average and Partition ^^ûes
227
'e have the following frequency distribution of the size of 51 households. Calculate
the arithmetic mean and the median.
; Size Number of households :
4./Find out median (a) Serial No.
4
9
21
11
75
Total
51
10
15
5--
10 -
15
20
25
10
[X = 5, Me = 5]
6 20
7 12
25
9 30
..........[Me (a) = 12, (b) = 20]
out median, furst quartile and third quartile of the following series :
Height (in inches) : 58; 59 60
No. of Persons 2 3 6
/?
61 ^62 63,. 64 ' 6^ 66
15 10 .5 4 3 1
[Me = 61, Q, = 61 and Q3 = 63]
6.
/The percentage of marks obtained by 68 students in an examination are
given below - ' Compute the median.
= Below 20 20^0 40-60 60-80 Above 80 No. of Students : 0
16
_^,,,
[Me = 65.6]
22
25
7.
Calculate the meanof the following distribution of daily wages of workers in a
factory:
Daily Wages (in Rs) : 100-120
No. of Workers
: 10
140-160 160-180 180-200 Total
30 15 5
80
41so, calculate the median for the distribution of wages given above.
./
[X = 146.75, Me = 146.67]
8./The following table gives the marks obtained by 65 students in statistics in a

certain examination. Calculate the median.
More than 70%
60%
18
50%
40
40%
45
" - 30%
20%
63,)
10%
65
50l
[Me = 53.4 Marks]

228
j .
26 8 ^ 2 50
j 16-19
20-29 30-39 40-49 50-59 60-64
1 ^^ 46
49
32
28
14
iiicuian or tne above data,
(ft) Draw a histogram and indicate mean and mode therein.

Get Mode on Histogram. Mean cannot be obtain!? o^ HiLl^^rT:'
30-35 14
35-40 16.
40-45 18
Compute mode from the following series :
45-50 50-55 55-60 60-65 23
18
[Me = 45.43, Q, = 38.4, Q^ = 51.1]

Size of items Frequency Size of items Frequency
1 3 8 10
3898
4 10 10 17
5 12 11 5
6 16 12 4
13.
Calculate mode for the following data
7 14 13 1
[Mo = 6]
1
26
113
120
95
60
42
21
14
10
[Mo = 3]

229
^înd out the Mode from any of the following two distributions :
X : 30-40
40-50 50-60 60-70 70-80 80-90 90-100
f 6 10 16 14
10
5.
And
Marks : 0-9 10-19 20-29 30-39 40-49
No. of Candidates : 6
Marks : 50-59
29
87
181
247
60-69 70-79 80-89 90-99
No. of Candidates : 263 113
49
is/uk of electric lamps is given in the following table. Calculate the median and the
mode.
Below 400
400-800
12
800-1200
40
1200-1600
41
1600-2000
27
2000-2400
13
2400-2800
Above 2800
4
[Mo
:e Mean, Median and Mode from the following data :

59
61
63
65
48
67
131
69
102
71
40
73
17
Total 350
[X= 67.9, Me = 67.75, Mo = 67.48]

i Followiiig is the distribution of marks of 50 students in a class : [Marks (Kore than) :
o\
10
20
30
40
50
50 \
Calculate theNMedian Marks. If^60% of students pass this examination, find out the
I minimum marl^btained by a pass tandidate. .
[Me = 27.5, 25.5%]
46
40
20
10
230
j .
32 20 43 11
61 31 47 .15
52 56 64 20 35 21 50
22 10 43 42
49 62
75 77
persons is
' 97
given below :
35 30 30
95
60
27 53 31
45
22 36 13
46
73
81 40 40
55
67 54 23
42 25 51
modal age.
19. Determine the value of mode for the foil ^
Mode = 3, Median = 2 M^n
= ^^
21.
[Modal age = 42 years]
Ma
No. of Students
Less than 10 Less than 20 Less than 30 Less than 40 Less than 50 Less than 60 Less
than 70 Less than 80 Less than 90
5 15 98 242 367 405 425 438 439
20.
c1,
LA = jy.j:). Me = SX 44
For the data given below find graphically the folWing

[a)
The two quartiles. '
(b)
The central 50% limit of the age
'
W The nnntber of workers falhttg ,n .he age gronp of 2S to 57 .ears

Mo = 36.22]
Age in years 20-24
iVo. of workers
Age in years :
50-54
No. of workers
: 23
25-29 10 55-59 10
30-34
15 60-64 5
35-39
25 65-69 2
40-44 65
45-49 40
Draw a -less than' ogtve front the following data and hence find out the value of
Class
20-25
25-30
30-35
35-40
40-45
45-50
50-55
55-60
Frequency
6 9 13 23 19 15 9 6
231
253
22.
The following table gives the distribution of the wages of 65 employees in a
factory.
Wages (in Rs)
: 50 60 70 80 90 100 110 120
(Equal to ormore than)
" ^^0
Number of employees
65 57 47 31 17 7 ' 2 q
23.
Draw the histogram and estimate the value of mode from the following data :
Marks No. of students

0-10
10-20 2
20-30 3
30-40 7
40-50 13
50-60 11
60-70 9
70-80 2
80-90 1
24. Represent the following data by means of a histogram and find out mode.
Weekly wages : No. of workers :
10-15
7
15-20 19
20-25 27
40-45
25-30 30-35 35^0 , 15 12 12 8
W
indîdual incomes, the 'less than type' Ogive and the
;:. 7i?'r ti!^ ^sir ^^ -Chapter 10

measures of dispersion
Introduction
Objectives of Measuring Disperelon Metliods of Measuring Dispereion
(A)
Dispersion from Spread of Values
(B)
Dispersion from Average
(C)
Graphic MetiiodLorenz Curee Absolute and Relative Measures of
(A)
Absolute Measures
(B)
Relative Measures Graphic Method
Comparison of Measures of Dispersion List of Formulae

.eafr^r:?:-^^^^^ -- a single figê. These
the form of an average. These av^Les Sf
uf frequency distribution in
magnitude of the distriLion but ZrS tfir ^^put the general level of Measures of
central tendency aê somî^r^^^^^
happens when the extent of variationf îZl f ^his
relation to the other values is lajr^n any ^^^^^^^^
? ^^ -
not only to know the average

ôw about the measures of
He knew that the average depth of the r^ter w^ Too 1 uTl'
family was 130 cm. Hef therLre decidl7thTh Tu""^" ^^ his

mer on foot. But it so Wpenâf hf ma^^^^^
Ae height of youngest childôf the
^^
^s^v 12? m W
had happened to the statistician famity
^^
^^
""
^^^t must
r-^ -7 ^^ there may be great may be below poverty line. TTiere ifnTed to nt
^^^ôf a majority of the people
233
Definitions
According to D.C. Brooks and W.F.L. Dick. "Dispersion or spread is the degree of the
scatter or variation of variables about a central value."
According to Prof. L.R. Connor. "Dispersion is a measure of the extent to which the
individual items vary."
According to A.L. Bowley. "Dispersion is a measure of the variation of the items."
Now, look at the following data about salaries paid to employees of three different
departments of an organisation.
Dept. A
Deviation
t. B
mmmmi
Dept. C
Deviation
fWf
MS
5000 5000 5000 5000 5000
00000
4500 5500 6000 5000 4000
- 500 + 500 + 1000 0
- 1000
10000 2000 4000 4500 4500
5000
-
3000
1000 - 500 -500
Total : Mean X :
25000 Rs 5000
25000 Rs 5000
25000 Rs 5000
We find from the above table that the average salary paid to employees in each
department is the same, i.e., Rs 5000. In department 'A' the salary paid to each
employee is the same, i.e., Rs 5000, hence mean is fully representative of the
values of the items in the series. In department 'B' though the mean is Rs 5000, but
the constitution of series is quite different. In this case lowest value is Rs 4000 and
the highest value is Rs 6000 and the difference between the highest and the lowest
value is Rs 2000, and the highest deviations from the mean are -1000 and +1000.
The mean in this case, does not adequately represent the values of the items in the
series of department 'B'. In department 'C though the mean is the same, but there
is wide gap between the values of items. The lowest value is Rs 2000 and the
highest value is Rs 10,000, which deviate from mean by -3000 and +5000
respectively. The difference between the highest and the lowest value is Rs 8000.
Not a single item in the series is represented by its mean.
From the above illustration we observe that some deviations are positive and some
are negative. Similarly, some deviations are large and others are small. Therefore,
we are required to make an overall summary of these differences (scatteredness) in
all values about the central value. This summary is called the measures of
dispersion or measures of variation. It is clear that we must not only know the
composition of a series but also observe how the composition of a series differs
from another. For such a study we have, a statistical tool called measures of
dispersion or measures of variation.
,
234
j .
|bjectives of measuring uispmm

Before we go on to describe the specific methods of studying variabihty, we must
clearly define the objectives.
ia) To Test the Reliability of an Average : Measures of dispersion enable us to know
whether an average is really representative of the series. If the dispersion of
variabdity m the values of various items in a series is large the average may be
unrepresentative of the series. If on the other the variability is small, the average
would be a representative value. This point has already been made clear in the
above dlustration, wherein different series of three departments the mean was a
common value and the variations differed.
(b)
To Serve as Basis for Control of Variability : The study of variation is done also
for the purpose of analysing why large variations happen or occur and this may help
to control the variation itself.
For example, in some major human health problems the blood pressure, the heart
and pulse beat are recorded and an attempt is made by the doctors to control these
through provision of medicines. Similarly, in industrial production to control the
quality of the product and the causes of variations in product are obtained by
inspection and quality control programmes. In social sciences where we have to
study problems relating to inequality in income and wealth, measures of dispersion
are of great help.
(c)
To Make a Comparative Study of Two or More Series : Measures of variability
are also useful in comparing two or more series with regard to disparities or
differences. A greater degree of dispersion or variability would mean lack of

uniformity or consistency or homogeneity of the data. While a low degree of
variability would indicate high uniformity or consistency or stability. Comparative
studies of varmbihty are very useful in many fields like profit of companies, share
values, performance of individuals and studies relating to demand, supply and
prices, etc.
id) To Serve as a Basis for Further Statistical Analysis : Measure of variability which
IS measure of second order is very useful in the use of higher measures such as
skewness, kurtosis correlation, regression etc.
Note: Characteristics of a representative average are explained on Page 139 and
140 ot this Book. Same points are for characteristics of a good Measure of
dispersion.
Following are the important methods of measuring dispersion :
MÔDS OF MEASURING OlSPERSiON
i
from Spread ilues
Range
Interquartile Range and Quartile Deviation
from
IMean Deviation or Average Deviation Standard Deviation
Method-Curve
235
First two measures, viz.. Range and Quartile Deviations are from spread of values,
termed as positional measures. They are calculated from the values of the variable
at a particular position of the distribution. They are not based on deviations from
any particular value. While the mean deviation and standard deviation are from an
average defined in terms of deviations from a central value. Lorenz curve is graphic
method of studying dispersion/variability.
Measures of dispersion in terms of spread and position are as under :
(A) Dispersion from Spread of Values
(a)
Range
(b)
Interquartile Range and Quartile Deviation
(a) Range
1.
Meaning
2.
Calculation of Range
3.
Merits and Demerits of Range
4.
Uses of Range
1. Meaning
Range is the simplest measure of dispersion. Range is the difference betu/een the
largest and the smallest value in the distribution. It is determined by two extreme
values of observations. In case of the grouped frequency distribution range is
defined as difference between the upper Hmit of the highest class and the lower
limit of the smallest class. In case of a frequency distribution, the frequencies of the
various classes are immaterial since range depends only on the two extreme
observations. Range as defined is an absolute measure of dispersion and expressed
in the units of measurement of the given data. Thus if we want to compare the
variabihty of two or more distributions with the same units of measurement, we
may use absolute measure. Symbolically, range is located by the following formula :
Range = L - S
where,
L = Largest item
S = Smallest item
Relative Measure
To compare the variability of two or more distributions given in different units of
measurement, we cannot use absolute measure but we need a relative measure
which is independent of the units of measurement. This relative measure is called
coefficient of Range. It is common practice to use coefficient of range even for the
comparison of variability of the distributions given in the same units of
measurement. It is obtained by applying the following forniula :
Coefficient of Range =
L-S L + S
236
j .
Range = L-S Here, L = 30, S = 5
Range = 30 - 5 = 25 Range is 25 Marks. Coefficient of Range

= kzS
L + S _ 30-5 30 + 5 = 0.714
.11 ^35
Range = L- S Here, L = 60, S = 0
Range = 60 - 0 = 60 Range is 60 Marks. Coefficient of Range
= IlzI
L + S _ 60-0 ^ 60 + 0 = 1
Age (in year) : l^ô
21-25 26-30 31-35
No. of Persons : 10 15 17
Calculate range and the coefficient of range. ^
last class will become 30 5 - 35.?
Absolute Measure of Range
" ^^^ ^ '
au , r
Range = L-S Alternatively (from mid-values)

T,
Mid-value of highest class =33
..Range = 35.5-15.5 = 20 years .. Range = 33 - 18 = 15 years.

ai
ci
Relative Measure of Range
237
Coefficient of range =
L-5 L + S
35.5-15.5
20
= 0.39
Alternatively Coefficient of range ^ 33-18 _ 15 _ 0 29 33 + 18 ~ 51

~ 35.5 + 15.5 51
Illustration 3. The following are the marks obtained by 50 students in Statistics.
Calculate the range of marks obtained by middle 50% of the students.
. Marks
No. of Students
Less than 10 4
Less than 20 10
Less than 30 30
Less than 40 40
Less than 50-
47
Less than 60 50
Solution. We arrange the data in continuous series.
Np. of Students
0-10
10 - 20
10
20 - 30
20
30
30-40 10
40
40 - 50
47
50 - 60
50
lb get marks ot miame ou /o stuucms, wc ît ..v, ----------------- and 37.5* student (i.e., 1- and 3 Quartiles) Q, and Q,. Marks of 12.5* student hes
m class 20 - 30 and marks of 37.5* student in class 30 - 40.
U.S'^-c.f.
Marks of 12.5* student = l^ + ^
Xt
20
= 20 + ^ X 10 = 21.25 Marks
Marks of 37.5* students = /j +
= 30 +
20
37.5'*' Smdent-c./". f
37.5-30
XI
10
X 10
= 30 + X 10 = 37.5 Marks
10
Largest Value Smallest Value Range Marks
238
j .
= 37.5ârks = 21.25 Marks = L-S

= 37.5 - 21.25 = 16.25 Marks Thus, range of marks obtained by middle 50%
students is 16.25 marks
Solution. We arrange the data in ascending order 61, 64, 65, 66, 67, 67, 68, 68, 69,
70, 72 Range height = L - S 72 - 61 = 11 inches.
When shortest man (61 inches is omitted) the range will be = L - S = 72 - 64 = 8
Change in the range = 11 - 8 = 3
Percentage change in the range ^ x 100 = 27.27%
11
3. Merits and Demerits of Range Merits
1.
Range is simple to calculate and easy to understand th^ rr,
ban a very accurate picture of variability one may compute'rangl '

2.
It gives broad picture of the data quickly.
rj
"
3.
It is rigidly defined.
4.
It depends on unit of measurement of the variable It has the Demerits
le es
:st he
ies )m
239
160 to 180 centimetres, if a dwarf (shortest) student whose height is 100
cemimetres is admitted in our data, the range would shoot up from 20 to 80
centimetres. Thus, a single variation in the value of an extreme item affects the
value of the range. 3 It is influenced very much by fluctuations of sample. Range is
subject to P uctuations of values from sample to sample. However in small
samples, it is uscxul in certain
circumstances.
4.
It cannot be calculated in case of open-end distributions because extreme
values ot
the distribution are not known.
5.
It does not tell anything about distribution of items in the series relative to a
measure of central tendency. Thus, the range is very unsatisfactory measure of

dispersion and should be used with
great care and caution. 4. Uses of Range
Despite various limitations, the range is useful in the following areas: (a) Quality
control : Range is used to study the variation in the quality of the items produced of
a manufacturing concern. Range has a great significance in quality
control measures.
lb) Measure of fluctuations : It is a very useful measure to study fluctuation.: of
series Variations in the prices of share, other commodities arJ money rates pnd rate
ot exchange can easily be studied with the help of ranê. " (c) Use in day-to-day life
: Range is by far the most widely .'sed measure of variabihty in our day-to-day life.
For example, the answer to the problems hke daily sales in a departmental store',
'monthly wages of workers in a factory'^ or the expected return of fruits from an
orchard', is usually provided by the probable limits in the
form of range.
Id) Use in meteorological department: Range is also used in a very convenient
measure by meteorological department for weather forecast since the general
public is interested to know the limits within which the temperature is likely to vary
on a particular day.
(b) Interquartile Range and Quartile Deviation
1.
Meaning
2.
Calculation of Quartile Deviation
3.
Merits and Demerits of Quartile Deviation
1. Meaning
-i i u
Just as in case of range the difference of extreme items is obtained,^similarly if the

diffLnce in the two values of quartiles is calculated, it would give us what is called
the 'Interquartile Range'. It is also a measure of dispersion. It is an advantage over
range m as much as, it is not affected by the values of the extreme items. In fact
50% of the values of a variable are between the quartile (i.e., Q, and Q,) and as
such the interquartile range gives a fair measure of variability.
240
Semi-interquartile Range or Quartile Deviation A. tU
I.Q.R = Interquartile Range = Q _ q
, Q3 = Third Quartile, Q. = First Quartile Semi-Interquartde Range or Quartile
Deviation
or
Q.D. =
Q3-Q1 2
Symbolically,
QazQi
Coefficient of Quartile Deviation = _2__
Q3 + Q1 2
Coeff. of Q.D. = fc^

1.
It IS simple to calculate and easy to understand.
2.
It IS rigidly defined.
3.
It does not depend on all the values of the data v^rLblf
deviation are the same as those of the
2. Calculation of Quartile Deviation
(a)
Series of Individual observations
(b)
Discrete Series
(c)
Continuous Series !
(a) Series of Individual Observations

the -ijtr
^^^^ -
145 130 200 210 , 198

234 159 160 178 257
260 300 345 360 390
fromi
SJiT-i-ti.
241
' Y S NoC ' Income (Rs)
1
130
234
145
10
257
159
11
260
160
12
300
178
13
345
198
14
360
200
15
390
210
Income (Rs)
^he quartile
Steps
1. Arrange the data in ascending order to get the value of lower and upper quartiles.
2. Locate the value by finding out Qj = size of
item and Qj = size of
fN + 1
th
item.
3. Apply the formulae to get interquartile range, quartile deviation and coefficient of
quartile deviation. Thus, we get
Qj = Size of = Rs 160
Q, = Size of
item = 4* item
ri5+n
th
item = 12* item
= Rs 300 Interquartile Range = Qj - Qj Here, Q, = 300 and Q, = 160
= 300 - 160 = Rs 140
Quartile Deviation =
Q3-Q1
Q.D. = Hzl^ = Rs 70
Coefficient of Q.D. =
2
Q3-Q1 Q3 + Q1
300-160 140 300 + 160 460
= 0.304
242
j .
Solution. We are given Quartile deviation (Q.D.) = SlZ^

= 15 Marks
r . - = 30 Coefficient of Quartile deviation
...(1)
QizQL Qs+Qt
= 0.6.
30
Q3+Q1
= 0.6
...(2)
= Q3 - Q = 0.6
Qs + Qa = 50 Now equation (1) and (2) are solved, Q3 - Qi = 30
80
Q3 = Y = Marks
Putting the value of Q^ in equation (i)
Qs-Q, = 30 40 - = 30
Tu tt
= 40 - 30 = 10 Marks
Thus, Upper Quartile = 40 Marks and Lower Quartile = 10 Marks

(b) Discrete Series
series :
coethcient of quartile deviation from the following
Heights
'I ''
63 64 65 66
^ 6 15 10 5 4 3 1
f
Coe
(in inches)
No. of Persons :
Solution.
58 2
Range = L - S = 66-58 = 8 inches
ai
(c) G HI
coeffii Ai Nc
Sol
I'l
Measures of Dispersion Quartile Deviation Steps :
1.
Arrangement of items in ascending order is necessary.
2.
Calculate cumulative frequencies.
3.
Locate First Quartile and Third Quartile by
(n+IY"
and .
V^y V^y
4.
Values are located at the size of item in whose cumulative frequency the
value of item falls.
5.
Apply the formula to find quartile deviation.
Qj = size of
fN+l^
Item =
(49 + 1^
th
Item
= 12.5* item = 61 inches
Q, = size of
= 63 inches
Q.D. =
Q3-Q1 _ 63-61
3x50 . Item = -= 37.5* item
= 1 inch
243
Height
No. of
in inches
persons (f)
58
59
60
11
61
15
26
62
10
36
63
41
64
45
65
48
66
49
c.f.
Coefficient of Quartile Deviation

Coefficient of Q.D. =
= 0.OI6.
Q3+Q1 63 + 61 124
Thus,
and
Range = 8 inches Q.D. = 1 inch Coeff. Q.D. = 0.016
Illustration 8. Calculate range and quartile deviation and compare them. Also
calculate coefficient of quartile deviation of the following data.
Age (years) : 20-30 30-40 40-50 50-60 60-70 70-80 80-90 No. of members : 3 61
132 154 140 51
3
Solution. Range
Range = L - S = 90-20 = 70 years
244
Quartile Deviation Steps :
1.
Calculate cumulative frequencies.
2.
First quartile and third quartile items are
(NY' 3/.T\th
j .
located by finding out (-] and

V^y
.4
item
in continuous series.
3. Locate, the first quartile and third quartile group m cumulative frequency column
where
size of respective and
UJ
N
UJ
item falls.
4. Apply the following formula :
- + -J- X I
Thus, we get First quartile
+
J--X /
= Size of
= size of
U
(544^
4
item
th item = 136* item
Hence, Q^ lies in the group 40-50
'i +
J- X /
where.
h - 40, ^ = 136, c.f. = 64, f= 132, / = lo
n - An 136-64
an 72x10 " " ~13r = years
Hence first quartile is 45.45 years.
Age
No. of t.f
(years)
members (f)
20-30 3
30-40 61
64
40-50 132
196
50-60 154
350
60-70 140
490
70-80 51
541
80-90 3
544
KI
Measures of Dispersion Third Quartile
245
Qj = Size of
= Size of
th
Vn
.4;
3x544
Item
= 408* item Hence Q3 lies in the group 60-70
where.
h = 60,
N
-c.f.
f
.4.
XI
= 408, c.f = 350, f = 140, i = 10
xlO
= 60 +
140 58x10
140
= 64.14 years
Quartile Deviation (Q.D.) =
^ 64.14-45.45 2
= 9.345 years Coefficient of Quartile Deviation
Coefficient of Q.D. = ^^^
Q3 + Q1
_ 64.14-45.45 64.14 + 45.45 _ 18.69 ~ 109.59 = 0.17

Thus Range = 70 years
Q.D. = 9.345 years Coeff. of Q.D. = 0.17
246
j .
Absolute value of dispersion

Quartile Deviation (OD )- Q3-Q1 45,000-18,000
vv- ] - ~ _
-- ^ j^g 13,500
-100% Persons
O3 = Rs 45,000
Relative value of dispersion Coefficient of O.D. =
Q3-Q1 Q3+Q1 "
45,000-18,000 45,000 + 18,000
27,000
63:000 = 0-428
and^rltiêtatr^tn?:^^^^^
of dispersion (0.428).
^ ^^^ ^ ^ ^ê data (Rupees)
percentage or coefficient of the absolute measure
3. Merits and Demerits of Quartile Deviation Merits :

2
'r'""" " "
-derstand.
3.
It ,s also useful where extreme values are likely to affeet the results
4.
T^S measure ,s useful when it is desired to know variah.lity in L Itral part o,
Demerits :
1.
It ignores half the times-lst 25% and the last 25%
2.
h IS a so not possible to give it further algebraic treatment.
4 2Tntb iT" " by fluctuations of sampling.

4^ As an ah olute measure it is not sufficient for comparison.
variX.'"^"'^ "
^^
for a rough study of
247
(B) Dispersion from Average
The range, the interquartile range and the quartile deviation suffer from common
defect. They are calculated by only two values of a series-wither extreme values m
case
of range or the two values of the quartiles as in case of quartile deviation. This
method of studying dispersion by location of limits is also called the 'Method of
Limits .
It is, therefore always better to have such a measure of dispersion which is based on
all the observations of a series and is calculated in relation to a central value. Range
and Quartile deviations are not calculated in relation to any average. If the
variations ot items are calculated from an average, such measure of dispersion
throws light on the formation of the series and the scatteredness of items around a
central value. This method ot calculating dispersion is called the 'method of
averaging deviations'.
Let .us examine from the following illustration about the salaries paid to employees
of a departmental store :
Monthly Salaries of Employees
Employee
Salary (in Rs) m
10,000
Deviations from Mean
Total (Rs)
2,000 4,000 6,500 4,500 EX = 27,000
4,600 -3,400-1,400+1,100
-900
(X-X) = 0
- IX 27000 Mean (X) = - = Rs 5,400

We observe that the salary of A (Rs 10,000) is more from arithmetic mean (Rs
5,400) and the salary of B (Rs 2,000) is quite less than the arithmetic mean. In
gerieral, some deviations are positive and some are negative. Similarly, some are
large and some are
small.
If we consider an average of these deviations calculated from arithmetic mean, we
can get an idea of a measure of dispersion. As we know the sum of the deviations
calculated Lm arithmetic mean is always zero. Here, positive deviations and
negative deviations cancel out each other. Therefore, adding these deviations
directly does not help us. Alternatively, we may consider either the 'absolute
deviations' or 'squanng deviations . Thus, the measures of dispersion in terms of
deviations from central value (average)
are as under :
(A)
Mean deviation or Average deviation
Where absolute deviations are obtained from average (ignoring plus and minus
signs).
(B)
Standard deviation
Where deviations obtained from arithmetic mean are squared.

248
2.
Calculation of Mean Deviation
3.
Ments, Demerits and Uses of Mean Deviation 1- Meaning
^^'"'^""ring plus (.) and nUnJsAsS^^^l^^^
rith^êan or
Measures of Dispersion where.

249
ElDl = (Read sigma D modulus), sum of the deviations taken from mean or median
ignoring signs N or M = Number of observations f = frequency X = Mean Me =
Median Relative Measure of Mean DeviaHon
Coefficient of M.D. = ^
M.D.
XorMe
2. Calculation o Mean Deviation
{a) Series of Individual observations
[b]
Discrete series
(c)
Continuous series
(a) Series of Individual Observations
.j
BtasMrio. 10. Calculate mean devation and its coefficient from median and mean
fro^TL following yeld of rice per acre for 10 districts of a state as under:
Districts
Rice Yields (in tons) Solution.
1
22
2
29
3 12
4
23
5 18
6
15
7 12
8
34
9 18
10 12
Calculation of Mean Deviation
12 12 12 15 18 18 22 23 29 34
N = 10
666
300
4
5 11 16
LIDI = 57
22
2.5
29
9.5
12
7.5
23
3.5
18
1.5
15
4.5
12
7.5
34
14.5
18
1.5
12
7.5
EX = 195
EIDI =
250
1.
Arrange the data in ascending order.
2.
Calculate the median of the series
fN + lY'
j .
Me = size of
Item.
3.
as
Take deviations of item from median Jgxonng smgs and denote the column
4.
Cdculate the sum of these deviations,
1.
Calculate the total item of finding arithmetic mean. '"umg
2.
Take deviations of items from mean
Jgôrmg signs and denote the column by

3.
Cdcufate the sum of these deviations,
4.
Divide the total obtained by number of items. Formula :
EIDI
5. Divide the total obtained by number of items. Formula :

ZIDI
M.D. =
N
M.D. =
N
Si"""'' '
Coefficient of M.D. = ^
XT
Mean
Now, we get
Mean =
Median
fN + Vth item
4J
rio+1^
th
<2
Now, we get Median = Size of
= Size of
= 5.5* item = Value of 5* item + 0.5 (Value of
item - Value of 5* item) = 18 + 0.5 (18 - 18)
= 18 + 0.5 (0) = 18 tons
Absolute Measure :
JV ~ 10 - 'on
Relative Measure : Coefficient of M.D.
M.D. 57
N 195
Median ~ =
~ 10
= 19.5 tons Absolute Measure :
N=
~ 10 = 6 tons
Relative Measure : Coefficient of M.D.
= m.D.
Mean
~ 19.5 = 0.307
251
Note It is better to calculate M.D. from median than that from mean because the
sum of the deviations taken from median ignoring signs is less than sum of
deviations taken
from mean.
Illustration 11. the yield of wheat per acre for 10 districts of a state is as under:
District
1 2 3 4 5 6 7 8 9 10
Yield of wheat : 12 10 15 19 21 16 18 9 25 10 (in tons)
Calculate : .
(i) Range and coefficient of range. () Quartile Deviation and its coefficient. {Hi)
Mean Deviation about Mean and coefficient. (iv) Meati Deviation about Median and
coefficient.
Solution. In order to calculate the quartile and median we arrange the yield of wheat
in the ascending order of magnitude.
(i)
Calculation of Range (Absolute Measure)
Range = L - S
L = 2S,S = 9 Range = 25-9 = 16 tons
(ii)
Calculation of Quartile Deviation
Calculation of Coefficient of Range (Relative Measure)

L-S
Coefficient Range =
25-9_16^0.47
25 + 9 34
Qj = size of
N+l
item = size of
rio+1
Mh
item
9 10 10 12
15
16 18 19 21 25
= size of 2.75th item
= Value of 2nd item + | (values of 3rd item - value of 2nd item) = 10 + 0.75 (10 10) = 10 + 0 = 10 tons.
Qj = size of
rN+n
th
item = size of
srio+i"!
th
item
= size of 8.25th item
= Value of 8th item + ^ (Value of 9th item - Value of 8th item)
= 19 + 0.25 (21 - 19) = 19 + 0.25 (2) = 19 + 0.5 = 19.5 tons

252
Absolute Measure : Quartile deviation Q.D. = Sl^
_ 19.5-10
- =4.75 tons
of Mean deviation
Statistics for Economics-XI Relative Measure :
Coeff. of Quartile deviation
Coeff. Q.D = QiJ:^ Q3+Q1 ^ 19.5-10 _ 9.5 l^XTlO ~ 2^ = 0.322
Absolute Measure :
Mean Deviation from Mean
Arithmetic Mean, =
N ~ IF tons
M.D. =
Mean Deviation = 4.2 tons ^^
= 4.2
Mean Deviation from Median
Me = Size of
= Size of
4
10^ y''
item
item
Relative Measure :
Coeff. of M.D. =
Mean 15.6 ~ 0.269

= Size of 5.5th item = Value of 5th item
2 (Value of 6th item
Value of 5th item) = 15 + 0.5 (16 - 15) = 15 + 0.5 = 15.5 tons
M.D.=
^ 10" Mean Deviation = 4.3 tons
Relative Measure :
M.D. 4.3
Coeff. of M.D. =
Median = 0.277
15.5
,
253.
Range = 16 tons . Q.D. = 4.75 tons M.D. = 4.3 tons

(from median)
and
"
that ,s why we ate g tfj h^ XeTah T
"'data,
deviation,wh,chasaLaRe of Ae dêrrh l
all the observations of ses ttn25
the value 4.75 tons.
Q""''
" f"
"f series, giving us
^^ ^^ ~g of absolute
distribution and thus cVcu^
^^^ -regularities in the
true measure of dispersion
accurate and
Relative Calcularioas of Illustration 10 and 11 Refer to Illustration 10 and 11

p RêYÛ
Wlât Veld
M.D. = 5.7 tons Coeff. of M.D. = 0.316 M.D. = 4.3 rons Coeff. of M.D. = 0.277
y.eld has greater variati" 6)1"
cal-lations we decide rife
has lesser variation is more rehable Therefore the vSh 7" ^^^ ^^^P ^hich
the yield of rice.
ifteretore, the yield ot wheat is more reliable than
{b) Discrete Series

Also"tS:
^^^^
lismbution.
254
Solution.
Statistics for Economics~XI
012
3
4
5
6
7
89
10 11 12
15
16 21 10 16
84212202
IDt
fm
15
30
31
16
52
62
10
78
32
86
24
90
16
92
10
93
95
14
97
16
97
99
10
20
Z/'IDI - 194
Total
N = 99
Steps :
1.
Calculate cumulative frequencies
2.
Locate the item by finding out
th
item.
3.
Value is located at the size of the item in whose cumulative frequency the
value of Item falls.
4.
Find out the median,
5.
as
^ke deviations of items from median ignoring signs and denote the column
6.
Multiply frequencies with deviation and get f\D\.
7.
After getting the total of f\D\ column apply the following formula :
I.f\D\
N
M.D. =
Median
Me = size of
= Size of
(N + lf
2J
item
item = 50^^ item
Median = 2 Accidents
Measures of Dispersion Mean Deviation :
255
M.D. =
Z/IDI 194
N
Coefficient of Mean deviation :
M.D.
Coefficient of M.D. =
99
1.96
Median
= 1.96
= Approx 2 Accidents = 0.98
'
Illustration 13. Calculate Mean

following data :
Deviation from mean and its coefficient of the
Marks : 0-10 10-20 20-30 30-40 40-50

No. of Students : 5 8 15 16
Solution.
Calculation of Mean Deviation from Mean
Marks X
No. of Students
Mid-points m.
0-10
-2
-10
22
110
10-20 8
15
-1
-8
12
96
20-30 15
25
30
30-40 16
35
+1
+16
128
40-50 6
45
+2
+12
18
108
N = 50
-Lfd'^ 10
m-25 10 d'
fd'
m- 17 ÎDI
Lf\p\ = 472
Steps :.
1.
Calculate Arithmetic Mean by step deviation method.
2.
Take the deviations of mid-points from mean ignoring sings and denote
them by ID!.
3.
Multiply these deviations by respective frequencies and find out /IDI.
4.
After getting the total of f\D\ column apply the following formula :
If\D\
M.D. =
Now, we get Arithmetic Mean :
N
Zfd'
X = A + ^x C N
256
where. Mean Deviation :
A = 25,-Lfd' =10, N = 50, C = 10
V ir
10
^ ^ "" 50 = 25 + 2 = 27 Marks
M.D. =
If\D\ N
where, I.f |DI = 472, N = 50, M D = ~

50
Mean Deviation = 9.44 Marks Coefficient of Mean Deviation =
Here,
M.D.
X
M.D. = 9.44 and X = 27 9.44
>27
= 0.349
0-10 5
10-20 10
20-30 20
30-40 5
40-50 10
Marks :
No. of Students : Solution. (/) Calculation of Range Absohite Measwe :
Range = L- S ^here,
L = 50, S = 0
= 50 - 0 = 50 Marks
Relative Measure :
Coefficient of Range =
L-5 L + S
50-0 50 + 0
=1
(ii) Calculation of Quartile Deviation
First, we will calculate and Q^
Qj = size of = size of
V4y (50
item
th
item = 12.5th item
279
Qj lies in the class 10 - 20. Applying the following, formula :

257
Q,-I,*
N4
-cf
XI
Here,
N
/j = 10, = 12.5, c.f = 5, f= 10 and i = 10
= 10 + ^^xio
= 10 + ^^^^ = 17.5 Marks
Q = size of
N 14
Item
= size of
'50
.4,
th
item : 37.5* item
Q lies in the class 30 - 40
Here, 1, = 30,
Vn)
v4y
= 37.5, c.f = 35, / = 5 and i = 10
Q, = 30+37.5-35^^^
= 30 +
5
2.5x10 10
= 32.5 Marks
Absolute Measure :
Quartile Deviation, Q.D. = ^^^^^
32.5-17.5
= 7.5 Marks
Relative Measure :
Coefficient of Q.D. = Q^-Qi
Q3+Q1
32.5-17.5 15 32.5 + 17.5 50
258
(iii) Calculation of Mean Deviation from Median
Statistics for Economicsr-XI
Marks Stud^ts f
c.f.
Mid-poitos. m
0-10
20
100
10-20 10
15
15
10
100
20-30 20
35
25
30-40 5
40
35
10
50
40-50 10
50
45
20
200
N^ 50
Zf IDI = 450
f-25 IDI
f\m
Steps :
1.
Calculate median of the given data.
2.
IDI.
Take the deviations of mid-points from median ignoring signs and denote
3.
Multiply deviations by respective frequencies and find out Z/'IDI.
4.
After obtaining the total of f\D\ column, apply the following formula :
n\D\
M.D. =
N
Now we get. Median :
Median = Size of = Size of
Median lies in the class 20-30 Apply the following formula :
N
l2j 12J
item
item = 25th item
Here,
Me = +
^.
/, = 20, J = 25, c.f = 15, / = 20 and / = 10 Me =.20 + ^^x 10

20 +
20
10x10 20
= 25 Marks.
Absolute Measure : Mean Deviation
259
M,D. =
If\D\ N
Here, Zf \D\ = 450 and N = 50 450
M.D. = Relative Measure
50
= 9 Marks
Coefficient of M.D. = ^ = ^ = 0.36
Illustration 15. Calculate the mean
obtained by 10 students.
Marks : 2-4 4-6
deviation from mean for the following marks
6-8 8-10
Student : 3 42 1
2-4
-2
'-6- 2.2
6.6
4-6
0.2
0.8
6-8
+2
1.8
3.6
8-10
+4
3.8
3.8
N = 10
lfd = 2
I/-IDI = 14.8 I/^WI = 14
Steps
1.
Calculate Arithmetic Mean by assumed mean method.
2.
Take deviations of mid-points from mean ignoring signs and denote them
by IDI.
3.
Multiply these deviations by respective frequencies and find out f IDI.
4.
After getting the total of /IDI column apply the following formula:
SÎDl N
M.D. =
Now, we get Arithmetic Mean :
X=A+
M
N
where, A = 5, = 2 and N = 10 2
=5+
10
= 5.2
260
Mean Deviation:
j .
Here, where.
M.D. =
If\D\ N
X/IDI = 14.8, N = 10
14.8
= =1.48 Marks
Alternatively: (Short-cut Method) apply the folloi; ZnZ,
'
ob,nig Xf W,,
where.
Now, we get
M.D. = l/l^^llP^z^KI/B-^ N
^f\d\=14,A = 5,N=10
class (the class m which mean hes), i.e., 4 + 3=7 If A = Sum of all class frequencies
after the mean' class, 2 + 1=3
MD =
10
= 14 + (0.2) (4) 14 + 0.8 14.8
10
10
M.D. = 1.48 Marks

Note : Take care that assumed mean is close to the true mean.
3. Merits and Demerits and Uses of Mean Deviation Ments :
-d i.. value .s P.ec,se and
u
spite statist deviat cycles, studiei
(B) SI 1. 2.^
3.<
4.J 5.1 6.1
261
3 Based on all items. It is based on all the items of the series, hence it is affected by
every value of the distribution. Thus mean deviation is a better measure of
dispersion than range and quartile deviation. 4. Less affected by extreme values. It
is not affected very much by value ot extreme
items.
5
Absolute measure. The averaging of absolute deviations for an average takes
out the irregularities in the distribution and thus mean deviation provides an
accurate and true measure of dispersion.
6
Calculated value. Mean deviation is not based on limits like range and
quartile deviation. It is a calculated value based on the deviations about an
average. It provides a better measure for comparison about the formation of
different
distributions.
Demerits :
uui
1
Ignoring the signs. The strongest objection against mean direction is that
while
calculating its value we take the absolute value of the deviations about an
averap and ignore the signs of the deviation. The step of ignormg the signs of the
deviation is mathematically unsound and illogical. Therefore this method is nonalgebraic, for this reason it is not in further statistical calculations.
2
Not well defined. Mean deviation is not a well-defined measure since it is
calculated
from different averages (mean, median and mode). Mean deviation

calculated from various averages will not be the same.
3
Harder calculations. Mean deviation involves harder calculation than the
range ' and quartile deviation. Its calculation by an arbitrary origin makes the
calculation
tedious.
11u
4. Cannot be calculated. Mean deviation cannot be computed for distribution with

open-end classes.
Uses. Despite so many demerits, mean deviation is not a totally useless measure. In
spite of its mathematical drawbacks, it has found favour with economists and
business statisticians because of its simplicity, accuracy and also on account of the
fact that standard deviation gives greater importance to deviations of extreme
values. For fj^^^sting û^s cycles, this measure has been found useful than
others. It is also good for small sample studies where elaborate statistical analysis is
not required.
(B) Standard Deviation
1.
Meaning
2.
Calculation of Standard Deviation
3.
Other Measures from Standard Deviation
4.
Mathematical Properties of Standard Deviation
5.
Relation between Measures of Dispersion
6.
Merits and Demerits of Standard Deviation
262 '
-1. Meaning
It isê mnf^' Standard deviation was introduced by Karl Pearsons in the year 1893
It i^he most commonly used measure of dispersion. It satisfies most of the
properties iLd down for an ideal measure of dispersion.
properties laid
rr
" mathematically illogical as in its
calculation signs are ignored and absolute deviations are taken. This drawback is
removed m die calculation of standard deviation. One of the easiest ways of dXg a
way
devil"'me^r^^^^ ^^
^^^^^ ^^^
^^^
Standard deviation is also known as root mean square deviation because it is the
square root of the means of squared deviations from le arithmetic La
.nnT!?"';
deviation, first the arithmetic average is calculated
and the deviations of various items from the arithmetic average are square! ê
ql^d
deviations are totalled and the sum is divided by the number of iteL tL sqnaTrrot
Symbolically,
where
<y
X-X = *
-
2. Calculation of Standard Deviation

(A)
Series of Individual Observations
(B)
Discrete Series
(C)
Continuous Series
(A) Series of Individual Observations

Standard deviation may be calculated by any of following methods
() Actual mean method (b) Direct method
(c) Assumed mean method
(a) Actual Mean Method

Illustration 16. Calculate Standard Deviation of the following data 25 50, 45, 30,
70, 42, 36, 48, 34, 60
Measures of Dispersion Solution.
Calculation of Standard Deviation Steps :
1.
Calculate the actual mean of the observations.
2.
Obtain deviations of the values from the mean, i.e., calculate (X - X). Denote
these deviations by
X.
3.
Square the deviations and obtaiti the total Ix^.
4.
Divide Ix^ by number of observations and find out the square root.
5.
Apply the following formula :
263
Here,
Now we get.
Here,
= (X- X)
X=
i:X 440
= 44
N 10 Ix^ = 1710, N = 10
jrm
= iir ^ \ 10
Values X
X-X *
25
-19
361
50
+6
36
45
+1
30
-14
196
70
-26
676
42
-2
36
-8
64
48
+4
16
34
-10
100
60
+16
256
i:X=r440
1x^4=1710
= jl7i = 13.076
(b) Direct Method
Illustration 17- Calculate the standard deviation of data given in Illustration 16 by
direct method. Solution.
Steps
1.
Calculate the actual mean of observations.
2.
Obtain the sum of square of values.
3.
= i-w i
{Xf
.N.
Vaiues
X
25
625
50
2500
45
2025
30
900
70
4900
42
1764
36
1296
. 48
2304
34
1156
60
3600
2:X = 440
IX^ = 21070
264
Now we get,
Statistics for Eopnomics-Xl
X=
EX 440
= 44
N 10
Here, ZX' = 21070, N = 10 and X = 44
a=
'21070
-(44)2
N "" " V 10 = V2107-1936 = n/171 = 13.076 (c) Assumed Mean Mediod
Solution.
Calculation of Standard Deviation Steps
1.
Calculate the deviations of the observations from an assumed mean (X - A).
Denote these deviations by d and make the total of deviations.
2.
Square the deviations and denote the total LiP
3.
a=
d = X-A
N
Here,
When the mean is in fraction, this method is used to simphfy the calculations.
25
-20
400
50
+5
25
45
30
-15
225
70-
+25
625
42
-3
36
-9
81
48
+3
34
-11
121
60
+15
225
N = 10
Id
Id'
= -10 = 1720
Now we get. Here,
a=
/N
N
1720, N = 10, ZJ = - 10
a=
1720 f-lO^
10
10
= VI72-(-1)2 = Vm = 13.076
265
Illustration 19. From the following information, find standard deviation of x and y
variables :
Ix = 235,
Ey = 250
Ix^ = 6750, = 6840

N = 10
Solution.
::VX
ox = yN
v m)
6750 10
ay = = \
N InJ
lio J
6840 p50Y 10 I 10 J
- ^675-(23.5)2 = ^/675-552.25 = 22.75 = 11.079

^684-625 = V59 = 7.68 .
= V684-(25)-=
(B) Discrete Series

Standard deviation can be calculated by any of the following methods :
(a) Actual mean method (b) Direct method
(d) Step deviation method

Illustration 20. Calculate Standard deviation of the following data :
:4
Frequency : 6
10
12
15
28
20
14
Solution.
Size
Frequency f . /X
24
-3.06 9.3636
56.1816
12
60
-2.06 4.2436
50.9232
15
90
-1.06 1.1236
16.8540
28
196
-0.06 0.0036
0.1008
20
160
+0.94 0.8836
17.6720
14
126
+1.94 3.7636
52.6904
10*
50
. +2.94
N = 100
X- X
fx^
8.6436
LfX = 706
266
jj^p^ _
^tMistics for Economics-XI
43.2180
Ifx'- = 237.6400
(x'ltrr
(X -X) and denote these deviations by .r
A- by Ae respecve frequences and n,ake
a=
N IfX
Here,
N
X=
^fX = 706 and N = 100 706
X=
100
= 7.06
c=
Here,
N
Zfx'^ = 237.64 and N = 100 [237J4 r_
= 1.541
{b) Direct Method
direarôd"
of 'he data given in Iusat,on by
Solution.
(c) ass
X
X-2
45678
64 81 100
-9 10 6 12 15 28 20 14 , . 5
24 60 90 196 160 126 50 16 25 36 49
__ ^ _ 96 300 540 1372 1280 1134 fDO i
N = 100
IfX = 706
^X^^"5222 f
Measures of Dispersion Steps :

1.
Calculate mean of the series, i.e., X
2.
Obtain the sum after mukiplying f and X (frequency and size), i.e., Z/X.
3.
Calculate the square of values (X^)
4.
Multiply frequency (/) to X^ and get the total, i.e., ZfX"
5.
267
a=
Z/X^
N
-(X)'
\
Ifx^ fz/x^ N J
N
m
7.06
N 100
Now we get,
Here, Z/X^ = 5222, N = 100
Substituting the values
a=
IfX"
N
-(Xf =
5221
100
-(7.06)2
= V52.22-49.8436 = ^2.3764 = 1-541 .-. Standard Deviation = 1.541
(c) Assumed Mean Method
Illustration 22. Calculate the standard deviation of the data given in Illustration 20
by
assumed mean method. Solution.
Size
Frequency
Y-7
-3
-18
54
12
-2
-24
48
15
-1
-15
15
28
20
+1
+20
20
14
+2
+28
56
10
+3
+15
45
N = 100
^ ' ' ^
E/a = 6
Ifd^ = 238
268
Steps :
r . Take the dev,arios of s,ze from an assnmed mean and denote these delations 2.
Multiply these deviations by the respective frequencies and calculate the total Zfd
where.
Now, we get
d= {X- A)
W fXfdf
N
m = 238, Yfd = 6, 100

Here, _
Substituting the values.
Ifd N
0=
238
100
= A/2.38-(0.0^ = V2.3764
jlOO
= a/^38-0.0036 a = 1.541
and
--
id) Step Deviation Method

^ Jllustradon 23. Calculate Arithmet.c Mean and Standard Deviation for the
following
Value Frequency Solution.
140 1
145 4
150 15
155 30
160 36
165 24
170
175 2
Values
î^l^lîo^ A^^
Deviation
140
145 150 155 160 165 170 175
Frequency
1 4 15 30 36 24
N = 120
X ~ iss d
-10 -5 0 +5 +10 + 15 +20
d'
-3 -2 -1 0 +1 +2 +3 +4
fd'
-3 -8 -15 0
+36 +48 +24 +8
m' = 90
fd
9 16 15 0 36 96 72
__32
= 276~
269
Measures of Dispersion Steps :
1.
Take the deviations of values from an assumed mean and denote these
deviations
by (d).
2.
Divide these deviations by common factor and obtain step deviations, i.e., d'.
3.
Zfd'.
Multiply step deviations by the respective frequencies and calculate the total
4.
Calculate the squares of the step deviations (J"), multiply these squared
deviations by respective frequencies (in other words fd' x d' = fd'-) and obtain the
total Zfd'-.
5.
where,
Now, we get Arithmetic Mean
Here,
a=
d' =
VN
IN
C
C
and C = Common factor
xC
N
A = Assumed mean = 155, Ifd' 9^ = 5, N = 120 90
X = 155 +
Standard Deviation
120
= 155 + 3.75 = 158.75
X 5 = 155 + 0.75 X 5
a=
Xfd'^ f-Lfd'
N
N
C
Here,
Tfd'- = 276, Tfd' = 90, N ^ 120 and C = 5
0=
(27
il20'
f 90 ^ 120
X5
=
V2.3-(0.75)2 X 5 = /2.3-0.5625 x 5
V1.7375 X 5 = 1.318 X 5 = 6.59
(C) Continuous series

For calculating standard deviation in continuous series any of the following methods
may be applied :
{a) Actual mean method (b) Direct method
(d) Step deviation method
270
{a) Actual Mean Method
j .
calXrt jalT"^
formula ,s used ,o
VN
where,
x = {X - X)
24. Find .he Mean and Sndard deviation from .he following dis.rihu.ion :
No. of Students , 4 V
Solution.
Calcularion of Mean and Standard Deviation
Marks X
4-8 8-12 12-16
No. of Students if)
11
N= IS
Midpoints (m)
1 6 10 14
fm
8 48 20 14
Ifm = 90
(m ~ X)
X
-A 0 +4 +8
16 0 16 64
fx^
64 0 32 64
Ifx'- = 160
Steps :
1. Calculate the actual mean of the series, x
-d-pomts from the mean, - x). Denote these
~*
the respective frequencies and ohtam
Se ^Sr dS ^^
^^^ ^^-re root to calculate the

a=
N
Mean
Here,
^ - N ~15 = 6 marks S/w = 90, N = 15
Measures of Dispersion Standard Deviation
271
a=
If-'
N
Here,
Zfx^ = 160, N = 15
0 = J^ = M666 = 3.265
.-. Standard Deviation = 3.265 marks.
Note. This method is rarely applied in practice becausc in case the actual mean is in
fraction, the calculations becomes complicated and take lot of time.
(b) Direct Method
Illustration 25. Calculate the standard deviation of the data given in Illustration 24
by direct method. Solution.
Calculation of Standard deviation
--------- Mid-points
(f)
(m)
fm
w'
0-4
16
4-8
48
36
288
8-12
10
20
100
200
12-16 1
14
14
196
196
N = 15
Lfm = 90
fm^
E/m- = 700
Steps :
1.
Calculate actual mean of the Series X.
2.
Obtain the total after multiplying f and m, i.e., Zfrn.
3.
Calculate square of mid-points, i.e., m^.
4.
Multiply frequency to m^ and get the sum, i.e., Zfm^.
5.
0=
i
Ifm^ (Ifm
N
N
-{Xf
= V N We get, N = 15, Zfrn = 90, Zfrn'- = 700
2-^2
Substituting the values
15
9o^ 15
=
^ yfiOM ^ 3.265
Standard Deviation = 3.625 marks.

d J!"" ^^^ I^-ation of the followmg frequency
50-55 45 50 40^5 35-40 30-35 25-30
29 31 47
51 70
Age in Years No. of Labourers Solution.

Age in years . , x^ cc
fd^
No. of labourers Jf>Mid-points (m)
m -- 42.5 d
fd
45-50 40-45 35-40 30-35 25-30 22 29 31 47 51 70 52.5 47.5 42.5 37.5 32.5 27.5
+10 +5 0 -5 -10 -15
220 145 0 -235 -510 -1050
2200 725 0 1175
5100 15750
N = 250
Svwt tr'""
Ifd = -1430 Ifd^ = 24950

and denote these
2. Multiply these devattons by the respective frequencies and calculate the total,
m\
4. Apply the following formula : i

a=
where,
d= (X-A)
.N
Measures of Dispersion Now we get.
273
a=
l-Lfd^ f-Lfd^
. N VN )
Here, = 24950, Zfd = -1430, N = 250
Substituting tbe values.
a=
24950 250
r-1430
= ^99.8-(-5.72)2
250
= V99.8-32.718 = V67.082 = 8.19
Standard Deviation = 8.19 years
(d) Step Deviation Method
This method is mostly used in practice.
Illustration 27. Find out the Standard Deviation of the frequency distribution given in
Illustration 26 by step deviation method.
Solution.
Age in years X
id'
No. of labourers f
fd"
50-55 22
52.5
+10
+2
+44
88
45-50 29
47.5
+5
+1
+29
29
40-45 31
42.5
35-40 47
37.5
-5
-1
-A7
47
30-35 51
32.5
-10
-2
-102
-204
25-30 70
27.5
-15
-3
-210
630
N = 250
Midpoints m m - 4.25 4
Ifd'= - 286
m- 4.25 5 d'
lA'^ = 998
Steps
1.
Take the deviations of mid-points from an assumed mean and denote these
deviations by d.
2.
Divide these deviations by common factor and obtain step deviations, i.e., d'.
3.
Jlfd'.
Multiply step deviations by the respective frequencies and calculate the total
4.
Calculate the squares of the step deviations {d'^Y, multiply these squared
deviations by respective frequencies (in other words fd' x d' = fd'-) and obtain the
total I^fd'-.
274
where, and
a=
d' =
XC
IC
C = Common factor
Now
we get.
a=
Ifd
r2
N
Zfd'
{N
\2
XC
where,
^fjn = 993, ^fj^ ^ _ N = 250 and C = 5
Substituting the values,

a=
998 250
286^ I 250
5 = 73.992-(-1.144)2 X 5
= V3-992-1.309) X 5 = VI^ x 5 = 1.638 X 5 = 8.19
.-. Standard Deviation = 8.19 years. Illustration 28. Find the Standard Deviation of
the height of 100 students.
Less than 62.5 Less than 65.5 Less than 68.5 Less than 71.5 Less than 74.5
5 23 65 92 100
Solution. Convert cumulative frequency into class interval.
Height (in inches) X
Frequency
Midpoints im)
ni-67 3 (d-) fd'
fd-"
59.5-62.5 62.5-65.5 65.5-68.5 68.5-71.5 71.5-74.5 5 23-5 =18 65 - 23 = 42 92 - 65

= 27 100 - 92 = 8 61 64 67 70 73
-2 -1 0 +1 +2
-10 -18 0 +27 +16 20 18
0 27 32
N = 100
Ifd' = +15
m'^ = 97
275
a=
<
Ifd'^ flfd'^
N
N
XC
where,
= 97, Zfd' = 15, N = 100, C = 3
Substituting the values.

o=
97
100
100,
X 3 = VO.97-0.0225 x 3
= ^/0.9475 X 3 = 0.9733 x 3 = 2.92
Standard Deviation. = 2.92 inches. Illustration 29. Calculate Mean Standard
Deviation and mean deviation about mean
Marks Students
More than 20
50
More than 40
47
More than 80
41
More than 100
21
More than 120
Solution. (Convert cumulative frequency into class interval)

Calculation of Mean and Standard Deviation
Marks X
Frequency (f)
Midpoints (m)
20-40 50 - 47 = 3 30
-6
-18
108
40-80 47 - 41 = 6 60
-3
-18
54
80-100
41 - 21 = 20 90
100-120
21 - 9 = 12 110
+2
24
48
120-140
9-0 = 9
+4
36
144
130
N = 50
Ifd' = 24
Mean :
X-A.^.C
where.
A 90, -Lfd' = 24, N = 50, C = 10
276
j .
24
^ " ^^ ^ X 10 = 90 + 4.8 = 94.8

Mean = 94.8 Marks
Standard Deviation
a=
N
where.
IN
wj-yo 10 (dl fd'
-Lfd'^ = 354
fd^
XC
= 354, Zfd' = 24,N = 50, C = 10
a=
SO
v50y
xlO
= V^xlO = 2.617 X 10 = 26.17 Standard Deviation = 26.17 Marks
Deviation from Mean
Marks X
20-40 40-80 80-100 100-120 120-140
Frequency (ft
3 6 20 12 9
Mid-points m
N = 50
Mean Deviation
30 60 90 110 130
m. ~ 94.8 ID!
64.8 34.8 4.8 15.2 35.2
M.D. =
where.
N
If IDI = 998.4 and N = 50
\A r, 998.4
M-D- =
= 19.968
Mean Deviation = 19.968
/"IDI
194.4 208.8 96 182.4 316.8
2/IDI = 998.4
3. <
mea
(b
111
Let us try the same question by assumed mean method (Assumed Mean = 90)
t- - . Marks
h^
\d\
m - 90/lai
20-A0 3
30
60
180
40-80 6
60
30
180
80-100
20
90
100-120
12
110
20
240
120-140
130
40
360
\d\ = 960
M.D. =
I/IJI+(X-A)(I/B-IM) N
where, IM = 960, X = 94.8, A = 90,1/B = 3 + 6 + 20 = 29 and S/A = 12 + 9 = 21
960 + (94.8-90)(29-21) 50
960 + (4.8)(8) 960 + 38.4
50 998.4
50
50
= 19.968
Mean Deviation = 19.968

3. Other Measures from Standard Deviation
Various measures are calculated from standard deviation. Some of the important
measures are as under :
(a)
Coefficient of Standard Deviation : A relative measures of standard deviation
is calculated to compare the variability in two or more than two series which is
called 'coefficient of standard deviation'. This relative measurement is called by
dividing standard deviation by arithmetic mean of the data
Symbolically,
Coefficients of S.D. = ^
X
Here, a = Standard deviation and X = Arithmetic mean
(b)
Coefficient of Variation : This relative measurement is developed by Karl
Pearson and is most popularly used to measure relative variation of two or more
than two series. It shows the relationship between the standard deviation and the
arithmetic mean expressed in terms of percentage. This measure is used to
compare uniformity, consistency and variability in two different series. The series
having greater coefficient of variation, it is called to be less uniform, less
homogeneous, less
m
278
j .
consistent or less stable (in other words, it has higher degree of variability). In the
same way, the series having lesser coefficient of variation, it is said to be more
uniform, more homogeneous, more consistent or more stable, (in other words, it has
less degree of variability).
Symbolically,
C.V. = ^ X 100
Here, C.V. = Coefficient of Variation, a = Standard deviation and X = Arithmetic
mean.
(c) Variance : Variance is the square of standard deviation. Standard deviation and
variance are measures of variability and they are closely related. The only
difference between the two measurements is that the variance is the average
squared deviation from mean and standard deviation is the square root of variance.
Symbolically,
Variance = a^ and Standard Deviation = VVariance
Calculation of Variance
In Series of Individual Observation :
Variance (a^) =
N
^ nx-xf
N
Here, x = X - X
In Frequency Distribution :
Variance (a^) =
flfd'^ 2'
N
[NJ
Xa
Here,
d' =
, and
C = Common factor
Individual Observations
Illustration 30. A batsman is to be selected for a cricket team. The choice is between
X and Y on the basis of their five previous scores which are : X : 25
85
40
80
120
y
50
70
65
45
80
[a)
Calculate coefficient of standard deviation, variance and coefficient of
variation.
[b)
Which batsman should be selected if we want
(/) a higher run scorer (ii) a more reliable batsman in the team.
Measures of Dispersion Solution, (a)

Batsman X
Arithmetic Mean
JX
X=
N
EX = 350, N = 5 350
X = = 70 Average score = 70 Runs
Standard Deviation
a=
N
Ix' = 5750 and N = 5
a=
5750
= V1150
= 33.91 Runs
Coefficient of Standard Deviation
Coefficient of S.D. = ^
Coeff. of S.D. =
a = 33.91 and X = 70 33.91
70 = 0.484
Variance
E(X-X)2 Ijc^
N
N
I(X -XV = = 5750
Batsman Y
Y=
N
EY = 310, N = 5 310
Y=
= 62
Average score = 62 Runs
a=
N
Ey2 z: 830 and N = 5
oy
= 12.88 Runs
Coefficient of S.D. = ^
279
Batsman
Scores
(X-X)^Batsman
X-X
Scores
25
-45
2025 50
-12
144
85
+15
225
70
+8
64
40
-30
900
65
+3
80
+10
100
45
-17
289
120
+50
2500 80
+18
324
EX = 350
(y-Yf
X- Y
Ex^ = 5750 EY = 310
= 830
Coeff. of S.D. =
a = 12.88 and Y = 62 12.88
62 = 0.207
_ E(Y-Y)2 ^^ ^
NN
E (Y- Yf = ly = 830
280
Here, X - X = x
5750
ax^ =
=1150 Runs
Coefficient of Variation
- ax
c.v.^ = Y 100
o = 33.91 and X = 70
33.91 C.V = X 100
= 48.44%
Here, y - y ^ ^
, 830 ay- = = 166 Runs
C.V.^ = ^ X 100
(J, = 12.88 and Y = 62
12.88 C-V. =
X 100
= 20.77%
ib) H) Batsman X should be selected as a
(70 S, .
than Ae'tîi tt'o^y ST^r,
1 '""IT of
Discrete Series
"""
* = 48.44%,.
^^ Jl-ustration M. Calculate variance and coefficient of variation from the foHowin,

Solution.
Size
4
5
6
7
89
10
Frequency
3
7 22 60 85 32
8
Size X
4
5
6
7
89
10
of Variation
Frequency
7 22 60 85 32
8
~NT217~
X~7 d
-3 -1 -1 0 +1 +2 +3
fd
-9 -14 -22 0
+85 +64 +24
m = 128
Cot
estir
fd'
17 28 22 0 85 128 71
a an
Measures of Dispersion Variance
, ,, Ifd^ ri/iif
Variance (o^) = - J Here,
^ = 362, l.fd = 128 and N = 217
362 YmY
Variance (a^) = ^ (^217,
= 1.668 - (0.589)2 = 1.668 - 0.347 = 1.32
C.V. = I X 100
Let us calculate a and X, _
o = VVariance = >/02 = 1.15
^
281
+ 0.59 = 7.59
N
217
Here,
C.V = I X 100
o = 1.15 and X = 7.59 C.V = ^ X 100 = 0.1515 X 100 = 15.15%
Continuous Series
itmuous series
niustration 32. To check the quality of two bulbs and their life in burmng hours was
Life (in hrs.) Ho. of bulbs
Brand A
0-50
15
Brands
50-100
20
100-150
18
60
150-200
25
25
200-250
22
Total 100
100
(i) Which brand gives higher life? (it) Which brand is more dependable?
282
Solution.
Statistics for Eco.
nomics-Xl
Brand A
Coefficient of Variation (Brand A^
C-V- = ^ X 100 Let us calculate first a and X. Standard Deviation
MLjlfd"
Xc
Here,Z/^- = 193,Z/-^-19,N=100andC=50
CT =
/m 1100
'19_ 100
X 50
Co^ffidem ofJSâtion~(BrLd BJ
= X 100 Let us calculate first a and X. Standard Deviation
a=
l^jEfd'^
Xc
a=
100
.100,
x50
283
= Vl.93-(0.19)2
Vl.93-0.0361x50
= Vl.8939x50 = 1.376 X 50 = 68.8 hrs.
Arithmetic Mean
X=A+
N
XC
Here, A = 125, I^d' = l9,h!= 100 and C = 50

19
= Vo.61-(0.23)2
- V0.61-0.0529x50
>/0.5571x50
0.746 X 50 = 37.32 hrs.
X = 125 +
X 50
Arithmetic Mean
Ifd'
X=A+
XC
N
Here, A = 125, Ifd' = 23, 100 and C = 50
23
100
= 125 + (0.19) X 50 = 125 + 9.5 = 134.5 hrs. Applying the formula, now we get
C.V. = ^ X 100
.A.
where, a = 68.8 and X = 134.5 68 8
C.V = X 100 = 51.15%.
134.5
X = 125 +
X 50
100
= 125 + (0.23) X 50 = 125 + 11.5 = 136.5 hrs. Applying the formula, now we get
where.
C.V. = ^ X 100
.A.
a = 37.32 and X = 136.5 37.32
C.V. =
136.5
X 100 = 27.34%.
(/) Since the average life of bulbs of brand B (136.5 hrs) is greater than that of
brand
A (134.5 hrs), therefore the bulbs of brand B give a higher life. (ii) Since C.V. of
bulbs of brand B (27.34%) is less than that of brand A (51.15%),
therefore the bulbs of B are more dependable. Illustration 33. The number of
employees, wages per employee and the variance of wages per employee for two
factories are given below :
No. of Employees
Average wage per employee per day (Rs) Variance of wages per employee per day
(Rs)
(a)
In which factory is there greater variation in the distribution of wages per
employee?
(b)
Suppose in factory B, the wages of an employee are wrongly noted as Rs 120
instead of Rs 100. What would be the corrected variance for factory B?
Factory A
50
100
120
85
16
Factory B
284
Solution.
() Calculation of Coefficient of Variation : Factory A
C.V. = |. X 100 Here, x = 120 and a =
= il? 100 = 2.5%

Factory B
C.V. = J X 100
Here X = 8S and a = ^
C-V. = ^ X 100 = 4.7%
W &rrecti8 Mean and Variation :
zx
For Factory B .^ = 100 and X= 85
100 x 85 = 8500
It IS not correct ZX
Corrected ZX= 8500 - 120 . 100 = Rs 8480
Corrected X = ^ = ^ ^
N
Variance = a^
a^ =
Here,
N
100
- (xp
= 16, X = 85 and JV = 100
ZX^
16 =
100
(85)2
T.
= ^^00 + 722500 = 724100
It IS not correct ZX^
/^^lUU
Corrected ZX^ = 724100 - (120)2 . (100)^

= 724100 - 14400 + 100000 = 719700 Corrected Variance = ô^reaed ZX^
- (Corrected X)^
719700 ~ ~Tdr - <84.8)2
bet
= 7197 - 7191.04 = Rs 5.96
285
Illustration 34. The sum of 10 values is 100 and the sum of their squares is 1090.
Find the coefficient of variation.
Solution. We are given.
N = 10, IX = 100, and XX^ = 1090
Coefficient of variation (C.V.) = ^ x 100
y\.
Apply the following formula to get Mean (X)
ZX
^=N
10 X = 100
100 10
X=
NX = IX
= 10
Apply the following formula to obtain standard deviation (a) by direct method.
(X)2
02 =
N
1090
-
(X)^
(10)2
10
= 109 - 100 = 9
= V9 =3
Therefore,
C.V. = X 100
= - X 100
= 30
Thus, X = 10 and C.V. = 30
Illustration 35. The means and standard deviations of two brands of bulbs are given
below:
Brand I
Brand II
Mean 800 hours
770 hours
Standard deviation 100 hours
60 hours
Calculate a measure of relative dispersion for two brands and interpret the result.
286
j .
Brand I
C.V. = ^ X 100
Given : X = 800 a = 100
100 800
X 100 = 12.5%
Given
Brand II C.V. = ^ X 100
X = 770 a = 60
60 770
X 100 = 7.79 %
Hence, the bnlbs of brand H are more consistem as compared to brand L
4. Mathematical Properties of Standard Deviation
Standard deviation has the following important mathematical properties
- 11 5
=3
Here, x-X- X, i.e., deviations taken from Mean, w/ , " ^ ~ ^^ deviations taken from
any value
287
less than the sum of the squares of deviations calculated from any other value,
which is used to calculate standard deviation.
Symbolically,
But the
sum of deviations calculated from Median (ignoring signs) is always less than the
sum of deviations calculated from mean (ignoring signs), which is used to
calculate mean deviation.
Symbolically,
ElX-Mel < ZIX-XI
(b) Standard Deviation and Normal Curve : In a normal or symmetrical distribution
apart from mean, median and mode are identical, a large proportion of distributions
are concentrated around mean. Following are a relationship {i.e., range of spread of
items) can be determined on the basis of mean and standard deviation.
Mean 1 a
covers 68.27% of the total items.
Mean 2 a covers 95.45% of the total items.
Mean 3 ct covers 99.73 % of the total items.
This can be observed in the following frequency curve :

PERCENTAGE OF ITEMS INCLUDED UNDER NORMAL CURVE
Illustration 36. Calculate the percentage of cases lying within X + 1 a, X 1(5, X.
3 a from the following data :
Size
:12345678
9 10
Frequency : 8 12 10 28 16 12 10 2
02
288
Solution.
Statistics for Economics-xA
Calculation of Mean and Standard Deviation : Mean :
Here,
N
A = 5, I.fd = - 68 and N = 100 -68
X=5+
Standard Deviation
100
= 4.32
CT =
Here, ^ 434, Zfd = -68 and N = 100
0=
/424 100
-68>
00
I____
liwj = V4.24-(0.68)2
Calculation (a)
Cases lying ib)
Cases lying (c)
X = A ^^^
There is no
- y/4.24-0A624 = VIT^ = 1.943 of percentage of cases :
X 10 = 4.32 1.94 = 6.26 and 2.38
between 3 and 6 are (10 . 28 . 16 . 12) = 66 out of 100, 66"/o
X 2a = 4.32 2 x 1.94 = 4.32 3.88 = 8.20 and 0 44 between 1 and 8 are (100 2) 98 out of 100, i.e., 98%
X 3o = 4.32 3 X 1.94
= 4.32 5.82 = -1.5 and 10.14 negative value. All the cases lie between 0 to 10,
/.e., 100%.
289
(c) Combined Standard Deviation : Just as combined arithmetic mean can be

calculated, if means and number of items in different groups are given, similarly
combined standard deviation can be calculated, if standard deviation means and
number of items in different groups are given. Combined standard deviation is
obtained as follows : {a) Two related groups :
iNiaf + N2O2 + Njd} + Nidj
=^
N1+N2
Here,
CTjj = Combined standard deviation of two groups
CTj = Standard deviation of first group a^ = Standard deviation of second group
Xj 2 = Combined arithmetic Mean of two groups (b) Three related groups :
'1.2,3
V
NjO^ + Nâl + Njof + N^d^ + Nzcff + N^dj
N1+N2+N3
Here, d^= (X-X 1,2,3), d^ = (X2 -Xi,2.3) and d^ = {X, -X,^^,^)
The above formula can be extended to calculate the combined standard deviation of
even more groups.
Illustration 37. In sample A, N = 150, X = 120 and S.D. = 20; in sample B, N = 75, X
= 126 and S.D. = 22. Calculate Combined Mean and Combined Standard Deviation.
Solution. Combined Mean :
V
N1X1+N2X2
- N1 + N2
150x120 + 75x126 18000 + 9450 27450
150 + 75
Combined Standard Deviation :
225
225
= 122
Niol + N2al + N^d^ + N2

. N1+N2
d^ = (X,-Xi,2) = 120 - 122 = -2 d^ = (X2-Xi,2) = 126 - 122 = 4
-i
150 (20)2 ^ 75(22)2 ^ _ (_2)2 ^ 75(4^2 150 + 75
290
j60odoT363ddT6^^ *
j .
150 + 75
[981^ -~ V~22r " = 20.88

Thus, Combined Mean = :22 and Combined Standard Devation = 20.88
follow^ A'ISirs.''' """
Distributions
N
A
20
ained by combming ,he
^ 120 C
60
Solution. Combined Arithmetic Mean :

60 50 40
5.D.
8 20 12
H00 + 6000^h2^ _ 9600

200 - ^ = 48
Combined Standard Deviation :
20 + 120 + 60
^1.2,3 =
Here,
and
I
nY+N^J^
= ~ ^1,2,3) = 60 - 48 = 12 = (^2 -X12 3) = 50 - 48 = 2 = (X3 -X12 3) = 40 - 48 =

-8
=
' 20 + 120^^60
* 200 [65120 ,_
~
= ^^25.6 = 18.04
Thus, Combined Mean
= 48
Combined Standard Deviation = 18.04

291
measures of Dispersion
\d) Change of origin and change of scale : Any constant added or ^"^ttacted
(change of origin), then standard deviation of original data and of changed data
after addition or Isuhtraction will not change but the mean of new data will change."
Any constant multiplied or divided (change of scale), then mean, standard deviation
and,variance will change of the new changed data.
Illustration 39. Average daily wage of 50 workers of a factory was Rs 200 with
standard deviation of Rs 40. Each worker is given a rise of Rs 20. (,) What is the new
average daily wage and standard deviation? (ii) Have the wages become more or
less uniform?
(Hi) If each worker is given a hike of 10% in wages, how are the Mean and Standard
Deviation values affected? Solution. We are given
N = 50, X = 200, a = 40
(i) Change of Origin
Old Series
Since,
X=
IX
N
NX =IX
50 X 200 = 10,000
Mean
X=
N 10,000
50
= Rs 200
Standard Deviation
a=
-(X)2
Suppose each worker is paid Rs 200.
X X^ = (200)^ X 50 workers
= 40,000 X 50 = 2,00,0000
a=
'20,00,000
50
= ^40,000-40,000
= Ji
Thus, Standard Deviation (a) and variance
(o') = 1.
New Series
Rise of Rs 20 to each worker to get new series 20 X 50 workers = Rs 1,000 New XX
= 10,000 + 1,000 = Rs 11,000
New Mean EX
X=
N 11,000
" 50 Standard Deviation
= Rs 220
a=
N
Each worker given a rise of Rs 20, i.e., 200 + 20 = Rs 220
XX^ = (220)^ X 50 workers
48,400 X 50 = 24,20,000
a=
^4,20,000
50
-(220)2
= ^48,400-48,400 Thus, Standard Deviation (a) and variance
y') = 1.
292
New .
new .ancUrd aeva.on .
devanon remain rhe same as rhat ofold series

w^ are required . ca.cuia,e eoefficienr , variation ro decide *e uniform..
Old Scries
C.V. = ^xlOO
- 200 = 0.5%
X 100
New Seri^
C.V. = |xlOO
220 = 0.45%
X 100
orvaSl^^roî-ZCtrtr^ - -- coe^cienr
(ni) If each woricer is given 20% h,ke
Mean affected: Old + Increase in wages Rs 200 + Rs 20 = Rs 220 New Mean =
Rs 220
-
..e. remain .he same as
5- Relation between JMeasures of Dispersion

and
-Viation, Mean Devation
(a) Q.D. - ^ s.D. (more precisely 0.6745 S.D.)
(b)
M.D. _ ^ S.D. (more precisely 0.7979 S.D.)
(c)
Q.D. = I m.D. (more precisely 0.8453 m D )
(d)
6 S.D. = 9 Q.D. = 7.5 M.D. Further, in such distributions
(0 Arithmetic M " ! stnl^TT""'''
ê items.
The above relationships
of the items,
to moderately asymmerric'al for c^t^" * Vplied

293
Merits and Demerits and Uses of Standard Deviation

Standard deviation is the most satisfactory and widely used measure of dispersion
ause of the following merits :
Merits
1.
Based on every item. Unlike the range and location based measures of
dispersion, the standard deviation makes use of all the observations in the set of
series. That is, it includes every item of the distribution.
2.
Correct mathematical process. The standard deviation is the easiest measure
of dispersion to handle algebraically and it is the resuk of correct mathematical
process. The deviations are calculated from arithmetic mean which is an ideal
average. The deviations are squared, so that automatically become positive. Being
used on correct mathematical process, it is amenable to further statistical analysis.
3.
Rigidly defined. Standard deviation is a well-defined and definite measure of
dispersion. It is rigidly defined and its value is always definite and based on all the
observations and the actual signs of deviations are used.
4.
Sampling fluctuations. Standard deviation is less affected by the fluctuations
of sampling than most other measures of dispersion.
5.
Mathematical Properties. It is amenable to algebraic treatment and possesses
many mathematical properties. It is the only measure for calculating combined
standard deviation of two or more groups. It is on account of the properties that
standard deviation is used in many advanced studies.
Demerits
1.
Complex in calculation. Standard deviation is not easy to calculate, nor it is
easily understood. In many cases it is more cumbersome in its calculation than
either quartile deviation or mean deviation.
2.
More weights to extreme items. It gives more weight to extreme items and
less weight to those which are near to the mean, because the squares of the
deviations which are big in size, would be proportionately greater than the squares
of the deviations which are comparatively small. Thus, deviation 2 and 8 are ratio of
1 : 4 but their square, i.e., 4 and 64 would be in the ratio of 1 : 16. Howevei; since
standard deviation gives greater weight to extreme items, it does not find much
favour with economists and businessmen who are more interested in the results of
the modal class.
Uses
Despite the drawback the standard deviation is the best measure of dispersion and )
uld be used whenever possible. It is widely used in statistics because it possesses
most die characteristics of an ideal measure of dispersion, k is a significant measure
for aking comparison between variability of two sets of observations to test the
significance f various statistical measures of random samples, correlation and
regression analysis etc. ' may regard standard deviation as the best and the most
powerful measure of lion.
294
(between H-0 tn a u- u
reutive measures of or variations

Types of Measures of
Dispersion/Variation
Measure iatiori
Range
Înter-Quartile Range and Quartile Deviation Mean Deviation Standard Deviation
1
re of Variation/ nation
Coefficient of Range ^ Coefficient of Quartile Deviation ^ Coefficient of Mean
Deviation Coefficient of Standard Deviation
(a) Absolute measure Absol..^^ ^
. the ^mrfda ^
f ^^ ^^^ as the data,
êes. If the data are in kg, the measiV^'e nV Jf " ê in j

d spersxon cannot be used to compare the Matter o ^
absolute
St r
--
or the coefficient of the absoluteltaC If d ' "" P^tcentZ

coefficent of dispersion or coeST f
caS
cfhcient of range, co^Bc^ro^^ûXtST'
-asures ar
and coefficient of standard deviation "oo

deviation is ca.ed
of mean deviation on standard
Thus, C.V. -
= f XIOO
measured m the same of var abihty of two or more series wher "uiLts 5 ' " "
obtained as percenta;
295
method (lorenz curve)"
Lorenz Curve
The graphic method of studying dispersion is known as the Lorenz Curve Method. It
is named after Dr Max. O. Lorenz who used it for the first time to measure the
distribution of weakh and income. Now k is also used for the study of the
distribution of profits, wages, turnover etc. In this method of values the frequencies
are cumulated and their percentage are calculated. These values are plotted on the
graph and curve that is obtained IS called the Lorenz Curve. The greatest defect of
this curve is that it does not give a quantitative measure of dispersion. Let us look
at the following illustration. Illustration 40. Draw a Lorenz Curve from the following
data :
Income (In thousand Rs) No. of Persons in thousands
Group A
20
10
16
40
20
14
60
40
10
100
50
180
80
Group B
Solution.
Income in
(Rs)
lative Income
wm
20 40 60 100 180
_
20 60 120 220 400
Cumu-laui/ePar^Mt
tage sands) hers
_____
No. of Pers6ns (stt thou5 15 30 55 100
10 20 40 50 80
Steps
1.
The size of items (or if classes are given, then mid-points) are made
cumulative. Considering last cumulative total as equal to 100 difference cumulative
total are converted into percentages.
2.
In the same way frequencies are made cumulative. Considering the last
cumulative frequency item as equal to 100, all the different cumulative frequencies
are converted into percentages.
296
*!
r !.
Percentage of Income
lorenz curve
Curve
5
""" ^T "
ot^^'ltSUl'""
ôm 0 to 100
^
line . as line
Illustration 41. fa ,he fo|Wi, ab,,^ " . and . according ro the allt tX" t'^
Profits earned in Rs '000 Area A
6 25 60 84 105 150 170 400
Area B
6 11 13 14 15 17 10 14
2 38 52 28 38 26 12 4
Sii inequa
nil
income After-ta No. of,
After-m
No. of I
297
Solution. Obtaining Lorenz Curve, we calculate percentage values as under :

Profits (in thousand)
CumuCumu-
Area A
Cumu-
No of Cumu-
Area B
Cumu-
No. of Cumu-
lative lative Com- lative lative Com- lative lative

Profit Profit Profit panies
Num- Per-
Percen-
ber
tage
age
panies
cent-
ber
age
0.6
25
31
3.1
11
17
17
38
40
20
60 .
91
9.1
13
30
30
52
92
46
84
175
17.5
14
44
44
28
120
60
105
280
28.0
15
59
59
38
158
79
Num- Per-.
cent-
150
430
43.0
17
76
76
26
184
92
170
600
60.0
10
86
86
12
196
98
400
1000 100.0 14
100
100
200
100
Since curve B is farthest from the line of equal distribution, it represents greater
inequality in area B as compared to area A.
Illustration 42. 9400 Indian households are classified according to their after-tax
income as follows :
After-tax income : 0-1000 1000-5000 5000-10000
No. of households : 1348 4^9 1892
After-tax income : 10000-20000 20000-40000
No. of households : 1460 490
Drawrh. T .
^t'^ti^tics for Economics-XI _âlculatioi^^ Values
After-tax Income
0 - 1000 1000 - 5000 5000 - 10000 10000 - 20000 20000 - 40000
Cunmlatii'c Income r> f Cumulative Percentage of Income
No. of houses holds
Cumulative Number of households
Cumulative % of house- . holds
Below 1000 Below 5000 Below 10000 Below 20000 Below 40000 IT 12.5 25.0 50.0
100.0 1348 4210 1892 1460 490
1 1348 5558 7450 8910 9400 14.34 59.13
79.25 94.74 100.00
of measures of oispersion
;-----iôrenz Curve. We are now m a position to make a
there is more inequahty
299
comparative study of these measures. It would help us in the selection of an
appropriate measure of dispersion which depends on-(^) nature of data, (b) the
purpose, and [c) object of an investigation.
1.
Definite value point of view : All the four-methods of dispersion are rigidly
defined
and their values are definite.
2.
Calculation point of view : Range is the easiest and simplest measure
because it is the difference between two extreme items. Quartile deviation is
superior to the range, as it is not affected too much by the value of extreme items,
instead it is calculated from lower and upper quartiles. This is also easy method.
However, Mean deviation and Standard deviation requires more calculations which
are based on the deviations from average. Lorenz Curve is a visual aid method but it
does not give quantitative measure.
3
Based on every item point of view : Range and quartile deviation are not
based on
" all the items of series while mean deviation and standard deviation makes use of
all the items. They are based on every item of the distribution. Range is highly
affected by the extreme item.
4
Interpretation and application point of view : All the four measures of
dispersion are easy to interpret. Range and quartile deviation are useful for general
study of variability. Range is useful for quality control, weather forecasting, etc.
Quartile deviation is useful when influence of extreme items is minimised as in the
study ot social problems. Mean deviation is used by economists and busmess
statisticians It is useful in forecasting business cycles and small sample studies.
Standard deviation possesses most of the good characteristics of a measure of
dispersion Therefore, in sampling and other areas of statistical analysis, it is the
most favoured and indispensable measure.
5
Algebraic treatment point of view : Standard deviation is the best measure of
dispersion because of correct mathematical processes as compared to range,
quartile deviation and mean deviation. It is widely used in statistics, i.e., in making
comparison between variability of two or more sets of data, in testing the
significance of random samples, in correlation and regression analysis, etc.
Thus, standard deviation satisfies the most essentials of a goqd measure of
dispersion.
These essentials are as under :
(i)
It should be simple to calculate and easy to understand.
(ii)
It should be rigidly defined, i.e., it has precise value.
(iii)
It should be based on all the observations of a series.
(iv)
It should not be greatly influenced by extreme items.
(v)
It should not be affected by fluctuations in sampling.
(vi)
It should be usable for statistical calculations for further or higher order
analysis.
300
j .
of formulae
Range
Absolute Afeasure
Range = L - S
Q^rtile Deviation
Relative Measures
Coefficient of range
L-S
L+S
L = largest item S = smallest item
Absolute Measure
Quartile range = Q^ _ q Semi-interquartile range or Quartile Deviation
Q.D. =
2
Relative Measures
Coefficient of Quartile Deviation
_ QlzQl Qs+Qi
Qj = lower quartile Qj = upper quartile
Absolute Measure Individual Observations
M.D. =
N
--
- ^Ji^
I > I = Deviations from median
Discrete and Continuous Series
M.D. =
zfjm
N
Short-cut (Assuiiied mean) Mediod
M.D. = lll^hilzAmB-^ N
Absolute Measure Individual Observation
Actual Mean Method
a=
N
Direct Method
N y M Assumed Mean Method

IN
a=
' N ' d = X-A
.N
Relative Measure Coefficient of Mean Deviation
Coeff. M.D. =
M.D.
Mean or Median
M.D.
XorMe
R< lative Measure
ent nf Standard Dcv- f-on
or mean ignoring signs
Coeff. S.D. = -E-X
Relative Measure Coefficient of Variation
a
C.V = - X 100
301
a=
d' =
N
fX~A
{N
XC
Vc
C = Common factor
"CS
Dirt
a=
a
N
IfX N
2-(Xf =
N
'N[N
Assumed Mean Method
a=
'N
lfd I N
\2
aIN[NJ
Variance or a' = ^^X-Xf ^ N
XC
a'
^ J^]
N
N
\ i\ J
Xe
d - , C = Common factor
1V
t
r
302
Combined Standard Deviation (a) Two related groups :
j .
_ Niof + N^cl + + N^dl

Here,.
{b) Three related groups :
,_
+ Nôl + Njof + N, Jf + N^dl + N,dl
3
Here, and
d^ = ^3 -X^ 2,3
EXERCISES
Questions :
1.
Illustrate the meaning of dispersion with examples.
2.
What are the essentials of a good measure of dispersion.?
3.
{a) Name four commonly used measures of absolute dispersion.
{b) Name the most commonly used measure of relative dispersion. Give formula for
calculating it.
4.
Why should we measure dispersion.? Do the range and quartile deviation
measure dispersion about same value.?
5.
A measure of dispersion is a good supplement to the central value in
understanding frequency distribution. Comment.
^
6.
Which measure of dispersion is the best and how.?
7.
Some measures of dispersion depend upon the spread of values whereas
some calculate the variation of values from central value.? Do you agree?
8.
Define the first and third quartiles. Explain how the quartiles are used to
calculate dispersion values.?
9.
(a) What do you understand by mean deviation?
qZt'd^LLT"^"""
10. 'Coefficient of variation is a relative measure of dispersion'. Explain
^^ variability? What is the need of calculating a measure
17.
lo.
19.
20. 21.
303
H2. In what way is standard deviation a better measure of dispersion than mean
deviation?
13 What is Standard deviation? Explain the uses of standard deviation.
14.
Why is standard deviation considered to be the most popular measure cf
dispersion.
Explain.
15.
... . ,
What IS coefficient of variation? What purpose does it serve? Also distinguish
between 'variance' and 'coefficient of variation'.

16.
Define coefficient of variation? In what situation would you prefer this as a
measure
of dispersion.
Make a comparative study of various measures.
"The standard deviation of heights measured m inches will be larger than the
standard deviation of heights measured in feet for the same group of individuals.
Comment on the validity of the above statement. Otherwise give appropriate
explanation of the statement given above.
What is meant by absolute and relative measure of dispersion?
Briefly explain the concept of 'Lorenz Curve'.
Define Lorenz Curve.
22. Write short notes on:
(a) Coefficient of Dispersion
(b) Coefficient of Variation
(c) Variance Standard Deviation

(e) Quartile Deviation
(f) Lorenz Curve
Problems : Range
1.
The daily wages of ten workers are given below. Find out range and its
coefficient.
No. of Workers :A B C D E F G H I ] Wages in (Rs) : 175 50 50 55 100 90 125 145 70
60
[Range = 125; Coefficient ot Range = 0.55J
2.
Following are the marks obtained by students m Sec. A and Sec. B. Compare
the range of marks of students in two sections.
Marks (Section A) : 20
25
28
45
15
30
Marks (Section B) : 45
52
36
42
28
25
[Section A : Range = 30, Coetticiem ot Range = 0.5

Section B : Range = 27, Coefficient of Range = 0.351]
3.
Find range and coefficient of range of the following :
(a) Per day earning of seven agricultural labourers in Rs :

60, 72, 36, 85, 35, 52, 72
304
Jan. +1.5 July -0.1
Feb. +2.4 Aug. -0.6
from normal (2002).
Mar. Apr.
May
+3.1 -1.5
-0.4
êp. Oct.
Nov.
-1-5 -0.6
-1.9
j .
June +3.3 Dec. -6.1

4.
[(a) Range = 50, Coeff. of Range L 0 42
No. of Workers :
50 2
70 8
80 12
90
7
100 4
120 3
130 8
150 6
5.
If
Xf
10 4
15 12
6.
Fir.^ M
i^vduge = û; L.oel
Find the range and coefficient of range of the following Age m years : cm
&
Frequency :
20
30
40
50
[Range = 40; Coefficient of Range = 0.67]
5-10 10
10-15 15
7.
15-20 20-25
20 5 [Range = 20, Coefficient of Range = 0.671
Frequency :
1-5 2
6-10 8
11-15 15
8.
16-20 21-25 26-30 20 10 lânge = 30; Coefficient of Range = 0.97]
:e
The following table gives the hei^h. f ^
Method.
^^
^^ R^^ge = 0.97
Calculate dispersion by Rang.
Height (in centimetres)

Below 162 Below 163 Below 164 Below 165 Below 166 Below 167 Below 168 Below
169 Below 170
No. of persons
1 8 19 32 45 58 85 93 100
[Range = 9 cm. Coefficient of Range = 0.
03]
'f
^M
305
Quartile lc\ialinn
9. Calculate Quartile Deviation and its Coefficient of Rajesh's daily income.
Months
: 1 2 3 4 5 6 7 8 9 19 11 12
^ Income (Rs) : 239 250 251 251 257 258 260 261 262 262 273 275
[Q.D. = Rs 55, Coeff. of Q.D. = 0.213] 10. Find the Quartile Deviation and its
Coefficient from the following data relating to the daily wages of seven workers : .
Daily Wages (in Rs) : 50 90
70
40
80
65
60
[Q.D. = Rs 15, Coefficient of Q.D. = 0.23] ^ Find out Quartile Deviation and
Coefficient of Quartile Deviation of the following items :
145 130
200
210
198
234 159
160
178
257
260 300
345
360
390
[Q.D. = 70; Coefficient of Q.D. = 0.304]

12.
Find out Quartile Deviation, Interquartile Range and Coefficient of Quartile
Deviation of the following series :
Height (in inches) : 58 59 60 61 62 63 64 65 66 No. of Persons : 2 3 6 15 10 5 4 3 1
[Q.D. = 1, Interquartile Range = 2, Coefficient of Q.D. = 0.016]
13.
Find out Coefficient of Quartile Deviation from the following data :
X : 10 15 20 25
f:
30 35 40 45
17 29 38
25
14
[Coefficient of Q.D. = 0.2]

14.
Calculate Quartile and Coefficient of Quartile Deviation of the following data :
Marks : 5-9 10-14 15-19 20-24 25-29 30-34 35-39 Students : 1 3
8
5
4
2
2
[Qj = 15.906, Q^ = 20, Q^ = 26.687 and Coefficient of Q.D. = 0.25]
15.
Calculate lower and upper Quartiles, Quartile Deviation and Coefficient of
Quartile Deviation of the following series :
Values: 5-6 6-7
7-8
8-9 9-10 10-11
Frequency : 5
12
15
[Qj = 6.875, Q3 = 8.733, Coefficient of Q.D. = 0.119]

16.
Calculate the Semi-interquartile Range and its Coefficient of the following
data : Marks : 0-10 10-20 20-30 30-40 40-50 50-60 60-70 No. of Students : 4 8
11
15
12
6
3
[Q.D. = 11.55; Coefficient of Q.D. = 0.337]

17.
Find out the Q3, Qj, Quartile Deviation and Coefficient of Quartile Deviation in
the following :
Age
: 20- 30- 40- 50- 60- 70- 80-
No. of Members : 3 61 132 154 140 51 2

I
[Q3 = 64.08, Q, = 45.43, Q.D. = 9.33, Coefficient of Q.D. = 0.17]
'i
1
306
68
M.D. = 12.77] 50 50
18. Calculate the InterquartUe Range for the data given below
Zency : T T T^^ ^
6
[I.Q.R. = 12.9]
Mcaii Deviation
Find Coefflcent of Mean dev,aon fn, median
P''-^ ms) : 25 28 32 32 36 48 44 45
... Ca,cn,a. Mean Oe..on from mean and med.an of rS^laTa" ^
^^
52 49 45 72 57 47
Ca.n,a.e Mean Oeo f.om
ml"; Llf ;
-^"
= ^ 4 10 9 15 12 7 9 7
.. o .e a.e devia.on from mel^'X f^ Xtn:
n
12 18 24 30 36 42
Frequency : 4 7 9 18 15 jo 5
24. Calculate Mean Deviation from median : =
No. of tomatoes per plant : 0 1 9 cj 4 ^

No. of plants . -y . ^ , , ^ ^ ^ 7 8 9 10
2 ^ 7 11 18 24 12 8 6 4 3
Size of Item :
Frequency =2
^^
14
^^
16
[M^D from X = 3.32 and Coefficient of M.D. = 0 342

26 Th. u,
"" ^^ " and Coeff,ciem of M D - 0 4051
dev,a,L.
""<1 ""dian and coeffiden, mean
s- ^^Mrr r ? r
[M.D. from X = 28.56, Coeffidem of M D = 0 228 M.D. from Me = 28, Coefficient of
M.D. = 0.233]
^^^
127 Calculate Mean Deviation from mean of the following data :

Class : 3-4 4-5 5-6 6-7 7-8 8-9 9-10 Frequency : 3
8
22
60
85
32
[M.D. = 0.915]
28.
Calculate Mean and Mean Deviation and coefficient of M.D. for the following
distribution :
Weekly tvages :
20-40 40-60 60-80 80-100
Workers
20
40
30
10
[Mean = 56, M.D. = 15.2 and Coefficient of M.D. = 0.27]

29.
Age distribution of hundred life insurance policy holders is as follows :
mlrTstVtrthday : 17-19 20-25 26-35 36-40 41-50 51-55 56-60 61-70 Number
16 12 26 14 12
^_^
Calculate Mean deviation from the median age.
:9
[M.D. = 10.73]
30.
Find Mean Deviation from median of the marks secured by 100 students in a
class-test as given below:
Marks :
60-63 63-66 66-69 69-72 72-75
No. of students :
18
42
27
[M.D. = 2.26]
31.
Using Mean Deviation from median of the income group of 5 and 7 members
given below, compare which of the group has more variability?
Group A : Group B :
4000 3000
4200 4400 4600 4800 4000 4200 4400 4600 4800 5800
[Group A : M.D. = 1240, Coeff M.D. = 0.054 Group B : M.D. = 571.4, Coeff. M.D. =
0.13 Group B has greater variation]
Standard Deviation
32. Calculate the Standard Deviation of wage earner's daily earnings :
Week
Earnings (in Rs)
1
54
2 62
3
63
4
65
5 68
6
71
78
9 10
73 78 82 84 [X =70, S.D. = 9.01]
33. Calculate Standard Deviation of the following two series. Which series has more
variability:
A : 58 59 60 65 66 B : 56 87 89 46 93
52 75 31 46 48 65 44 54 78 68 [A: X = 56, S.D. = 11.7, C.V. = 20.89% B: X = 68,
S.D. = 17.1, C.V = 25.14% Series B has more variability]
308
WaSiSM
wem mtM
j .
Income (Rs) ; iqo

120 ISO ^ 140 120 150
[X = 133.7S, S.D. = 22.88]
35.
36.
: (B) Following are given X variable
55, 49, 67, 89, 44, 59, 57 (a) Calculate
() the arithmetic mean () the standard deviation (/') the mean deviation Also
calculate 0) Z(X - 55)^ () 2 IX - Median! (c) Examine, if
()Z|X-X|>z IX-Median!
No. of families
166 552 580 433 268 148
78
37.
9 10 11 12 77 41 20 8 6 1
Calculate Mean and Standard Deviation fron. . n ^^ "
Marks (Above) Q jq
the followmg data :
= 1-76]
No.
: 150 HO 100 80 80 70 30 ^
Calculate Mean and vana.ce f.r the
2
X
25
4 16
5 21
6 18
7 13
8 10
94
38.
10
3
[X = 5.5; a^ = 3.99]
25-30 16
30-35 8
39.
WKMM wm&m
Ml
35^0 3
"^^^-o
Vanance ..
Frequency 2 ,
^^-25
7 13 21
Calculate the Coefficient of V^w r . ^^ " = 7.95, 02 ^

200 workers in a flc.
lowing distribution of the wagt 2
ÔT
: 40-49 en
fX= 74.45,S.D. = ,5.921.CV...2,.38%J

4:
43
44.
309
40.
The following are the scores made by two batsmen A and B in a series of
innings:
: 12 115 6 73 7 19 119 36 84 29 % \; B : 47 12 76 42 4 51 37 48 13 0 ; Who is better
as a run-getter? Who is more consistent?
[A : X = 50, S.D. = 41.83, C.V. = 83.66%
70.82%]
B : X = 33, S.D. = 23.37, C.V. =
(A is better as run-getter and B is more consistent,)

41.
The index number of prices of cotton and coal shares in 1998 were as under:
Month : Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Index Number of
Prices :
Cotton : 188 178 173 164 172 183 184 185 211 217 232 240 Coal : 131 130 130
129 129 129 127 127 130 137 140 142 Which of these two shares do you consider
more variable in prices :
[Cotton : X = 193.9, S.D. = 23.80, C.V. = 12.27%
Coal : X = 131.75, S.D. = 4.815, C.V. = 3.65% Cotton shares are more variable in
prices]
42.
Calculate the arithmetic mean and
the following distribution :
standard deviation and variance from
Class : 0-5 5-10 10-15
15-20 20-25 25-30 30-35 35-40
Frequency : 2 5 7
21 16 8
13
[X = 21.9, S.D. = 7.99, a^ = 63.97]
43.
Calculate arithmetic mean and standard deviation and variance from the
foSbwing series:
Marks : 70-80 60-70 50-60 40-50 30-40 20-30
No. of Students : 7 11
22
15
[X = 51.67, S.D. = 15.13, a^ = 228.92] ,44. The following tables gives the age
distribution of students in a school in 2001 and 2002. Calculate Coefficient of
Variation for both the groups.
Age
:. 17- 18-
19-
20-
21-
22-
23-
24-
25-
2001 : 1
12
14
14
2002 : 6
22
34
40
32
20
16
[2001 : X = 21.5, S.D. = 1.703, C.V = 7.92%

2002 : X = 20.91, S.D. = 1.846, C.V. = 8.82%]
You are given the following data about height of boys and girls :
Boys Girls
72
, 38
Number
Average height (in inches) Variance of distribution (in inches)
tl
68 9
61 4
310
46.
j .
(a)
Calculate Coefficient of Variation.
(b)
Decide whose height is more variable.
[{a) Boys : C.V. = 4.41%, Girls C V - 1 77/1 r i

Ufe No of Years : 0-2 2-4 4-6 6-8 8-10
No of Refrigerators Model A Model B

10-12
16
13
of
Wh,chide, has
[Model A : X =5.12, C.V. = 54 9% Model B : X = 6.16, C.V = 36.2%

Neck circumference . 12 0 12'^ i^n
(in inches)
^^.O 14.5 15.0 15.5 16.0
No of Students : 5 20 30 43 60 56 37 16 .
crkenon Mean .3 standard deviation.
'
^^^ ^ê
[X = 14.01", a = 0.87". The largest size of collar = 16.62".

48 T, u A r
I
smallest size of collar = 11 4"1
^^^ --Its : ^
Life ( 000 miles) : 20-25 25-30 30-35 35^0

orand X
12
IS
Brand Y
in
20
30
15
32
Which brand has a greater variation.?

[C.V. (X) = 21.82%; C.V. (Y) = 16 101/ y U
.o. the data he.ow state lih se'r.s'.rcon'.^l'^
40-45 13 12
45-50 9 0
Variable Series A Series B
10-20 20-30 30-^0 40-50 50-60 60-70 18
22
40_ 32
18
10
32 40 22
18
[Series A : _X = 42.14, S.D. . 14.06,.C.V = 33.36%

50 Th. ( u u,
B : X = 37.86, S.D. = 14.06, C.V = 3714%1
50. The following table gives the distribution of wages m the two branches of a
falry^
::
300-350
"
93
157
105
82
500
311
gr Find the mean and standard deviation for the two branches for the wages
separately. F [a) Which branch pays higher average wages?
(b)
Which branch has greater variability in wages in relation to the average
wages?
(c)
What is the average monthly wage for the factory as a whole?
id) What is the variance of wages of all the workers in the two branchesA and B
taken together?
[Branch A : Mean = Rs 225, S.D. = Rs 66.20, C.V. = 29.42% Branch B : Mean = Rs
230, S.D. = Rs 62.15, C.V. = 27.02% {a) Branch B pays higher average monthly
wages.
(b) Branch A has greater variability.
(c) Combined Mean = Rs 226.67 (d) Combined Variance = Rs 4215]
51.
What percentage of frequencies are there in the range of X 3 S.D.
X : 60.5 70.5 80.5 90.5 100.5 110.5 120.5 130.5 140.5 f 3

209 81 21 5
21 -78 . 182 305
[X = 100.95, S.D. = 13; Range = 99.12%]

52.
Goals scored by two teams A and B in football matches were as follows : No.
of Goals in a match : 0
1
2
3
4 No. of matches : A : 17 9 8 5 4
B : 17 9
Find the team which is more consistent in its performance.

[Coeff. of variation Team A = 123.6% Coeff. of Variation Team B = 109.0% Thus,
Team B is more consistent]
53.
Find mean and the standard deviation of the following two groups taken
together:
Group Mumb^ :
^. ; Mean : , ^ . SOX : - -
113
159
22.4
121
149
20.0
54.
[Combined .: X^ z = 153.83, a^ , = 21.8]
The number examined, the mean weight and standard deviation in each group of
examination by two medical examiners are given below. Calculate mean and
standard deviation of both the groups taken together.
a
iW
Medical Exami?ier iiilS^^ MiMm Examined IS^^WMlilli
Standard Deviation
AB
50 60 113 120
' y Mean : ^ Weight
6.5 8.2
[Combined : X^ ^ = 116;82, Oj , = 8.25]

312
^ The following data gives arithmef ^^ Sub-srauh \r.: r77~~~r~--------B'ûp.

No. of Men
AB
C
{in Rs)
50 100 120
61.0 70.0 80.5
Standard Deviation (in Rs)
8.0 9.0 10.0
c^ A fCombined : X, , , - 7:5
56. A sample of 35 value, h.c o ' ~ ' 2.3 = 11.9]

<=0. a group of 50 male worths .he '' """ ' =
wages are Rs 63 and Rs 9 respSively F?"
R^ 54 and Rs 6 tespeaively Fi"d If"
group of 90 workers. '
of their weeidy
"0 female workers, th^fare
'"> ^^dard deviation for a comLed
Coefficient ofvariation of two series are 5S/ ' = ",, = 91

and What are their ml, TJ" ""'"'on
f the coefficient of variation of X series is J4 6/ 'f f" * =
nteans are fOf.a and
respe':,!:^^^.^- l^dTZ:^--
No. Of Persons COOO)
^^
60 iqO i^q
40
50
22.608]
Class A
Class B
]'
20
80
^ - li It ll - .5 85 ' ^ - - 40
61.
xi/St------y^PC-
58.
59.
60.
- [rniu-vaiues) No. of students (Eco.) No. of students (Statis.)
Chapter 11
MEASURES OF CORRELATION
T. 2.
3.
4.
5.
6.
Introduction
Correlation and Causation Kinds of Correlation Degree of Correlation Methods of
Studying Correlation Scatter Diagram
Karl Pearson's Coefficient of Correlation () Spearman's Rank Correlation List of
Formulae
iduction
In the previous chapters we have discussed measures of central tendency (Mean,
Median and Mode), partitional values (Quartiles) and measures of dispersion
(Range,' Quartde Deviation, Mean Deviation, Standard Deviation and Lorenz Curve.
These are all relating to the description and analysis of single variable only This
type of statistical analysis is called 'univariate analysis'. Now, we will deal with
problems involving association in two variables. We find that in social as well as
natural sciences, where more than one inter-dependent variables are involved,
change in one variable brings change in others. For instance, in Biology we know
that weight of a person increases with height in Geometry we know the
circumference of a circle depends on the radius, in Economics prices vary with
supply, cost of industrial production varies with the cost of raw materialsagricultural production depends on the rainfall etc. The relationship between
variables is measured by correlation analysis. Thus, 'the term correlation (or
covariation) indicates the . relationship between two such variables in which change
in the values of one variable, the values of the other variable also change.' This
statistical analysis of such data is called bivariate analysis
Other Definitions
According to Croxton and Cowden, "When the relationship is of d quantitative
nature, the appropriate statistical tool for developing and measuring the
relationship and expressing it in a brief formula is known correlation."
According to L.R. Connor, "If two or more quantities vary in sympathy so that
movements in one tend to be accompanied by corresponding movements in
other(s) then they are said to be correlated."
t
314
H.
^relation and causation
j .
1. Cause and effect : There is a cause and effect relationship between two variables
shon w,ves and many .h starred husbands may havt K' ^ r;
315
be correlation between price and demand so that in general whenever there is an

increase in price the demand falls, and vice-versa. But this does not mean that
whenever there is a rise in price the demand must fall. It is possible that with the
rise in price the demand may also go up. This is on account of the fact that in
economic and social sciences various factors affect the data simultaneously and it is
difficult almost impossible to study the effects of these factors separately. Thus,
correlation measures co-variation, not causation. It measures the direction and
intensity of relationship among variables.
s^ds of correlation
On the basis of nature of relationship between the variables correlation may be :

(1)
Positive and Negative Correlation
(2)
.Linear and Curvilinear Correlation
(3)
Simple, Multiple and Partial Correlation
1. Positive and Negative Correlation

When both the variables change in one direction, that is when both increase or
decrease the relationship between the two variables is called positive or direct. But
when the change is in opposite directions that is one is increasing and the other is
decreasing, the correlation is negative or inverse. For determining the direction of
change average values are taken. For example :
(I) Positive Correlation
(a) .
(b)
(a)
Both variables
increasing
(il) Negative Correlation

(b)
Both variables
decreasing
One variable
increasing, the
other decreasing
One variable
decreasing, the
other increasing
10
100
70 .
147
15
125
75
110
20
150
60
140
30
110
60
180
30
160
40
135
35
90
40
190
40
190
30
130
40
80
30
200
50
200
15
120
45
75
20
240
60
255
10
90
50
60
10
250
We find that in I (a) the values of X series are increasing so also of the Y series. In I
(b) values of X and Y are decreasing. Thus, they are both instance and positive
correlation. On the other hand, in II {a) the values of X are increasing and the
values of Y are decreasing, similarly in II (b) the values of X are decreasing and the
values of Y are increasing. Thus, hey are both examples of negative correlation.
316
Examples : (Positive Correlation)'^"""""'cs-XI
1- Age of husband and age of wife.
--easeinheatlllT^^^nofr,.
1- Demand of a commodity mav ^
Increase in the number tfTe ^ "": " 3- Sale of woollen garments ant ly ir ""
Yield of crops and Price. " Correlation
u the ratio of chance h^n
of^rrotstr
-ear
line. If tbTv:ri:trfmS=bles. Their^SaSnshbt'f "P ""-"ncy

"f non-hnear "ttnTware ^'phed, rhe
bear a constant rari^ ('""'''near), the amount of chale 3. Staple, Multiple and Partial
Correlation
relationship betwln T
"^"Me or
p ''
^^r-ables are
IS a study of relaf,V,,l.- 7 ""her variables from ,1. u ,

influencing valbles b ''
variables Sfllcit ^ '
of tainfalf""stant. For example, 3;,':''
"f other
" riables
correlation. " a certain consrant^Jm::

M
317
of correlation
The relationship between two values can be determined by the quantitative value of
coefficient of correlation which is obtained by calculations.
Perfect Correlation : Perfect correlation is that where changes in two related
variables are exactly proportional. If equal proportional changes are in the same
direction, there is perfect positive correlation betWeen the two values described as
+1; and if equal proportional changes are in the reverse direction, there is perfect
negative correlation, described as - 1. For example, the circumference of a circle
increases in the equal proportionate ratio with the increase in the equal
proportionate ratio in the length of its diameter; the amount of electricity bill
increase in a perfectly definite ratio with an increase in the number of unit
consumed, the volume of a gas varies inversely with the pressure at constant
temperature etc.
DEGREE OF CORRELATION
ive
Zero Correlation : The value of the coefficient of correlation may be zero. It means
that there is zero correlation. It does not mean the absence of any type of relation
between the two variables. Two valued are uncorrelated. However; other type of
relation may be there. There is no linear relationship between them.
Limited Degree of Correlation : In social science, the variables may be correlated,
but an increase in one variable need not always be accompanied by a
corresponding or equal increase (or decrease) in the other variable. Correlation is
said to be limited positive when there are unequal changes in the two variables in
the same direction; and correlation is limited negative when there are unequal
changes in the reverse direction. The limited degree of combination can be high
(between .75 to 1); moderate ( .25 to .75) or low
i j I-i
318
Karl Pearson's foLt '"P""'^-"'^ degree of eorrelarion according ,o

Dejp-ee of Correlation
Perfect Correlation
Very high degree of Correlation
Sufficiently high degree of Correlation
Moderate degree of Correlation
Only the possibility of a Correlation
Possibly no Correlation
Zero Correlation (Uncorrelated)
Positive
+1
+ -9 or more from + .75 to + .9 from + .6 to +.75 from + .3 ro +.6 Less than +.3 0
Negative
-1
- .9 or more from - .75 to - .9 from - .6 to -.75 from - .3 to -.6 Less than -.3 0
IhhoD;
"on. Somell^ are :
SW
Coefficient of Correlation
{c) Spearman's Rank Correlation
scatter diagram
tdea about the presence of
measuring X-variable on bokolTL^âpb paper. The chart is prepared by pomt for

each pair of observation oTx and y JZTi u'''' ^^ P^^^ plotted m the shape of points. The cluster of ooin^ U
the scatter diagram. When the plottedTo te^
^^^^^ âta are
"" P^P^^ called
we know that there is some correlation Seen tl ^^^d-upward or downward-the

correlat^n is positive, when it irôv^nw^d ^
- "Pward
- scatter diagrams given below : ^"rreiation is negative. Let us study
r=+l
Perfect Positive Correlation
(a)
High Degree ot Positive Correlation (b)
Low Degree of Positive Correlation (0
Perfect Negative Correlation (d)
319
High Dgree of Negative Correlation
Low Degree of Negative Correlation
I
V!
r= 0
No Con-elation (9)
Fig. 1
Figure [a), (b) and (c) show an upward trendthey show positive correlation. Figure
(d), (e) and show a downward trendthey show negative correlat!on. Howe\ er,
there are differences among (a), (b) and (c) and similar differences among {d), (e)
and (/).
We find from the plottings on the scatter diagrams that there is a certain similarity
among (a) and {d), (b) and (e) and (c) and (/). In (a) and (d) the plotted points are
almost in a straight linesthis indicates perfect correlation. In [b) and (e) the
plotted points are not in a straight line but if we draw a straight line in the middle of
their points (regression line) we will find, the points are near about the line. This
kind of scatter diagram shows high degree correlation. In (c) and (f) if we draw a
similar line (regression line), we will find that the plotted points are very much
scattered around the line^not as near as in the case of {b) and (e). This kind of
scattered diagram shows low degree correlation. Finally, diagram {g) shows such a
vast scatter of points that it is impossible to see any trend this shows no
correlation or zero correlation.
Illustration 1. From the following pairs of value of variables X and Y draw a scatter
diagram and interpret the result.
8 9 10 11 12 13 14 15 54 48 42 36 30 24 18 12
5
72
6 66
7 60
X : 4 Y : 78 Solution.
We note that X = 4 and Y = 78 as given first X and Y values. We may plot this as
point (X, Y) on graph paper, where X = 4 and Y = 78. We measure 4 on X-axis and
78
lik
,1.
j .
scatter diagram
Scale : 0.5 cm = 2 on X-axis
B
64 56
48 40 32 24 16 8 0
320
coordinates of
measure 5 along the x'axis and 72 alongT axis and so on for all d,e given X and y Xl
from the above scatter diagram we can decide Aat the variables X an" Y "e corre
ated. The points take the shape of liê
hen tC r 'r "" Weei X aid
Rate of Change
It is slope of the straight line rwhirh depends on an angle that the str^lghT Hnt
makes with the X-axis and is equal to j^Zj
rate of change
showing almost equal change
t-- .__
--
-4-.
-U
1-
02468
10 12 14 16 IS
showing more than proportionate
an<
change
I'fl::
m
in
----
a (i
321
showing less than proportionate change
showing no change
non-linear relationship
Fig. 3
We know when the plotted points show some upward trend, the correlation is
positive and when there is downward trend, the correlation is negative.
(/) If the straight line makes an angle of 45 with the X-axis, the change is exactly
in the same proportion as the change in the value of X [Fig. {a) and (b)].
Hi) If the angle that the straight line makes with the X-axis is greater than 45 the
change in the value Y is more than proportionate to the change in the value of X
[Fig. (c) and (d)].
(iii) If the angle that the straight line makes with X-axis is less than 45", the change
in value Y is less than proportionate to the change in the value X [Fig. (e) and (/)]
(w) If there is no angle and it is a straight line parallel to X-axis, it shows that value
Y does not change at all [Fig.
(v) Linear correlation exists when the ratio of change between two variables is
uniform
The relationship is described by the straight line. In case of non-linear relationship
(curvilinear) the amount of change in one variable does not bear a constant ratio
to the amount of change in the other variable. Such relationship will form a curve on
graph [Fig. (h)].
322
Ir
!
m
f
Merits and Demerits of Scatter Diagram Merits :
1. It is very easy to draw a scatter diagram.
5. fa case of linear relationship between x lni y lT T ^ donate change in th^ .a,e t
Jcha^^r,: t'^nTT" "
t? râtX '"own , ner,ca,
Whether YLTes XorTcau^ ^^ ôes not tell,
^hen ,t . not possible to draw a scatter
pearson's coefficient of correlation
X fgr^BS
variable
(1867-1936).ItisthemostLerused me^^^^^^^^^ and

correlation of coefficient. This is atrcaHedX^^^^
statistician Karl Pearson
represented by r. It is based on arithmel^ ad f't'!, ^^ ^

of Correlation (r) of two variables ob aiZ l jfjS^^T, ^-^ffft-ent
corresponding deviations of the various 7eZ of the products of the
by the product of their standard devZ^Zan JZ ^T
Symbolically,
<êvtattons and the number of pairs of observations.
r=
Ixy
Here,
Nxaxxay
x=(X- X); y={Y- Y)
<yx = Standard deviation of X Series ie
''"\N
ay = Standard deviation of Y Series, i.e.

N = Number of pairs of observations r = Coefficient of correlation The above
formula can be rewritten as under :
Txy
323
N
r=
N.ax.ay
The above formula is based on the study of covariance between two series. The
covariance between two series is written as follows :
N
r=
Exy 1 1
-y. X N
Zxy,
ox oy 1
^y X 1 )c 1 =
^y
" if " -if

r=
Ixy
yjlx^xZy^
or
I(X-X).(Y-Y)
^Jiix-xfylm-yf
Applying the Karl Pearson's formula Coefficient of Correlation is calculated by
following methods :
(a)
Actual Mean Method
(b)
Direct Method
(c)
Assumed Mean Method
(d)

Illustration 2. Calculate Product moment of correlation from the following data and
interpret the result.
Serial No. of Students :
10
Marks in Mathematics :
48
15
18
21
24
27
30
36
39
42
Marks in Statistics :25
25
27
27
31
33
35
41
41
45
Solution. Karl Person's coefficient of correlation is also called Product Moment of

Correlation.
I
324
II
t
n^>:
i*'
Statistics for Economics-XI Cdculaôn of Coefficient of Correlation
15 18 21 24 27 30 36 39 42 48
ZX = 300
-15 -12 -9 -6 -3 0 +6 +9 +12 +18
225
25
144
25
81
27
36
27
31
33
36
35
81
41
144
41
324
45
= 1080
2Y = 330
Steps :
1. Calculate arithmetic means of X and Y series 7. Apply the following formula :
r=
Ixy
Here, ^ = (X - X) and y = (Y _ y)
Let us calculate arithmetic means of X and Y series :
300
X=
Now we get.
Y=
r=
N ZX
10
330 N
Ixy
= 30
= 33
Here, Zxy = 708, Zx^ =1080 and ^ 439

708
708 708
325
r=
= 0.98
>/l080x480 >/518400 720 Hence, there is high degree of positive correlation.
Illustration 3. Calculate Karl Pearson's coefficient of correlation between birth rate
and death rate from the following data :
Year
Birth rate
1931 24
15
1941 26
20
1951 32
22
1961 . 33
24
1971 35
27
1981 30
24
Death rate
Solution.
Calculation of Coefficient of Correlation
Actual Mean Method :
EX
X=
180
N
30 ; Y =
Ixy
EY _ m N " 6
= 22
r=
Here,
yJlx^x-Ly^ Ixy = 81, Zx^ = 90 and = 86 81 81 81
r=
V90x86 V7740 87.9772 Hence, there is high degree of positive correlation.
= 0.920
Birth Death X-X
rate
Y- y
rate
xy
24
15
-6
36
-7 \
49
42
26
20
-4
16
-2
4.
32
22
+2
33
24
+3
+2
.4
35
27
+5
25
+5
'25
25
30
24
+2
EX = 180
81
EY = 132
Ex^ = 0
Ex = 90
Ey = 0
Pi'
t-i \vi
I;-,
326
X
data compute product moment correlation between
No of items Arithmetic Mean Square of deviation from Mean

X series 15 25 136
Y series 15 18 138
c
----------138
If = 86
Exy =
Summation of product of deviations of X v o r means = 122.

Y series from their respective
"cviauons ot A and
Solution. Regarding deviations of the values in X anH v t . means, we are given the
following Morr^^^ ^ ""
= 136, ^ 138^ ^^ ^ ^^2
Applying formula
Now, we get
r=
r=
Ixy
122
122
122
= 0.891
>^36x138 V18768 136.996 Hence, there is high degree positive correlation
between X and Y
their arithmetic means be 420. Ld the coSf^fl^^^^^^^^^ IXe^^S
Solution. Given N = 50, cx = 4.5, ay = 3.5 and Zxy = 420 Applying formula.
r=
Ixy
Now, we get
N X ax X ay
r=
420
420
= 0.533
50x4.5x3.5 787.5 ^rl^'^Z
^ -cl Y.
^âtion 6. If the covariance between X and Y variables is3

X and Y are respectively 13 8 and 16 4 Vir.A .u t
between them.
+12.3 and variances of
" ^he Karl Pearson's coefficient of correlation
Solution. We are given.

Covariance of X and Y = ^ - l ? ^ Variance of X (ax^) = 13.8
= y/l3:s = 3.71
Variance of Y (a/) = 16.4
oy = Vl^ = 4.05
327
Applying formula, Now, we get
r=
N.ax.ay
Exy 1 1
-X x N ax ay
r = 12.3 X X ^
3.71 4.05 = 12.3 X 0.27 X 0.25 = 0.83 Hence, there is high degree of positive
correlation between X and Y. Illustration 7. Find the standard deviation of X series if
coefficient of correlation between two series X and Y is = 0.28 and their covariance
is 7.6 and variance of Y series is 81.90.
Solution. Given, coefficient of correlation (r) = 0.28
Covariance of X and Y =
Lxy
= 7.6
Variance of Y (af) = 81.90
ay = V81.90 = 9.05
Applying formula.
Now, we get
r=
lay
N.ax.ay
2jcy 1 1 x x
0.28 = 7.6 X
xN ax ay 1
or
ax 9.05
0.28 X 9.05 ax = 7.6 or 2.534 ax = 7.6 7.6
ax =
2.534
= 2.99 approx 3
Therefore, variance of X (ax^) = (3)^ = 9
Illustration 8. Calculate the number of items for which r = + 0.8, Ixy = 200,
standard deviation of Y = 5; and Ix^ = 100, where x and y denotes deviation of
items from actual mean.
Solution. Applying formula.
r=
Ixy
yjlx^xly^
or 0.8 =
200
Now, we get
Ô.sr =
or 0.64 =
100 xZy
or 0.64 X 100 x = 40000 64 Ey^ = 40000
yJlOOxZy^
40000 100 xZy^
i
Îv
i>t
f
Ii ;;
328
V 2 40000 64 =625
Now, = or 5 =
VN
1625
VN
or
/CX2 625 (5)^ = ^ or 25 =
or
25 N = 625 'N =
Hence,
(b) Direct Method

J:XY-N
r=
in,
ll In
625
number of items is 25.
= 25
625 N
25 ~
N.
In j
n
nJ
EXY
= -p- Kf
/ix-*
NVN
nixy~zxxy
y/NEX^
-iZXf Xy/NZY^ -{ZYf
^ " - - fr the following
where.
r=
X=
lix' N {Xfx
ZX N , Y = ZY N
N
~(Y)
v\2
r=
X.
1XY-N.{X).{Y}
X ^V X
r=
329
Illustration 9. The data of price and quantity purchased relating to a commodity for
5 months are given below. Calculate the product moment correlation (Karl Pearson's
coefficient of correlation) between price and quantity and comment on its sign and
magnitude.
Months Price (in Rs) Quantity (in kg)
1 10 5
2 10 6
3 11
4
4
12 3
Solution. Calculation of coefficient of correlation.
10 10 11 12 12
2:x = 55
5
6432
ZY= 20
100 100 121 144 144
ZX' = 609
25 36 16 9 4
lY' = 90
Steps :
1.
Calculate arithmetic means of X and Y series.
2.
Square the values of X series and obtain the total, i.e., EX^
3.
Square the values of Y series and obtain the total, i.e., EY^
4.
Multiply X and Y values and find out the total, i.e., ZXY.
5.
5 12 2
xy
50 60 44 36 24
EXY = 214
r=
IXY-N.X.Y
VeX^ - N(Xf x ^zy^ - N(Yf
Let us calculate arithmetic means of X and Y series
X=
EX 55
EY 20
N 5 ~ ^^ ' ^ - N 5
Here, ZXY = 214, EX^ = 609, ZY^ = 90, X = 11, Y = 4 and N = 5 Now, we get
214-5x11x4
=4
r=
^609-5(11)^ xV90-5(4)2 214-5x44
Ii [i 1
330
214-220 V609-605x>/90-80 -6 -6
-6
= -0.949
>/4xV10 2x3.162 6.324
Hence, there is high degree of negative correlatiori between price and quantity
purchased relating to a commodity of 5 months.
In other words, purchase (demand) decreased due to increase in the price of
commodity.
Illustration 10. Draw a scatter diagram and calculate Karl Pearson's coefficient of
correlation between X and Y. Interprete the result and comment on their
relationship. X :
1
3
4
57 8
:
10 . 14
16
Solution.
^
%
u
scatter diagram
Scale: 1 cm = 1 on X-axis 1 cm = 2 on Y-axis
-Q
lo
v SA
1
in
1V -Q(V)
U A-At
2
)1
J.
fx,
17
<
Fig. 4
From the above scatter uiagram we can decide that variables X and Y are
correlated. The points take the shape of line, and it goes up from left bottom to right
top then there IS perfect positive correlation between X and Y.
fon
equ in s con negt
353
331
X
X'
36
18
16
64
32
10
25
100
50
14
49
196
98
16
64
256
128
X = 28
XY'
ZY = 56
IX' = 164
ZY' = 656
ZXY = 328

r=
N
V
Here, IXY = 328, 2X = 28, lY = 56, IX' = 164, IT- = 656 and N = 6
r=
6
(28)^ r
rr-f
1164 56{56r
328-261.33
V164 -130.666 X V656 - 522.666
66.67 V33.334 X VI 33.334
66.67 66.67
= +1
5.774x11.547 66.67 r = +1
There is perfect positive correlation by scatter diagram and even by Karl Peaison^
formula, resulting to r = +1.
We observe from the illustration the changes in twô values X and Y are exactiv in
equal proportion. Y values are exactly double than the corresponding values of X
movuig in same direction (upward). In such situation, correlation results to perfect
positiJe correlation. If equal proportional changes are in the reverse direction, there
is perfect negative correlation (r = -1).
f/ '
fiPl
IN
332
-fflcient of ce,ado
Statistics for Economics-XI I
on their relationship.
between X and Y and
X Y : Solution.
comment
-3 9
-2 4
-1 1
24
39
-3 -2 -1 1 2 3
IX = 0
l^jgilftjon of Coeffident of Correlation
941149
xy = 28
941149
= 28
81 16 1 1 16 81
ly^ = 196
XY
-27 -8 -1 1 8 27
Zxy= 0
r=
IXY-
N
2 (ZYf
fzy^-
N
=0
yf^x^/65.334 = 0 5.291x8.083"
rhey
333

When actual mean is not a whole number; but a fraction or the series is large, the
calculation by actual mean method and direct method will involve a lot of
calculations and time. To avoid such tedious calculations, we can use the assumed
meat, method. Correlation coefficient can be obtained by the following formula.
Idxdyr=
Ux.Zdy N_
W(Zdyf
N
Illustration 12. Calculate Karl Pearson's coefficient of correlation of the following
data of height of fathers in inches (X) and their sons (Y). Interpret the result.
Height of fathers (in inches) : 65 66 57 67 68 69 70 72 Height of sons (in inches) :
67 56 65 68 72 72 69 71 Solution.
65
66 57
67
68
69
70 72
-3 -2 -11 -1 0 +1 +2 +4
Zdx = -10
9 4 121 1 0 1 4 16
Z^^ = 156
67 56 65
68 72 72 69 71
+2 -9 0 +3 +7 +7 +4 +6
ldy = 20
4 81 0 9 49 49 16 36
Zdy" = 244
-6 +18 0 -3 0 +7 +8 +24
Idxdy = 48
Steps :
1. Calculate the deviations of X series from an assumed mean (68) and denote them
by dx and find out the total, i.e., ILdx. 1. Calculate the deviations of Y series from an
assumed mean (65) and denote them by dy and find out the total, i.e., Uy.
3.
Square the deviations of X series and obtain the total, i.e., Zdx^.
4.
Square the deviations of Y series and obtain the total, i.e., I^y^.
5.
Multiply t/x and f/y and find out the total,/.e;, Ikixiiy.
6.
Applying the following formula, we get
334
Here, Zdxdy = 48, ZJx = -10, I^y = 20, N = 8, W = 156, ZJâ ^ ,44 Now, we get r =
-j
8
48 + 25 >/i56-12.5XV244-50
73
73
73
11.97x13.92 ~ U^ ""
the: "
l>etwee height of fathers and
We can simplify the above calculations by using log tables : Taking Logarithms
73
Hence,
VM3.5xVm log r . log 73 - 1 [log 143.5 + log 194]
= 1.8633 - i [2.1563 + 2.2878]
= 1.8633 - 1 [4.4441]
= 1.8633 - 2.2220 = -0.3587 = -0.3587 (+1) - -1 + (1 - 0.3587) = Antilog T.6413 r =
0.4378 = 0.438
{d) Step Deviation Method convenient common factor to redZ T , ""
by
u Stq
,
335
I unaffected by the change of origin and change of scale of X and Y. After changing
these deviations, we apply the same formula of assumed mean method.
Illustration 13. The data on price and supply relating to a commodity for 7 months
are given below : ^
^
".s)
40
Supply (in kg)
lo^ .o .o
: 400 200 500 1000 400 1100 1200
Calculate product moment of correlation between price and quantity and comment
on its sign and magnitude. Solution.
X-60
X-60
.Price (Rs)
X
dx'
(kg)
20
dr
y-700 dy^
drdy
I /W
t*jf
dy
100
20
-40
-2
400
-300
-3
6:
40
-20
-1
200
-500
-5
25
60
500
-200
-2
o;
80
+20
+1
1000 +300 +3
100
+40
+2
400
-300
-6
120
+60
+3
lioo
+400 +4
16
12
140
+80
+4
16
1200 +500 +5
25
20
ZX = 560
97
lAxdy= 40
Tdx = 7
-3
Zdx^ = 35
ZY = 4800
Zdy = -l
Idf =
Steps :
1.
Calculate the deviations of X series from an assumed mean and divide them
by common factor. Denote them by dx and find out the total, i.e., Idx.
2.
Calculate the deviations" of Y series from an assumed mean and divide them
by common factor. Denote them by dy and find out the total, i.e., Uy.
3.
Square the step deviations of X series and obtain the total, i.e., Idx\
4.
Square the step deviations of Y series and obtain the total, i.e., Zd-f.
5.
Multiply dx and dy and find out the total, i.e., Idxdy.
6.
(Zdx).CZdy)
N_
Zdx.dyr=
[Zdxf N
Zdy^(Zdy)^ N
336
Here, Idx.dy = 40, Zdx = 7, Uy = _

r=
40-1^
'7
Statistics for Economics-XI 1; N = 7, W = 35 and Ldy^ = 97
^_ -
41
y/Bxy/96-857
41
41
= + 0.787
_
5.29x9.84 52.05
commodity. ner words, supply mcreases due to mcrease in the price of

Change of Scale in the Calculation of r
valu" of
~ ff
^^ ^^^
we take the values as T 2 ani s thrva L T Z ^^ ^
^00 and
values of Y-series are 1 i 2.4 and 3 7 lev ci\ 1 T J'l
^^^^
these values to he 12,24 ^n,^'' -

The following example would illustrate the poim
Illustration 14.^ Calculate^coeffic^^^^^
SolL^W^rmultSTLes^lOa^r."^^^ ^^^^^
values of X and Y would L ^
^ ^y ô that the
X:1
^=
10
11
J3
'
'
'
Calcularion of Coefficient of Correlation
359
Applying formula
337
"Ldxdy
r=
(ldx)(Uy) N
Here, Uxdy = 46, Ux = 0

Idy = 0, EJx^ = 28, Zdy^ = 76, N = 7
Now, we get
+46r=
(OHO) .7
f^xf^
+ 46
sBmm
LIBRARY
= 0.997
V28x47
Hence, there is high degree of positive correlation.
If the original values of X and Y were used the result would still be the same and r
would be +0.997.
Assumptions of Karl Pearson's CoefiScient of Correlation
Pearsonian coefficient is based on following assumptions :
1.
Linear relationship : If two variables are plotted on a scatter diagram, it is
assumed that the plotted points will form a straight line. So there is a linear
relationship between the variables.
2.
Normality : The correlated variables are affected by a large number of
independent causes, which form a normal distribution. Variables like indices of price
and supply, ages of husbands and wives, heights of fathers and sons, price and
demand are affected by such forces the normal distribution is formed.
3.
Causal relationship : Correlation is only meaningful, if there is a cause and
effect relationship between the force, affecting the distribution of items in two
series. It-is meaningless, if there is no such relationship. There is no relationship
between rice and wheat, because the factors that affect these variables are not
common. Similarly, the weight of an individual during the last ten years may show
an upward trend and his income during this period may also show similar tendency
but there cannot be any correlation between the two series because the forces
affecting the two series are entirely unconnected with each other. The calculated
coefficient of correlation of such series is usually termed as ''non-sense or spurious^
correlation.
4.
Proper grouping : It will be a better correlation analysis if there is an equal
number of pairs.
5.
Error of measurement: If the error of measurement is reduced to the
minimum the coefficient of correlation is more reliable.
Ji
"i
338
Mathematical Properties of th^ r
Th^ ( 11
Coefficient of Correlation
are muIdpUed or divided by so ^rant ^ f'"" * ^-ri' consr^r . subtracted or added

frorivl'f^^'/v""" "" 'ât a " and 14).
of X and Y series. (See Illustration
3. The converse of the dieorem r=n i.
and need not necessarily be indepe^detit Uncor^L ^ """elated variables and y
Stnyly implies the absence of Itoear rZI^ \
bles X
however, be related in some other fobetween them. They may,
MerU^^d Demerits of Karl Pearson's Coeffident Demerits
3
process is time consuming.
relaZ'Sp' between the variables, whether such

4. Correlation lies between 1 Thi ^ i
otherwise it may be misinterpreted.
'
interpretation.
^Rww^ ____________
under consideration
^^^
Charles Edward spearman, a British psychologist developed a formula in 1904 which

consists in obtaining the correlation coefficient between ranks of N individuals in the
two attributes under study called coefficient of correlation, by rank differences. It is
the Product Moment Correlation between the ranks.
This method is applicable only to individual observations rather than frequency
distribution. The result we get from this method is only approximate one, because
under ranking method original values are not taken into account.
After assigning ranks to the various items, the differences of corresponding rank
vaiues are calculated and following formula is used :
rfe = 1 N^-N
where,
rk = Coefficient of rank correlation ZD' = the total of squares of the differences of
corresponding ranks N = the number of pairs of observations Like Karl Pearsons, the
value or rk lies between +1 and -1. If rk = +1, then there is complete agreement in
the order of ranks and the direction of the rank is also the same. When rk = -1, then
there is complete disagreement in order of ranks and they are in opposite direction.
Let us examine by following example :
1
23
1
23
000
000
niy = 0
rk = \-
=1ZD^ N^-N
6x0
3^-3
=1-0=1
Perfect positive correlation, i.e., there is a complete agreement.
1 2
3
321
-2 0 2
4
04
=8
rk = l=16ZD^ N^-N
6x8
3^-3
= 1 - 2 = -1
Perfect negative correlation, i.e., there is complete disagreement.
The problems are of three types of calculation of rank correlation :
When Ranks are given, (fc) When Ranks are not given, (c) When Ranks are equal or
repeated.
Ir i
(If:
340
(a) When ranks are given :
Illustration 15. In a hah
Entry Judge I Judge II
Calculate the rank correlation coeLent!" Solution.
j .
CDE
345
164
//
10
11
10
11
F65
^^^ff^^ffident of Correlatic
A
B
C
D
E
F
G
H
I
J
K
N= 11
12
3
4
5
6
7
89
10 11
2
-1
-1
+2
-2
+1
+1
-1
+1
10
-1
11
-1
+2
Steps :
11441111114
ZD'= 20.
1.
Calculate the difference of two ranks /e Rn u
2.
Square these differences and find o^ 'Z tok]
3.
rk=l-
Now we get.
N^-N
n'-n
where, ZD^ = 20 and N = H
363
341
rk=l6x20 11^-11
=1120 1320
= 1 - 0.091 = 0.909
Hence, there is high degree positive correlation, i.e., two judges are agreeing to the
degree of 0.909. It indicates that judges have fairly strong likes and dislikes so far
as ranking of the babies are concerned.
{b) When ranks are not given :
Illustration 16. From the following marks obtained by 10 students in Statistics and
Economics, calculate Spearman's coefficient of rank correlation.
Statistics : 36 56 20 65- 42 33 44 53 15 60 Economics : 50 35 70 25 58 75 60 45 89
38 Solution.
Calculation of Rank Coeffident of Correlation
36
50
-5
-1 '
56
35
+6
36
20
70
-6
36
65
10
25
+9
81
42
58
-1
33
75
1?
-6
36
44
60
-1
53
45
\ +3
15
89
10
-9
81
60
38
+6
36
N= 10
= 318
Steps
1.
Assigns ranks to given data. Ranks can be given by allotting the biggest item
the first rank, the next to its second rank and so on or smallest item the first, next
to its second rank and so. on. Any one of the above method of ranking must be
followed in case of both the variables.
2.
Find the difference of two ranks (i.e., R^ - R^) and denote these differences
by D.
3.
Square these differences and find out the total TB^.
4.
Apply the formula.
342
j .
rk = 1
Here,
. N'-N ^D- = 318 and N = 10
rk = 1 ^x318
=11908 990
th uu = 1 -1.-927 .-0.927.
2^x^226-(55). (55)
iiOx
2260-3025
V3850 - 3025 x 73850^30^ -765
^^ X ^JS25 = - 0.927, which is same as before

343
Blustration 17. Ten entries are submitted for a competition. Tbree judges study eacb
Ranks given by :
Calculate the appropriate rank correlations to help you to answer the following
questions :
(a)
Which pair of judges agree the most?
(b)
Which pair of judges disagree the most? Solution.
Entry No. :
10
Judge A :
10
Judge B :
10
Judge C :
10
Calculation of Rank Coefficient of Correlation

-
10
6.
4.
10
10
10
N = 10
- IjF^
0
+3
+3
+2
-2
-3
-1
+2
+1
-2
,-3
-2
-1
\-1
+1
-2
+2-
.4
+4
16
-3
+1
+4
16
+2
-1
" 1.
-3
+3
+1
' -2
+2
-2
'4
-4
16
SD^ = 48
ID' = 26
Applying the following formula, we get

rk = lN-' - N
rk (between Judges A and B) rk = 1 6x48
10" -10
= +0.71
rk (between Judges A and C)
rk = I 6x26
10-^10 = +0.8425
= I _ ^ = 1 _ 0.29 290
= 1-^=1- 0.1575
990
ID- - 88
344
rk (between Judges B and C)
rk = l6x88 10^-10
^
^-e ê nearest approach
(*) ^mce is n^nimun. of the pair of judges ^ and C. therefore, they disagree the
in and" ^^rr/t^S
-"^nts
in ranks in to subjects obtained W L of 1 '
<liff"ence
of 7. Find the corrit coefficiem'jrnLl:!::^^" ""

rk=l-
N^-N
Substituting the values in above formula, we get
0.5 = 1 -
(10)^-10 = 1 - 0.5 = 0.5

990
6 ED2 = 0.5 x 990
2>2 ^ 0-5x990 6
= 82.5
Corrected ID^ = 82.5 - (3)^ + (7)2
= 82.5 - 9 + 49 = 122.5 6x122.5
Corrected rk = I =1-
^ ^^d Solution.
(10)^-10 735
990
rk = + 0.2576
(c) When ranks are equal or repeated
13
13
24
15
20
19
Measures of Correlation Solution.
Calculation of Rank Coefficient of Correlation
345
X
48
13
5.5
+2.5 6.25
33
13
5.5
+0.5 0.25
40
24
10
-3.0
9.00
2.5
- 1.5
2.25
16
15
3.5
-3.5
12.25
16
3.5
+2.5 6.25
65
20
10
+1.0 1.00
25
+1.0 1.00
15
2.5
-0.5
57
19
+1.0 i.oo"
N = 10
Steps :
0.25 _
ZD^ = 39.5
1.
Assign the ranks to given data. When two or more items are of equal value,
they are assigned average ranks. For example, in X series value 16 repeated twice
and
they are each ranked ^^ =3.5 and in Y series value 13 are given the rank ^^ = 5.5
and so on.
2.
the
Obtaining ID^ apply the formula. When equal ranks are assigned to same of
entries and adjustment is made in the formula of rank correlation, i.e., adding
{m^ -m) to the value of SD^ Here, m represents for number of times whose ranks
are repeated. In case, there are more than one such group of values with common
rank 1/12 (m^ - m), is added as many times the number of such groups. The
adjusted formula is as under :
..3
rk = 1ID^
+ ^(m^ -m) +...
N^-N
Now we get, rk
6{39.5 + -2) + -2) + -2)} = 1 ~ in3n
ta :
=1=16(39.5 + 1.5)
990
=110^-0 6x41.0
990
246
= 1 - 0.246 = 0.754
990 rfe = 0.754
Hence, there is high degree of positive correlation.

346
j .
Merits and Demerits of the Rank Method Merits :

M^hT "
- compared ,o Karl Pearson.
De^r;'-
degree of correlation,
grouped frequency disîbnrion (bivtiaSs^l^n'
"'
OF FORMULAlt
1. Karl Pearson's Coefficient of Correlation (a) Actual Mean Method
r = ^y _ Zxy J_ J N.ax.ay N ^ ax ^
ay
(b) Direct Method
NN
Ixy
xZ/
ZXY-N
r=
In
N
N.
'N
In
IN
.N
_N
N
N
N1XY-EX.IY
zxy-n.x.y
I------------^^ 1\.
(c) Assumed Mean Method and Step Deviation Method
r=
347
N
N
Explanation of Symbols
r = Karl Pearson's Coefficient of Correlation. X = (X - X), deviations taken from
actual mean of X series. y = (Y - Y), deviations taken from actual mean of Y series.
ax = Standard deviation of X series. ay = Standard deviation of Y series. ZX = Sum
of the values of X series ZY = Sum of the values of Y series ZX^ = Sum of square of
the values of X series ZY^ = Sum of square of the values of Y series ZXY =
Multiplying X and Y values and obtaining the total N = No. of pairs of observations
dx = {X - A), deviations taken from assumed mean of X series.
dy = (Y - A) deviations taken from assumed mean of Y series.
dxdy = Multiplying the deviations taken from assumed mean of X series with the
deviations taken from assumed mean of Y series.
2. Spearman's Rank Coefficient of Correlation
rk = \=1N^-N
N^-N
rk = Spearman's rank correlation. D = Difference of ranks. N = Number of pairs of
observations. m = Number of times the value repeated.
348
exercises
j .
4.
5.
6. 7.
10.
11
12.
13.
14.
Questions ; ~
"
fea What is meant by correlaHon? wi,^^ t Distrnguish betvê;^^;!^^::.^^ T

^^
Distinguish between :
'ô-elation from coeffidem of variation.
(a) Positive and negatives correlation

ib)
Lmear and non-liear correlation,' and
ic)
Simple, partial and multiple correlation Give three examples of perfect
correlation. '
ê^pl^r
between X and y is .ro, does it mean that variable
d^r Smir
born and export over last
correlation): correlations (positive, negaL or no J

(/) Sale of woollen garments and the day temperaturedCflllrrtfou^^^^^^^^^^^ /J" 'he po, .He scaler
Distinguish between covariance and variance.
ia)
Define Spearman's rank correlation.
ib)
What are the limits of rk
! ' âSl.^/^- we .legate product moment

r ..correlation be equal to the val^^^? ^^ ^ -d Y, will this
8.
9.
26
35
57
68
8 12
9 11
349
Me^swres of Correlation
15 What are the advantages of Spearman's rank correlation over Karl Pearson's
correlation coefficient? Explain the method of calculatmg Spearman s rank
correlation coefficient.
16.
(a) How is Karl Pearson's coefficient of correlation defined?
(b)
What are the limits of the correlation r?
(c)
If r = +1 or r = -1. What kind of relationship exists between X and Y?
17.
(a)
Spurious correlation, and
[b)
Positive and negative correlation.
Problems :
1. Give the following pairs of value of variables of capital em^ployed and^profit^.
Capital employed (in crores of Rs) (X) Profit (in lacs of Rs) (Y)
(a) Make a scatter diagram.
ib) Do you think that there is any correlation between profit and capital employed.
Is it positive or negative? Is it high or low? (c) By graphic inspection, draw an
estimating hne.
2
Plot the following data as a scatter diagram and comment over the result : ' X
11 10 15 13 10 16 13 8 17 14
y : 6 7 9 9 7 . 11 9 6 12 11
3
Following are the heights and weights of 10 students in a class. Draw a
scatter diagram and indicate whether the correlation is positive or negative.
Height im inches) : 72 60 63 66 70, 75 58 78 72 62
Weight (m kg)
: 65 54 55 61 60 54 50 63 65 50
4. Construct the scatter diagram of the data given below and interpret it
Average value (in Lakhs Rupees)
Year Cotton (import) Cloth (export)
: 1990 : 47
171
1991 64
1992 100
1993 97
: 70
100
111
133
85
{expuri/
103
139
1994 126
Draw a scatter diagram for the data given below and interpret it
X:
10 20 30 40
y.
32 20 " 24 36
6, Draw a scatter diagram of the following data :

50 40
60 28
1995 203
1996
70 48
80 44
XY
15
7
18
10
30
17
27 16
25 12
23 13
30 9
f!
350
-,
X Series
Y Series
Arithmetic Mean Square of deviations from Arithmetic Mean
-------J__
Summation of products of deviatioZl^lTZTV'^---means = 122
^ ^nd Y series from their respective
Number of points of values = 15

15 25
18 25
39 41
24 27 30 36 27 31 33 35
Calculate product moment of correlation between X and Y
- ^^ - S 2 2 - 42 41
48 45
[r = 0.98]
91 95 49 40
SliL" Z r '''
whea, and ^
;-
.ô 550
16 17 20 19 19 20 25 27
11. Calculate Karl Pearson's coefficient nf i l ^ '' = 0-1621]
the following 10 firms :
^^ correlation between the sales and expenses of
Firms 12 3
---JJ
Expenses . n 13 14 ..
(/ Rs '000) ^
15 14 13 j3
12.
Ten students got the following percentage of b c f'" = Ser,al No. ; 1 ^ 'J'
^^ Statistics and Mathematics Statistics
: gO 60 51 76 58 J J ' ^ 10
Mathematics 45 yj ^^
62 64 72 56 58
. Calculate product moment correlation ^^ ^^ ^^ ^^ ^^ 60

13.
Calculate correlation coeffident between X the nnn,K . ^^ = " 3ri Y, the
number of rain coats solrl in
ot rainy days per month
Interpret the results.
^ =Vl4 8 18 10 22 9 3 ,
^
11 20 12 15 73''
^^
^ certain shop for 12 months.
^ 3 4 7 10 11 29
[r = - 0.67]
351
^ f The deviations from their means of two senes (X and Y) are given below . Ky . 4
-3 -2 -1
0+1+2+3+4
: j -3 -4 0+4+1 .2 -2 -1
< Calculate Karl Pearson's coefficient of correlation and interpret the resu.t. ^^ ^
^^
15 Find the product moment correlation of the following data : ' X 1
4
5
6
7
Y ; 9 8 10 12 11 13 14
8 16
16.
9 15
[r = +0.931
Calculate the correlation coefficient of the marks obtained by 12 students m
Mathematics and Statistics and interpret it.
Students
Marks (in Maths) Marks (in Statis.)
A 50 22
B 54 25
C 56 34
D 59 28
60 26
F 62 30
G 61 32
H 65 30
7 7 K ^ 67 71 71 74 28 34 36 40
[r = + 0.783]
67
68
68 72
69 VO
71 73 69 70 [r = 0.47]
17. The height of fathers and sons are given below : Height of fathers (in inches) :
65 66 67 Height of sons (in inches) : 67 68 64
Calculate Karl Pearson's coefficient of correlation.
18 Find Karl Pearson's coefficient of correlation from the following index numbers
and
'f;'" ''- -''
Costofltvtng : 98 99
[r = +0.85]
19. Find the product moment correlation between sales, and expenses of the
following 10 firms.
Firms Sales Expenses
1 50 11
2. 50 13
3
55 14
4
60 16
5
65 16
6
65 15
7 65 15
8 60 14
9 60 13
20.
10 50 13
[r = +0.797]
Calculate the coefficient of correlation for the following ages of husbands and wives
in years at the time of their marriage.
Age of husbands : 23 27 28 28 29 30 31 Ageofuîves : 18 20 22 27 21 29 27
33 35 36 29 28 29 [r = +0.82]
21 Find suitable coefficient of correlation for the following data : .îFertUizers used
^ tons)
: 15 18 20 24 30^ 35^
Productivity (in tons)
^^
40 50 150 160 (r = +0.99]
352 22.
23.
P,
age of ca and annua, matoenance
Age of cars (years) ; 2
Annual maintenance
2100 2000
. I6OO 1 Ton lonn ^ ^ 10 12 Co^MmRs) 1800 1900 1700
Calculate coefficient of correlation K,. p ,
^^ = +0.836]
population and death rate^ ^^^^^^ between the density of

C 400 14
Citites Density Death rate

A 200 10
B 500 16
D
700 20
E 600 17
24.
F 300 13
[r = +0.988]
Total of the deviation of X = -170 Total of the deviation of Y = -20 Total of squares of
deviation of X = 2264 lotal of the squares of deviation of Y - 8288
series : Arithmetic Average = 65
Standard deviation = 23 33 r series : Arithmetic Average = 66 Standard
deviation =14 9
Rauk Correlation
26.
ir = +0.78]
Calculate Spearman' r , on from the following data :
^ 15 10
I '' 20 25 40
16
25
12
27.
The following are the marks obtained fout nf mm u t'" = +0-143] emp
oyment interview held by two Ldependem - ^ '
coefficient of correlation. ^nêpendem judges separately Calculate the rank
Candidates A n n r^
'' - "
Judge X Judge Y
20 22
20 15
14
10
8
11
12
13 9 [r = 0.721]
353
28
Two judges in a beauty competition rank the 12 entries as follows
X:
y. 12 96
10
354782
10
Calculate rank coefficient of correlation.

29
Calculate rank coefficient of correlation of the followmg data : ' X : 80 78 75
75 68 67 60
Y : 12 13 14 14 14 16 15 ^^ _ ^^^^
30. Twelve entries were submitted in a flower show competition. They were ranked
by
two judges as under :
^ , 7 8 9 10 11
^7
3 12 11
4 10
futeB : ^ : 5 3 11 2 12 10 5 9 7 Calculate Spearman's rank correlation. 31 Calculate

the coefficient of rank correlation from the following data X 48 33 40 9 16 16 65
25 15 y . 13 13 24 6 15 4 20 9 6
11 12 11 1 [r = -0.454]
59 17
12 5 8
[r = +0.86]
57 19
[r = +0.73]
32. Calculate rank coefficient of correlation between years of service and efficiency
rating.
Persons
Years of Service Efficiency rating
A 24 66
B 30 51
C 12 84
D
25 66
E 29 45
F 19 81
G 16 72
H 10
97
IJ
11 7 92 70
[r = -0.78]
33. From the following data calculate coefficient of correlation by the method of
rank
95 70 60 80 81 150 115 110 140 142
XY
75 120
68 134
50 100
[r = +0.93]
1. 2.
3.
4.
5.
6.
7.
8. 9.
10. 11.
Chapter 12
IWTRDOCUTION TO INDEX NUMBERS
Introduction Definition
Types of Index Numbers Problems in Construction of Index Numbere Methods of
Constructing Index Numbers Consumer Price Index (CPI) Index of industrial
Production (IIP) General Uses of Index Numbere Inflation and Index Numbers
Limitations of Index Numbers List of Formulae
li'ftSWf
INTRODUCTICm
have
r'r'
we
Quantities; in measures of rp r ion-ab j^^^^^
Po-'ional values :
Deviation, Mean Deviation and tondat Devia,l"t""

two variables. From the above tookAe s '
association of
chapter we will learn how to obtS sum jrr"^ ""T?

variables.
"-is
"" """"nary measures of change in a group of related
ail .^l^tZSieThlt:
rtTp^t I
P^.ces of
price of some commodities may'alat

illustration : ^ ^^^
'T -''it,es,
^^^^ "s examine from the following
Commodity Prices of ve^ 2000 ?etable oil
and tea
Vegetable oil (per litre) Rs Tea (per kg in Rs) 40 100
^yjyjj 80 150
ti c
355
We can measure the change in the prices of vegetable oil and tea in two ways :
(a)
Actual Difference
(b)
Relative Change (Price Relative)
(a} Actual difference. The actual difference in price is the difference between the
current year price and the base year price.
Actual difference = Current year price - Base year price
Current year : 2005 Base year : 2000
Difference in : Vegetable oil (per litre) Tea (per kg)
We find that the rate of vegetable oil is increased by Rs 40 and of tea by Rs 50 from
the year 2000 to 2005. From this, it appears that the increase in price of tea is more
than the increase in price of vegetable oil. (b) Relative change (price relative). The
relative change in prices is the actual difference in prices relative to the original
price. From the above example :
80 - 40 = Rs 40 150 - 100 = Rs 50
Relative change =
Actual difference
Base year Price Relative change in vegetiable oil :
80-40
or 1Current year Price Base year Price
For vegitable
For Tea
40
150-100 100
=1
or
1= 0.5 or 1 40 150 100
=1
= 0.5
This change can also be expressed in percentage : For vegetable oil : 1 x 100 =
100% And for tea : 0.5 x 100 = 50%
The ratio of prices in two years is called price relative which is a pure number and
this price relative for a single commodity even may be called an index number of
that commodity.
However, if we calculate the rise in percentage taking 2000 as the base year, we.
find that the rise is 100% of vegetable oil and 50% in case of tea.
Symbolically,
Current Year Price Base Year Price
iL Po
100
100
356
P^ - price of the current year (2005) Pa = price of the base year (2000)
Vegetable oil : x 100 = 200
Tea
40
m 100
= 150
M Increase of vegetable o,l is 100/Th f . " ""

(b) The relative comparison o oê
^000 = 100.
Thus, change in pncrrrll ^"-at of tea. actual difference in prices. important than just
the
As measurement of veeerahip nil .v. iv " i of measurement, their absZe duffel l ""
,
"" "Ot be combined. But relative
changes or price relattons are pure numbers namely for vegetable

Rs 80
Rs150
R740 ^^^ tea
Rs 100
be combined to obtam the arithmetic mean of price relatives,
I.e.,
80 150
+
40 100
2 + 1.5
= 1.75
it c!:- - "seeher ,s ,.,5 . ,00 = 1.5. Now,
mcreasedby27%.,nthe!ameay cltsi'XL''"" "f - i
hat Dearness Allowance of Governlm eij^
".dex goes up. Similarly, we come acroTs rdex ^b '"T"''-production, sales, export,
prices, wages c Thev ar7 f , "Sncultural and industrial economy. Index numbers are
the bafo^rlX^^VrrnX:'''''''"
definition
orhif Je-chats^trd r Tllnr IrT " "r
commodtty to another. Tley are usually IXJIZI^Z^
357
According to Spigel, "An index number is a statistical measure designed to show

changes in variables or a group of related variables with respect to time, geographic
location of other characteristics."
According to Croxton and Cowden, "Index numbers are devices for measuring
differences in the magnitude of a group of related variables".
Thus, the characteristics of index numbers can be heighhghted as under :
1.
Index numbers are expressed in terms of percentages so as to show the
extent of relative change. However, percentage sign (%) is never used.
2.
Index numbers are relative or comparative measurement of group of items.
They compare changes taking place over time or between places or like categoriesschools, persons, hospitals etc.
3.
Index number are called SpeciaUsed type of averages in the senses that they
help us in comparing change in series which are in different units. Averages like
mean, median and mode can be used to compare only those series which are
expressed in the same unit.
4.
The technique of index numbers is utilised in measuring changes in
magnitude which are not capable of direct measurement due to composite and
complex character of the phenomenon. Examples of such phenomena or
magnitudes are price level, 'cost of living', prices of specified list of commodities,
volume of production in different sectors of an industry, production of various
agricultural crops, 'business or economic activity' etc. Changes in business activity
in a country are not capable of direct measurement but it is possible to study
relative changes in business activity by studying the variation in the values of same
such factors which affect business activity and which are capable of direct
measurement.
ttpes of index numbers
The usefulness of any index number lies in the types of questions it can answer.
Each index number is designed for particular purpose, and it is the purpose that
determines its method of construction
There are various kinds of index numbers. In economics and business, they can
broadly classified as under :
1.
Wholesale Price Index (WPI)
2.
Consumer Price Index (CPI) or Cost of Living Index
3.
Index number of Industrial Production (IIP)
4.
Index number of Agricultural Production (L\P)
5.
Sensex
1. Wholesale price index (WPI) is used to measure the general price level where we
are required to obtain the wholesale prices of industrial, agricultural and other
products from wholesale market. It does not include the items pertaining to services
like repairing charges, barber charges etc. WPI is used to eliminate the effect of
358
the Priva" str"
"he public and
4.
number of Agriculn.ral Production (lAP) is used to study the rise and fall of the
yteld of pnncpal crops from one period to other period
5.
Sensex is a useful guide for the investors in the stock marter If rh.
appropnate time for mvestment. The rise in sensex at the highest level reflects the
base''??S'valut'ofthT' Bombay Stock Exchange Sensitive todex with 1978-79 as
iiuinoer will replace wholesale price index. Producers Price Index /PPT^
359
in construction of index numbers
Following are the important problems which must be well defined for the
construction of index numbers :
1.
Purpose : Every index number has its own particular uses and hmitations. The
first and foremost problem in the construction of index numbers is in regard to the
objective or the purpose for which they are required. It is important to know what is
to be measured and how these measures are used. If the purpose is to measure the
general price level, then wholesale price index number is used. If the purpose is to
measure cost of living of middle class families, working class (labour) or agricultural
workers, in a particular region or city, then consumer price mdex number is used. If
the object is to measure relative change in industrial production, then index number
of industrial production is to be used.
2.
Selection of base period : When comparison is to be made between different
time periods or different places, some point of reference is to be decided. This is
called base. In the above illustration about prices of vegetable oil and tea, we have
taken year 2000 as the base year and 2005 as current year for our calculations' of
index numbers. The base is assigned the value of 100%.
For making the comparison over a period of time it must be remembered :
(a)
The base period should not be either too short or too long : It should be
neither less than a month nor more than a year from calculations' point of view.
(b)
The base period should not be too near or too far : This is because people
usually prefer to compare present conditions with conditions in base or reference
period that is not too far back time. If the base period is too far the comparison
becomes meaningless. Due to introduction of new commodities, change in habits,
taste, fashion, in economy many commodities may go out of use. In such situation it
becomes necessary to shift the base period.
(c)
The base period should be normal and representative period : Base period
should be free from all sorts of abnormalities and random or irregular fluctuations
like earthquakes, wars, floods, famines, labour strikes, lockouts, economic boom and
depression.
(d)
It should be a period for which actual data is available
Fixed base and chain base : If the period of comparison is kept fixed for all current
years, it is called fixed base period. However sometimes chain base method is used,
in which the changes in the prices for any given year are compared with prices in
the preceding year and not with the fixed year. Naturally, the chain base method
gives a better picture than what is obtained by fixed base method. However, much
would depend upon the purpose of constructing the index.
3. Selection of items : Collection of data is a special problem in constructing index
numbers, since there is a large variety of goods and prices. Care also must be taken
that data from unrelated commodities or periods are not grouped together for the
calculation of price index. If the number of the commodities is too large, a choice
360
of some representative items has to be made. On the other hand, inclusion of too
few Items would make the index number unrepresentative of he
mcrdfal,
''
^^^^ calculations, it is nof^"s bk
include all commodities in construction of index numbers

be considered :
() Commodities selected should be relevant and representative of the group

according to the purpose of mdex number. For example, in const uction of wholesale
price mdex number to know the general price level, we sZw nclude wholesale prices
of some major mdustrial and agricultural ôlmoS and Other goods and services. In
the same way for coLtruction ofZsle
^^ which-sm^nt toT W
^^^ ^^^
be neither too
ot data. Ihere is always a chance of getting spurious or misleading results if the

w
^^ r - ^be changes m mdustrfalToI
we must collect the prices relating to production of various goods of factories For
nlrh^'. '
^^ ^^^ consideration, w! can re y onT^^^^^^^
published market reports by business houses. Chamber of Commerce aS

L utilised
"
Pl-- also
I
361
6.
Choice of an average : For constructing an index number any average such as
mean, median, mode, geometric mean and harmonic mean can be used Frorn the
practical point of view median and mode are unsuitable because of their being
Latic. The geometric mean and harmonic mean are difficuh to calculate hence;
arithmetic mean is used. Though with the development of the use of electronic
computers, the use of geometric mean is also becoming popular.
7.
System of weighting : In order to allow each commodity to have reasonable
influence on the index it is advisable to use a suitable weighting system.
Unweighted index numbers are those where all commodities are given equal
importance. But in most cases different commodities are given different degrees of
importance, therefore, weights are assigned to the various items.
The method of weighting used would depend on the purpose of index. Weighting
may be done according to : (a) Value or quantity produced, (b) Va ue of quantity
consumed, and (c) Value or quantity sold. When the quantity is the basis of weight it
is called quantity weighting and when the value is the basis, it is called value
weighting. Weight may ,be either implicit (arbitrary) or explicit (actual).
8.
Choice of method : There are various methods of calculating index numbers
such as the aggregative method or the price relative method. Various methods have
been proposed for calculation of weighted index number such as Laspeyre's
method, Paasche's method, Dorbish and Bowley's method, Marshall Edgeworth's

method, Kelley's method and Fisher's method. Fisher's method is considered as
ideal for constructing index numbers. No single formula can be said to be
appropriate for all types of index numbers and as such the choice of a formula wi 1
have to be made taking into account the object of index numbei; the data available
and the resources at the disposal of the person or organisation constructing the
mdex
number.
constructing indei
The methods of construction of index numbers are given below :
Methods
_
Price
362
Unweighted Index Numbers
I. Simple Aggregative of Actual Price Method
This is the simplest method of calculating index numbers. In this method, total of
the current year prices for the various commodities is divided by the total of base
year prices and the quotient is multiplied by 100.
Symbolically, Price Index
Po^ =
Quantity Index
^01 =
^Po
X 100
100
where.
Poi = Current year price index number ^01 = Current year quantity index number
Zp^ = Total of current year prices for various commodities ^Po = Total of base year
prices for various commodities
= Total of current year quantities for various commodities = Total of base year
quantities for various commodities
Illustration 1. Calculate price index number for 2005 taking 1995 as the base year
trom the following data by simple aggregative method.
Commodities
Prices in 1995 (in Rs)
Prices in 2005 (in Rs)
Solution.
I
A
100
80
160
220
40
140
120
180
240
40
Construction of Price Index Number

Commodities
A
100
140
80
120
160
180
220
240
40
40
Zp^ = 600
Price in 199S (Rs) Price in 2005 (Rs)
Xpj = 720
It:
exi
363
Steps
1 Aggregate the current year prices of various commodities (Ep,)

2.
ISrelate the base year prices of various commodities W
3.
Po, =
= ^ X 100
Zpo
Here,
p = Price index number of the current year (2005) Zp = Total of current year prices
for various commodities Zp - Total of base year prices for various commodities
Now, we get
= ^xlOO = X 100 = 120
thus, the pncr^.^.;::
Number for 2004 wirh base 1995 from Ae^followmg
Commodities ^ ^^^ jj 5
80 60 20
10
1995 Quantity (kg) 2004 Quantity (kg)

Calculation of Quantity Index Number
Commodities
ABCDE
Total
Quantity in 1995 (in kg)
(qp)
___ _
40 10
52
Quantity in 2004 (in kg)
Iq^}
Uo = 107
80 60 20 10 6
24, = 176
^^ - 100
^01 Eô
Here,
101
= Quantity index no. of 2004, Zq, = 107, and Zq, = 176
_ IZi X 100 = 164.48
^01 107
extent of 64.48% as compared to 1995.
364
j .
Illustration 3. Compute index numbers for the vears 1996 innn ( u r ., data (Base
Year 1995). ^ 1996 to 2000 from the following
Year : 1995 Price : 10 Solution.
1996 14
1997 16
1998 20
1999 22
2000 24
Calculation of Index Numbers (Base year 1995)
Price
Index Numbers ^ ^xlQO Pff
1995 10
100
1996 14
~ X 100 = 140 10
1997 16
16 jQ X 100 = 160
1998 20
1999 22
20 jQ x 100 = 200
24 10
2000 Hprp -h
22 ^ X 100 = 220
24 c û
24 Y^ X 100 = 240
1 ----'I'* ^.ixv, wiiixiîiL ycai

Po = Price of the base year
Limitations
1.
No weight is given to the relative importance of items
2.
Index IS influenced by the items with the large unit prices
II. Simple Average of Price Relatives Method

X 100. Index number by this method is the arithmetie mean or median or
geometric'
365
Illustration 4. Construct pure index number for 2005 taking 2000 as the base year
from the following data by simple average of price relative method.
ABCD
100 80 160 220
40
140 120 180 240
40
" Solution. 'A price relative is the price of the current period expressed as a
percentage of the price at the base period'.
Construction of Price Index Number
Commodities Price in 2000 (in Rs) Price in 2005 (in Rs)
Prices in 2000
Commodities
Prices in 2005
- - 'a : :
Price Relatives
SL X 100 ; :: Pov , ^
100
140
^^^ X 100 - 140 100
80
120
120 " X 100 = 150 80
160
180
220
240
X 100 = 109.1 220
40
40
"^^x 100 - 100 40
Total
Z^x 100 F 611.6 Po
Steps :
1. Calculate the price relatives of current year
|LxlOO
2.
Aggregate the calculated price relatives.
3.
Divide the total of price relatives by number of commodities.
4.
>1
Po^ =
Po
xlOO
N
Here, = Price index number of current year (2005)
366
j .
^ X 100 = Price relatives of current year N = Number of commodities

Now we get, p^^ =
^xlOO {Po
611.6
= 122.32
N~s
m th^nrVt' T"
2005 is 122.32. In other words, there is net increase
m the prices of commodities m the year 2005 to the extent of 22.32% as compared
to
Merits
1. Index number is not influenced by extreme items. Equal importance is given to all
LfxC? ItvlliS*
Limitations
1.
The relatives calculation are assumed to have equal importance. This
assumption may not be always correct.
^
2.
There is a problem of selecting a proper appropriate average. Weighted Index
Numbers
weil?*''''^
''
1"
appropriate
weights are assigned to various commodities to reflect their relative importance in

the
I. Weighted Aggregative Method
Weights are assigned to the various items. There are various methods of assigning
merk r J Tn
Laspeyre's method, Paasche's method, Dorbish and Bowley's
method, Marshall Edgeworth's method, Kelley's method and Fisher's method Fisher's
constructing index numbers. According to syllabus of Class XI, we are discussing
here Laspeyre's and Paasche's method of constructing index
Laspeyre's Method Paasche's Method
Price Index fo: = X 100 Zpolo Quantity Index = X 100 ZqoPo
X 100 Quantity Index = X 100 ZqoPi
Price Index = v^^
for Economics-XI j Introduction to Index Numbers

jthere is net increase 2% as compared to
^nce is given to all fquoted or absolute
!. This assumption
ôd appropriate pportance in the
of assigning ndex numbers r and Rowley's hod. Fisher's ' syllabus of ucting index
' "" " ' ^
'--''a 'O ger quantity index n
denoted as ,, and' the'^na^; ^t ylJlt^^^.T'''' ''' Laspeyre-s metltod is very

widely used" Ti, ha The
which are not changed front one^yert^n S Te r^ T ^ V'
Value Index Number =
Base year values
V = ^lilyinn ^01 xioo
or
=
XlOO
where
XVo
Poi = Price index number ^01 = Quantity index number Vgj = Value index number
Pi = Current year price pQ = Base year price
= Current year quantity = Base year quantity V, = Current year value (Zp^q^) Vp
= Base year value {Lp q )
Commodities
ABCD
1996 Base Year
Price
10 8 6 4
Quantity
30 15 20 10
2005 Current Year
Price
12 10
66
Quantity
50 25 30 20
368
Solution.
Construction of Price Index Numbers
Year (ZOOS) 1
Quantity It
PSt
Ptlo
50 25 30 20 300 120 120 40

120
Pitr
500 200 180 80
360 150 120 60
600 250 180
= 580 = 960 = 690 = 1150

where
1, = quantity of current year (200J)
Po = price of base year (1996)
.
quantity of base year (19961
(A) Laspeyre's Method. In this merhoH K

Steps. (Price Index nuntM "
otrC.''
^ ""^hts.
contntodtties .th base year weights and
otiî.^^ "" wtth base year weights and

TptfL^t' '
* "-'ent by ,00. The above steps give us
Laspeyre's Price Index Number Symbolically,

X 100
690
= J^ X 100 = 118.96
Thus the price index number of 2005 is 1 IS v pnces of commodities m the year
2005 to the ex,^^ urease m the Laspeyre's Quantity Index :
18-96% as
compared to 1996.
= |xlOO ôPo
960
^01 =
580
XlOO = 165.52
JOU
Thus, the quantity index number of 2005 is 165
,.ant.ty of commodittes n, the year ÔO^l'^^îrroHÎ^t
391
(B) Paasche's Method : In this method current year quantities are. taken as weights.
Steps. (Price Index Number)
1.
Mukiply current year prices of various commodities with current year weights
and obtain Spj^j.
2.
Multiply the base year prices of various commodities with the current year
weights and obtain
3.
Divide by JLp^q^ and multiply the quotient of 100. Symbolically,
Paasche's Method :
p 3,^x100
1150 960
X 100 = 119.79
Thus, the price index number of 2005 is 119.79. In other words, there is net
increase in prices of commodities in the year 2005 to the extent of 19.79% as
compared to 1996.
Paasche's Quantity Index :
_ = ^fiPL X 100 ZqoPr
1150 690
xlOO = 166.67
Thus, the quantity index number of 2005 is 166.67. In other words, there is net
increase in quantity of commodities in the year 2005 to the extent of 66.67% as
compared to 1996.
Value Index Number :
Zpo^l
1150 580
X 100 = 198.28
Thus, the value index number of 2005 is 198.28. In other words, there is net
increase in value of commodities in the year 2005 to the extent of 98.28% as
compared to 1996.
n. Weighted Average of Price Relatives Method
Illustration 6. Calculate weighted average of price relative index number of prices
for 2005 on the basis of 2004 from the following data :
370
Commodities
AB
CDE
Solution.
Weights
20 12 8 4 6
j .
Price 2004
20 15 10 5 4
Price 2005
Commodities
ABCDE
Weights
(w) %
20 12 8 4 6
Steps :
of Price Index Numbers
35 18 11 5 5
Price 2004
20 15 10 5 4
Price 2005
35 18 11 5 5
Value weights
(PolJ [V]
400 180 80 20 24
Pi
^xlOO ypo
fp]
IV = 704
175 120 110 100 125
[PV]
70000 21600 8800 2000 3000
IPV = 105400
Calculate the price relatives of the current year fexiool
Item of the period for which the in^
"Jexpressmg each
of the same item in the tse pL^"
ca4>ated as a percentage
p. calculated pereentages for each ttem hy value weights,

nr fPl/l
or [PV]
Po, =
XlOO \Po
^PoqoZV - 75J- = i^y./I

-n
.ere .s a net mcrease
^^'./l /o as compared to 2004.

or
^^ _ 105400
= 149.71
tr in
n
CO
im
fin coi pu] are
371
somer price index (cpi)
The wholesale price index numbers measure the changes in the general level of
prices and they fail to reflect the effect of the increase or decrease of prices on the
cost of living of different classes or group of people in a society. Consumer price
index numbers are also called (/) Cost of living index number, or () Retail price
index number, or (ttt) Price of living index numbers. Consumer price index numbers
are designed to measure the average change over time in the price paid by ultimate
consumer for a specified quantity of goods and services. They measure the change
in the cost of living of a particular section of society due to change in the retail
price. A change in the price level affects the cost of living of different classes of
people differently. The general index number fails to reveal this. So there is the
need to construct consumer price index. People consume different types of
commodities. People's consumption habit is also different from person to person,
place to place and class to class, i.e., richer class, middle class and poor class.
Construction of Consumer Price Index
The following are the steps in construction of consumer price index : (1)
Determination of the class of people : Consumer price index numbers are
constructed separately for different classes of people or groups or sections of the
society, e.g., urban wage earners, agricultural labourers, industrial workers,
government employees etc.'and also for different geographical areas like town, city,
rural area, urban area, hilly area and so on. The group has to be clearly defined.
When we talk of government employees, then we have to decide about the low paid
or high paid government employees as their consumption pattern differs. The class
for which the index number has to be constructed must be as far as possible
homogeneous from the point of view of income and habits. The major groups of
consumers for whom the consumer price index numbers have been constructed in
India are : (/) the industrial workers, (ii) the urban non-manual workers, and (Hi)
the agricultural labourers In India, the consumer price index for industrial workers is
by far the most popular index. This is constructed on monthly basis with lag of one
month. CPI measures changes in retail prices of goods and services covering 260
items of consumption from 70 centres. The base year of CPI (IW) is 1982. The CPI for
industrial workers is increasingly considered as the appropriate indicator of general
inflation, which shows the most accurate impact of price rise on the cost of living of
common people.
(2) Conducting family budged enquiry : Family budget enquiry is held with a view to
find out how much an average family of this group spends on different items of
consumption. The quantity of the commodities consumed, as also prices at which
they are purchased are noted down. The enquiry is done on a random sample basis.
Some famihes are selected from the total number by lottery method, and their
family budgets are
372
Jt''^ ""
groups;
(/) Food () Clothing (Hi) Fuel and Lighting

(iv)
House Rent
(v)
Miscellaneous
the
"--i-s is very in,ponat in
to shop and W
17,
cCect tetai, priee. The pHncpies ^tSroTtr;^^^

1.
Pnce must relate to a fixed list of items for a fixed quality.
2.
Retad price must be the price which is given by the consumer.
3.
M drscount U given to all customers, it can be taken into account.
In ttcTt'oft T""'
""" "
""" OP'"
price
questiomtaires. First we musfSaToecw" >e"ts or mail

must be instructed properly anTK listTtem ,'^^^^ "
be conducted by "cU pLngC^thllhSm?
for rhfferenr classes <ff Peo-pl^Tltrnd^^r^ ^r^^^ Methods of Construction
(t) Famdy Budget Method or Weighted Relatives :
IWR
Consumer Price Index =
IW
Here,
R = ^x 100 for each item
Po.
W = Weights
(ii) Aggregative Expenditure Method or Aggregative Method :
Consumer price Index = ^^ x 100
Zpoô
This is based upon Laspeyre's method. According to this method, the various items
are given weights on the basis of quantity consumed in the base year.
If the calculated cost of living index number is more than 100, it means a higher
cost of living, necessitating an upward adjustment in the wages and salaries of
employees The rise of wages or salaries is equal to the amount of percentage it
exceeds 100. If the calculated index number is less than 100, it means the cost of
hving has decline by the balancing percentage between 100 and calculated index
number.
Illustration 7. An enquiry into the budgets of the middle class families in a certain
city gave following information. What is the cost of living index of 2004 as compared
with 1995. Calculate by :
(i)
Family budget method, and
(ii)
Aggregative expenditure method.
Expenses on items
Price (in Rs) 2004
Price (in Rs) 1995
Solution.
(i) Constructing Cost of Living\Index Number
(Family Budget Method)
Food Fuel
Clothing
Rent Misc.
35%
20%
15%
20%
1500 250
750
300
400
1400 200
500
200
250
10%
Expenses on item Weights (%) (W)

Price (in Rs) 1995 (Po)
(P.)
Price Relative - A (R)
Weighted Relatives (WR)
Food 35
1400 1500 107.14
Fuel
200
- 250 125
1250
Clothing
20
500
750
150-
Rent 15
200
300
150
2250
Misc. 20
250
400
160
3200
10
ZW = 100
Price (in Rs) 2004
3749.9
3000
IWR = 13449.9
Cost of living Index for 2004

CPI =
LWR 13449.9
= 134.499
ZW 100
Thus, there is increase of 34.5% in prices of 2004 with that of 1995.
374
Expenses on items
Food Fuel
Clothing
Rent
Misc.
Weights
35 lb 20 15 20
(ii) Aggregate Expenditure Method
Price (in Rs) 1995 Po
1400 200 500 200 250
Consumer Price Index for 2004
Price (in Rs) 2004 Pi
P<Ao Pi'Jo
1500 250 750 300 400 49000 2000 10000 3000 5000
8000
^Poô = 69000
52500 2500 15000 4500
= 82500
CPI - ^Pi'ô 82500

100
" ^ 100 = 119.565
items are 75, 10, 5, 6, and 4 rewrtvdv Pr^r
""^^ts of these
hving for 2005 with 1980 as JS hSe
"""ber for eost of
Items
'
Price in 1980Price in 2005
Food Clothing Fuel and lighting House rent Misc.

200 25 20 40 65
Solution.
_-^Consfructing Cost of Living Index Number
100 20 15 30 35
Items Weights W Price 1980 (Pol

100 Weighted Relatives (WR)
Price 200S (PJ
Price: Relative R
Food Clothing Fuel and lighting House rent Misc.

75 10 5 6 4 100 20 15 30 35
200 25 20 40 65
200 125 133.33 133.33 185.71 15000 1250
666.65 799.98 742.84
ZW = 100
IWR = 18459.47
Introduction to Index Numbers Cost of living Index for 2005

CPI =
375
IWR IW
18459.47 100
= 184.594
Thus, there is increase of 84.6% in prices of 2005 with that of 1980 Illustration 9.
The consumer price index for June 2005 was 125. The food index was 120 and that
of other items 135. What is the percentage of the total weight given to food?
Solution.
Items Index Weights
(I)
Food 120
WI
:m
w,
Other items 135
120 Wj
w.
IW = 100
135 W,
IWj == 120 Wj + 135 W^
Let the total weight = 100, W^ = Food and W^ = other items Hence, 100 = Wj +
We are given consumer price Index =125
IWR
.(1)
CPI =
125 =
IW
120 Wi +135 W2 . 100
or
12500 = 120 Wj + 135 W^
(2)
Now, solving equation (1) and (2), .
100 = 12500 =
We get
13500 =
12500 =
... X (135)
Wj + W^ 120 Wj + 135 W^
135 Wj + 135 W^ 120 W, + 135 W^
1000 = 15 Wj W, = iff^ = 66.67
Now using equation (1), we get 100 = Wj + 100 = 66.67
W, = 100 - 66.67 = 33.33 Hence, percentage of total weighs given to food =
66.67% and for other items = 33.33%
M.
376
Verification
Items
Food Other items
Index
(I)
120 135
Weights (W)
66.67 33.33
IW = 100
W.
8000 4500
IW, = 12500
CPI =
IWI IW 12500 100
= 125
Consumer Price Index No. is 125 as given in question. Uses of Consumer Price Index
Consume, price index is'called J prici^dX^fri^Ze '
{a) Purchase Power of Money = _ ^_
Consumer Price Index
(fe) Real wages =
Suppose, the consumer price index was 400 in 7(\[\a n^ u 100 m 2000-01. Then a
rupee in 2004-^5 wol be ^ûTto
'
" ""
100 400
= 0.25
F I 11
purchasmg power of rupee in 2004-05
Rs 32T:I-ch w" tr
P" n-onth was
100 and for 2004.0J was AmwTlnA A Consumer pnce mdex for 2000-01 was by rise
of h,s wages^Têlrl^Telltagt""" """"""
Real wage = Money Wages
Consumer Power Index
For 2000- 01 : ^ X 100 = Rs 3250 For 2004-05 : ^ X 100 = 1250
377
However the monthly money wage was raised from Rs 3250 to 5000 in 2004-05.
The worker has not gained. In fact his real wage has gone down. The real wage of
the worker is Rs 1250 in 2004-05 as compared Rs 3250 in 2000-01.
Example 12. If the salary of a person in the base year is Rs 4000 per annum and the
current year salary is Rs 6000, by how much should his salary rise to maintain the
same standard of living if the CPI is 400.
Solution. We are given :
Year ^
Salary CPI
Base CurrentRs 4000 Rs 6000
100 400
When 100 is the CPI of Base year, bis salary is Rs 4000 400 CPI of current year, his
salary should be
400x4000
100
= Rs 16,000
Hence, his salary rise should be of Rs 10,000 (16,000 - 6000 = Rs 10,000) in current
year to maintain the same standard of living.
2.
The government (central or state) and many big industrial and business units
use consumer price index numbers to regulate the Dearness Allowance (D.A.) or
grant of bonus to employees. This compensates them for increased cost of living
due to price rise. They are used by the government for the formulation of price
policy, wage policy and general economic policies.
3.
If the prices of some important essential commodities (like wheat, rice, sugar,
cloth, etc.) increase, due to shortages, the government may decide to provide them
through fair price shops or rationing.
4.
Costs of living index numbers are used for deflating value series in national
accounts.
5.
Consumer price index numbers are used widely in wage negotiations and
wage contracts. They are used for automatic adjustment (increase) of wages
corresponding to a unit increase in the consumer price index.
mdex of industrial production (iip)
Index numbers of industrial production are fairly common these days. They tell
about the relative increase or decrease in the level of industrial production in a
country in relation to the level of production in the base year. They are the best
measures of economic progress in any country. These indices can be constructed by
studying variations in the level of industrial output. As such the first step in the
construction of such index numbers is to find the level of output of various
industries of the country. It should be remembered that these index numbers throw
light on changes in the quantum of production, not in
^^
Statistics for Economics-XJ
values. If the variations in the value of output are to be studied, data about the
value of mdustnal output have to be used for the purpose of constructing such
index numbers. Thus, mdices of mdustrial production are constructed either by
studying changes in the quantum of production or its value.
Index of Industrial Production in India
A number of index numbers of industrial production are compiled in India by official
and non-official agencies. The general index of industrial production is the most
popular among these. In India, Index of Industrial Production is published by Central
Statistical Organisation (CSO), Industrial Statistics Wing. The old series of Index of
Industrial
.'aatlT''. . '
but now new series is pubHshed with the base year
1993-94. An abstract from Economic Survey 2005-06 is as under :

General Index of Industrial Production Base 1993-94 = 100
1993-94
1998-99
2004-05
100
1999-00 2000-01
2001-02
2002-03
2003-04
145.2 154.9 162.6 167.0 176.6 189.0 204.8
Usually important data about production are collected under following major heads:
I. Mining Industries : Coal (inc. lignite). Petroleum, crude (off-shore and on-shore)
Iron ore.
II. MetaUurgical Industries : Hot metal (inc. pig iron), crude steel, semi-finished
steel, steel castings, aluminum, bister copper.
III.
Mechanical Engineering Industries : Machine tools, cotton textile machinery,
cement machinery, railway wagons, automobiles, (commercial vehicles, cars, jeeps,
land rovers), power driven pumps, diesel engines, earth moving equipment, bicycles
sewing machines, agricultural tractors. '
IV.
Electrical Engineering Industries : Power transformers, electric motors,
electric fans, electrical lamps, radio receivers, aluminum conductors.
V.
Chemical and Allied Industries : Nitrogenous fertilizer (N), phosphatic fertihzer
(PÔj), soda ash, caustic soda, paper and paper bond, automobile tyres, bicycle
tyres, cement, petroleum refinery products, penicillin, streptomycin,
chloramphenical powdei; vitamin A.
VI. TextUe Industries : Jute textiles, cloth (cotton cloth), mixed/blended cloth, spuny
and filament yarn, staple fibre etc.
VII. Food Industries : Sugar, tea, coffee, vanaspati, salt.
VIII. Electricity Generated : Related to utility.
IX. Miscellaneous : Glass, soap etc.
Usually important data about production are collected under above major heads.
379
The data relating to the production of the above mentioned industries are cq^lected
either monthly, quarterly or yearly. The production of the base year is taken as 1^0
and the current year's production is expressed as a percentage of the base year's
production. These percentages are multiplied by the relative weights assigned to
various industries. Weights are usually assigned on the basis of the relative
importance of different industries. The relative importance of industries is usually
decided on the basis of capital invested, the gross value of productions, turnover,
net output etc. Many other criteria of relative importance can also be laid down.
Usually weights in an index number of industrial production are based on the values
of net output of different industries. The weighted arithmetic average or geometric
mean of the relatives give the index number of industrial production. Such index
numbers can be constructed both for gross output as well as net output.
The following table shows broad industrial grouping and their weights.
Broad groupings
Weight in % Index No. in May 200S
Mining and quarrying

Manufacturing
Electricity
10.47 155.2
79.36 222.7
10.17
General Index
213.0
From the above table, we find that the growth performances of broad Industrial
categories differ.
Method of Constructing Index of Industrial Production
Formula : Using simple arithmetic :
Index No. of Industrial Production (IIP) = where.
iL Uo
W
IW
q^ = Current year Quantity produced q^ ^ Base year Quantity produced
W = Relative importance of different outputs. Illustration 13. Construct Index of
Industrial Production for 2004 from the following information.
Industry
Output (Units)
1996 2004 Weights

1. Mining
120
160
20
2. Textile
80
110
25
3. Mechanical Engineering
4. Chemical 80
70
25
5. Electrical 90
120
15
70
90
15
380
. ^ , , Statistics for Economics-XI
Solution.
of Index Number of Industrial Production
In.IuslnI Milling
2.
Textile
3.
Mechanical Engineering
4.
Chemical
5.
Electrical
1996 la
nm
120 80 70 80 90
87.50 133.33
-__
^xlOO %
/ \ 'SL !
160 110 90 70 120 20 25 15 25 15

133.33 137.50 128.57
2666.66 3437.50 1928.55 2187.50 1999.99
XW = 100
12220.20
Industrial Production Index =

X
iL
ZW
12220.20
100
= 122.20
22.20% increase of industrial production in 2004.
general uses of index numbers
ItTor^b^^ can be summarised as follows :
as barometers to find th^Ta^td^^^^^r T"" ^^ act
barometers which are used'm physlTrmr"
^ L^ke
measure the level of economic andTsmesTac

""^bers barometers' or
'barometers of econorr ^ ^ ^'economic exchange, reserve bank deposits^r"row
1on T ""
activities of a country and these md cesTan t u"
could act as an economic blromeJer
business
-êx which
2. To measure comparative chanirfe tu

measure relative temporal or crolêS^n^^.r''
""'"bers is to compared with
same base figure Inde^^^^^^^^ ' "^"^^le or a set of variables time to time,
among differentXeând T " comparison of changes from
m the phenomena like prTce cost ^^ ^
measured with the help'of '''
^^^ ^^ânges
^^^^^^
-f --^g complex variable through time or space

--
--red ,
Infme"rgfc7:a7uf ^
nature into
/
" 'be
381
3.
They help in framing suitable policies : Index numbers are indispensable tools
for the management of any government organisation or an individual business
concern for efficient planning and formulation of business policies. For example,
relative wholesale and retail price index numbers are the output (volume of trade,
industrial and agrxultural production etc.) help in economic and business policy
making.
It is not in the field of business and economics that index numbers are used as a
basis for policy frame but even in disciplines like Sociology and Psychology their
utility is immense. For example, sociologists may speak of population indices,
psychologists measure intelligence quotients which are essential index numbers
comparing a person's intelligence score with that of an average for his or her age.
Health authorities prepare indices to display changes in the adequacy of hospital
facilities and educational research organisations have devised formulae to measure
changes in effectiveness of school systems.
4.
lo measure the purchasing power of money : Index numbers are helpful in
finding out the intrinsic worth of money as contrasted with its nominal worth. Very
often statements are made that purchasing power of the Indian rupee in 2000 is
only 20 paise as compared to its purchasing power in 1990. It means that a person
who was having an income of Rs 1000 per month in 1990 should have an income of
Rs 5000 to maintain the same standard which he was maintaining in 1990. This
helps in determining the wage policy of a country.
5.
To help in study of trend : Index numbers are very useful in
the trend or
tendency of a series over a period of time. It is easy to find out the trend of exports,
imports, balance of payments, industrial production, prices, national income and
variety of other phenomena. It is also useful in forecasting future trends. With the
help of index numbers of prices, demand, wages, income etc., a business executive
is in a better position to take decisions about whether a new product should be
launched or whether there is scope for exploring new markets or whether the
existing pricing and production policies need a change.
6.
For adjusting National Income : Index number are vfery helpful in deflating
(adjusting) national income on the basis of constant prices to enable us to find out
whether there is any change in the real income of the people. They are used to
adjust the original data for price changes, or to adjust wages for cost of living
changes and thus be transformed into real income and nominal sales into real sales
through appropriate index numbers.
inflation and index numbers
According to Samuelson By inflation we mean a time of generally rising prices for

goods and factors of productionrising prices of bread, cakes, haircuts, rising
wages, rents, etc.
According to Ackley "Inflation can be defined as a persistent and appreciable rise in
general level of average prices".
1
382
inflaS,:.
T" T"
to be cateeorised a,
Pe'^P'ible and persistent over time
with rismg prices The essence of
'' Tl
pnce levef rLg ove ' t me Jnfl^^ "
f -- -PP^X that keeps the
IS expressed as percentarrist
P- mdex and
or week. The variationsin gen rarprfcel" 1 m ^^^^ ^^^^

numbers. They are :
measured by two types of index
(a)
The Wholesale Price Index (WPI), and
(b)
Consumer Price Index (CPI)
pnce at which a commortv^ oU fn " '"'n'"^ P"
'te
measure the general pê it , the 17 7 """êrs which

(WPI). ,s aL.n
movements ,n a comprehensive way h ' n ifdl:ri?T

commodities in all trade and transact, tL
movement m prices of
important in modern ecoTo^c " tTa ' ifa/T
Pes is very
activity WPI is the most commo::i;r;;:dt:ar^f

Wholesale Index Number in India
Eco^dvt: Mti^r^^^^^^^^
published every week by the office of
was constructed m 194ny he S <" -^h index number
1952-53 as base year in mrTre ^
TûT
Government of India has tl base st 98,I""

base year 1993-94.^
published with the
of c^dilX'atT''"
> "ver large number
---
405
383
Category
Weifihts %
22.0 14.2 63.8
No. of items
98 19 318
(a)
Primary goods
(b)
Fuel power, light and lubricants ^_(c) Manufactured goods
Source : Economi^ Survey ^05-06 Inflation and Wholesale Price Index Number
WPI IS the only price index m ndt wS ^^^
^^^de and transactions,
lag of two weeks Iîs due to rhe-^ ^^ '' ^^ """ '

Table 1
Index Number of Wholesale Prices
Year
Primary Articles
Fuel, Power, Light and Lubricants
Manufactured Goods
AU , Cunnnodirics
Last week of
1989-90
1990-91
''''''
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01 2001-02
2002-03
2003-04
2004-05 Average of weeks
2005-06 October-Nov. (Provisional)
167 196 225 . 232 259
(Base 1981-82 = 100)
165 189 214 246 278
175
171.1
190
191.8
214
217.8
231
233.1
254
258.3
121 125 136 142 153 159 162 168 178 181 183
198
199
Base 1993-94 = 100)
109
115
130
148
153
193
223
231
256
263
290
313 312
117
116.9
123
122.2
126
128.8
129
134.6
135
141.7
139
150.9
144
159.2
144
161.8
152
172.3
162
180.3
169
189.5
172
197.8
173
198.3

Uses of Wholesale Price Index Numbers
From the above Table 1 of Wholesale Price Index Number obtained from Economic
Survey, 2005-2006, let us understand the uses of WPI under the following heads:
1.
Price trends in India
2.
Measuring rate of inflation
3.
Forecasting future prices
4.
Estimation of demand and supply
5.
Determining real changes in aggregates
6.
Uses in planning
1. Price trends in India : Ever since independence the price trends in India have
varied
between sharp to moderate increases. With the exception of some years of the First
Five-Year Plan, viz., 1952-53 and 1954-55 when prices showed a moderate decline,
almost
the entire period of over five decades since 1950-51 has shown persistent rise in
prices.
molesale Prices. The rising trend in wholesale prices, as shown by the Wholesale
,
bas continued ever since 1960-61, but it assumed alarming dimensions since
1972-73 after the first oil shock of 1973 when" OPEC nations affected a manifold
rise
in oil prices. OPEC again increased petroleum prices in 1978 that adversely affected
our
To-ô'?! ^ u ^^^ """^ber of wholesale prices, with
1970-71 as base 100) increased to 175 in 1974-75 and further to 256 in 1980-81
thus
showing two and a half fold .increase in price in just one decade. The base year for
WPI
was changed to 1981-82 = 100 under the new index which rose to 258.3 in 1993-94
showing another two and a half fold rise in price in a little over one decade The base
year was again changed to 1993-94 = 100 under the current series of Wholesale
Price
''''''
P"ce level between
1993-94 and 2004-05. The Wholesale Price Index stood at 189.5 in 2004-05. Table 1
shows the movement of wholesale prices of various commodity groups since 198687
2 Measuring rate of inflation : WPI is used to measure the rate of inflation. The rate
of inflation is useful to know the real value of income, savings and wealth etc. Using
WPI of 2003-04 and 2004-05 for all the commodities from the table given above, the
rate of inflation can be calculated as under :
Rate of inflation =
WPI of current year WPI of previous year
XlOO
-100
=
[189.5 " L180.3
or Rate of inflation =
XlOO
= 5.1%
WPI of current year - WPI of previous year'
WPI of Picvious year

"189.5-180.3' 180.3
X 100
= 5.1%
385
Thus, the annual inflation rate during 2004-05 was 5.1% in case of all commodities.
One can also calculate inflation rates for different commodities or commodity
groups as required for policy purposes.
Economic Survey 2005-' Annual point-to-point inflation rate in terms of
the Wholesale Price Index (WPI) increased from 4.6 per cent at end March 2004 to
5.1 per cent at end March 2005. The year 2005-06 started with an inflation rate of
5.7 per cent on April 2, 2005, which was followed by a softening trend until August
27, 2005 when it reached a trough of 3.3 per cent. While the rate rose steadily
thereafter, it remained below 5 per cent. At 4.5 per cent on January 21, 2006 it was
significantly lower than 5.4 per cent recorded a year ago. Average WPI inflation
decelerated from 10.6 per cent in the first half of 1990s to 4.7 per cent during 200102 to 2004-05.
3.
Forecasting future prices : From the above time series data of WPI understand
that the wholesale price level has increased in 2004-05 for primary articles by 83%,
for fuel power, light and lubricants 191%, for manufactured products 69% and for all
commodities by 89.5%. Thus, WPI can be used to forecast the increase in future
prices.
4.
Estimation of demand and supply : One can use an appropriate model to
estimate the future demand and supply as the prices affect both the demand and
supply. WPI therefore is useful for analysing and forecasting trade situations by
interpreting the present trend in supply and demand conditions.
5.
Determining real changes in aggregatives : WPI are useful to determine the
real changes in aggregates like, national income, national expenditure, capital
formation etc. National income is defined as the value of goods and services
produced in a certain year. National income at current prices can be obtained after
calculating the value of goods and services according to prices prevailing in the
same year.
The real change in national income can be calculated as given below :
Real Change of National Income
WPI of Base year WPI of current year
X National income of current prices
For example, suppose the national income of the country in 2001 on the basis of
current year prices amounts to Rs 700 crore which is increased to Rs 780 crore in
2002. Suppose the WPI increased to 150 in the year 2002 as compared to 2001 WPI
as 140. The real change in national income can be calculated as :
= 11^x780
150
= Rs 728 crore
Here, the real increase in national income of Rs 28 crore (728 - 700). while actual
monetary increase is Rs 80 crore (780 - 700).
An increase in the national income at the current prices may be due to :
(a)
an increase in the general price level, or
(b)
an increase in the real output.
386
j .
amotJ^rerpeSra^d'tr^^^^^^^^^ lajches number of projects wh.ch require huge

for rhese profecrs in .rs I'a, bVd.e " " " " P"'
year due to rising costs of nroiecr
ti
projects. The origfnal eimatKo ofT'
the real cost of such
indicated by Wpf is con rred Ss tfelTe 7
cannot be same every
''
to revise the annual cost of projects On this b'^^^^^
"
governmem
of funds for various schemLr^

Inflation and Consumer Price Index in India (CPI
r- ^J
- as services
labourers or non-n^JTurlTZXye^
Workers (CPI-IW Base 1982 . 100rs cha^.e
I"dex for Industrial
Changes in cost of living of rur 1 aretfl^^^^^^^^^

(CPI-AL Base 1986-87 f 100) while CW for TIrt m
^^ -^-tnal workers.
"" ^S"cultural labourers
does It for urban non-manulltorkS

measure of price rise of inflation and is used for deêrm nL ^ '' considered a good
governmem employees as well as otLHlr T ^ allowance (DA) of
monthly basis and is availabTe after Tw of r " ^
^^^ ''
and agriculture labourers are publ^sheJ bVLa^^^^^

Organisation published the CpCmber of lib.
^^^ Statistical
because their typical consumptrbtllô^^^^^^^^^^

groupAslivt trZ^^rJ^TtJ^'-'
- 'y ty
the food price will have gSam ^^^^^^ the rise in

price increase will not be inflationary
Table 2
Government gives the statement as oil
Major Group
1.
Food
2.
Pan, Supari, tobacco etc.
3.
Fuel and lighting
4.
Housing
5.
Clothing, bedding and foot wear
6.
Misc. group
Base 1982 (Weight in %)

Grand Total
57.00 3.15 6.28 8.67 8.67 16.36
100.00
Base 2001 (Weight in %)
86.19 2.27 6.43 15.27 6.58 23.26
100.00
Source . Economic Survey, 2005-06 (p. 87)
'
thusêa^'res t ST^m ^th'atg Sr of""^
^^
that the consumers pa^. The''cotrrC'^'drS

387
commodities and regarded as an index of changes in cost of hving of industrial
workers This index shows that there has been a five-fold rise in retail prices and cost
of living of industrial workers since 1982. This index has gone up to 548 in Oct. 2006
as against 100 in base year 1982. General Index for Urban Non-Manual Employees
showed over fourfold rise between 1982 and Oct. 2006. Thus, the impact of rising
prices on urban non-manual employees was a little less than that on tbe industrial
workers. Prices in rural areas also showed a rising trend but the extent of rise in
prices this case was lower than that in urban areas as is indicated by the the
general index for agricultural labourers. Table 3 shows the movement of prices in
India as shown by the All India Consumer Price Index.
Table 3
All India Consumer Price Index Numbers
Industrial Workers
Urban Non-Manual Agricultural Labourers
(Base 1982 = 100}
Employees
(Base 1984-85)
Last Month
of
up to 1994-95
Base 1960-61 = 100 1996-97 onwards
= 100)
Food General
(Base 1986-87 = 100)
Index Index General Index

1986-87
141
137
115
572
1987-88
154
149
126
629
1988-89
168
163
136
708
1889-90
177
173
145
746
1990-91
199
193
161
803
1991-92
230
219
183
958
1992-93
254
240
202
1076
1993-94
272
258
216
1114
1994-95
304
284
237
1204
1995-96
337
313
259
234
1996-97
369
342
283
256
1997-98
388
366
302
264
1998-99
445
414
337
293
1999-00
446
428.
352
306
2000-01
453
444
371
305
2001-02
466
463
390
309
2002-03
477
482
405
319
2003-04
495
500
420
331
General Index
2004-05
506
520
436
339
Oct. 06
538
548
460
356
Source : Economic Survey, 2005-2006 (p. S-63).

High inflation hurts the poor with their incomes not indexed to prices. It also puts
pressure on interest rates, and adversely affects both savings and investment.
Because of its implications for the poor and its possible destabilizing effects on
macro economic stability, containment of inflation is high on the Government
agenda.
388
Causes of Rising Prices (Inflation)
in India, we have to look^tn L tr t understand the various price or inflation
Demand Side Factors
1.
Increase in Money Supply
2.
Faster Growth in Money Supply than the Growth Rate of National Income
3.
Massive Increase of Government Expenditure
4.
Deficit Financing
5.
Growth of Black Money
6.
Increased Wages and Salaries Supply Side Factors
1.
Slow Growth of Agriculture
2.
Slow Pace of Industrialisation
3.
Increase in Petroleum Prices
4.
Changes in Administered Prices
5.
Wage Price Spiral (i.e., workers demanding higher wages)
limitations of index numbers

4
> list of formulae
1.
Unweighted Simple Aggregative Method
Price Index p - ^ x 100

^Po
Quantity Index ^ = ^ x 100
y V.
Value Index V^j = ^ x 100
evq
^ im. X100 Zpo%
2.
Unweighted Simple Average of Price Relative Method
X^xlOO VPo J Po. = 3.
Weighted Aggregative Method : Price Index
A.
Laspeyre's Method = ^^ x 100
B.
Paasche's Method p.. = ^^ x 100
ZPoqo
4.
Weighted Average of Price Relative Method
Z ^xlOO x(Poqo) [Po J

Poi =
389
Quantity Index
. ^ ^ X 100
ZqoPo
, 100
ôPi
A.
Aggregative Expenditure Method or Aggregati
CPI = ^ X 100
B.
Family Budget Method
CPI =
Index of Industrial Product
ZPV Method
:ive
'ZWR "
or
_ XW
.XW.
"XW7"
Industrial Production Index No. =

iL ZW
W
390
j .
exercises
Questions :
1. Distinguish between actual difference and relative difference in prices. 2- Define
index numbers. Why do we need an index number.?
3.
What are the problems in construction of index numbers?
4.
Briefly explain the importance of index numbers in the study of Economics.
5.
What is index number? Discuss briefly the uses of index numbers.
6.
What is the difference between a pure index and quantity index?
7.
State the general uses of index numbers.
8.
What are the desirable properties of the base period?
9.
Distinguish between 'weighted' and 'unweighted' index of prices?
10.
Is change in any price reflected in a price index?
11.
Distinguish between Laspeyre's method and Paasche's method of
constructing index number.
What does consumer price index for industrial workers measure?
Define Consumer Price Index number. Explain the uses of consumer price index
numbers.
What are the uses of Wholesale Price Index numbers?
15.
Explain Index Numbers of Industrial Production.
16.
Distinguish between 'Wholesale Price Index' and 'Consumer Price Index'.
17.
Why is it essential to have different CPI for different categories of consumers?
18.
Discuss the limitations of index numbers.
19.
Can CPI number for urban non-manual employees represent the changes in
cost of hvmg of President of India?
20.
What do you mean by inflation? How the wholesale price index numbers are
useful for measuring the rate of inflation?
21.
Try to list the important items of consumption in your family.
22.
(a) Base year
Index of Industrial Production
c Value Index
(J) Consumer Price Index
; , (e) Wholesale Price Index.

Problems :
1. Construct the Index Number for 2002 with 2001 as base from the following prices
of commodities by simple (Unweighted) aggregative method. Commodities
:A
B
CD
E
12.
13.
14.
Prices in Rs 2001 Prices in Rs 2002
50 80
40 60
10 .
20 10 6
[Index Number = 164.48]

391
2. Using the following data and 2002 as the base period, compute simple
aggregative price indices for the two fuels.
Item
Coal
Producers Price
V-
2000 2001 2002
(Rs)
(Rs)
Crude oil
----"c;
5.
[Index Number : 2001 = 85.71, 2002 = 114.28]
3, Calculate the index number for 2002 with 2001 as base from the following prices
of the commodities by simple (unweighted) aggregative method.
Commodity Price Price
and unit
' (2001)
(2002)
Butter per kg
20.00 22.00
Milk per Litre3.00
4.50
Cheese per Tin
18.00 19.80
Bread per kg2.00
3.80
Eggs per Dozen
4.00
4.50

4, Calculate Quantity Index Numbers from the following data by simple aggregative
method taking quantity of 1998 as base.
Commodity Quantity (in tons)
1998 1999 2000 2001
2002
0.30
0.33
0.36
0.36
0.39
0.25
0.24
0.30
0.32
0.30
0.20
0.25
0.28
0.32
0.30
2.00
2.40
2.50
2.50
2.60
(Quantity Index No. = 117.1, 125.1, 127.3, 130.5) Calculate index number for 2002
on the base prices for 1991 from the following by average of price relative method.
Items Prices (1991) Prices (2002)
6.
Bricks Timber Plaster Board Sand Cement 10 20
16
21
14
[Index No. = 147]

Construct the index number for 2000 taking 1990 as base by price relative method
using arithmetic mean.
Commodities -.A
Price (1990) : 10
20
30
40
Price (2000) : 13
17
60
70
[Index No. = 147.5]

392
1993
1994
1995
1996
1997
(in Rs)
75 50 65 60 72
1998
1999
2000 2001 2002
Wholesah Prices (in Rs)

7 69 75 84 80
wholesale prices in India for second week of Sept. 2002 and L th'e wLr'"^''
""-ber of wholesale prLes
Weights
^^^
Index
Food Article Manufactures Industrial Raw Material Semi-Manufactures Miscellaneous

31 30 18 17 4
473.6 390.2 510.2 403.3 624.4
Q 1 1 ...
[WPI = 449.2491
m^hor Tt^ ^^^^
data by weighted aggregative
method using : a Lasoevre's method
^ u aggregative
Commodity Price (2001) Quantity (2001)

ABCD
4325
in v^r^rr. û J .
,.
Price (2002) Quantity (2002)
20 15 25 10 6 5 3 4
10 23 15 40
L^^-^f^j-ô . XJ/.//, I'aascncs : 158.99]
aZtitv in? ^"û price index and quantity index numbers wn-li onoi__j quantity index numbers with base 2001 and interpret.
2001
Cummodtty
ABC
Pnce
_
4
3
Quantity
2002
Price
s
252
_
624
Quantity
31
6
[Laspeyre's : Price Index = 76.92, Quantity Index = 143 18-Paasche's : Price Index =
69.84, Quantity Index = 130]
415
11. Calculate weighted aggregative of actual price index number and quantity index
number from the following data using (/) Laspeyre's Method, and {ii) Paasche's
Method. Also calculate value index number and interpret them.
Commodity Base year
Current Year
Quantity lbs. Price per lb. Quantity lbs. '

Bread Meat Tea
6 4 0.5
paise 50 paise 40 paise
Price per lb.
40 paise 45 paise 90 paise
7 5 1.5
30
[Index Number = (/") 86.02, (ii) 81.25]

Commodity Price Base Year (in Rs)
A
6.0
8.0
40
3.0
3.2
80
2.0
3.0
20
Price Current Year Quantity Base Year (in kg)

13. Prepare consumer price index numbers from the following data for 2000 and
1999 taking 1998 as base.
Group 1998 1999 (Price in Rs) 2000
A
20.00 24.00 21.00
1.25
1.50
1.00
5.00
8.00
8.00
2.00
2.25
2.12
[Index numbers, 1999 = 127.25, 2000 = 107.43] From the data given below
construct the consumer price index number
Commodity
Price Relatives
Food
250
45
Rent
150
15
Clothing
320
Weights
20
Fuel and Lighting
190
Miscellaneous
300
15

UNIT 4
DEVELOPING PROJECTS IN EC
Chapter 13
PREPARATION OF A PROJECT REPORT
Introduction
2.
Uses of Project Report
3.
Consumer Awareness
4.
Questionnaire for Dealers , 5.. Productivity Awareness
In the previous Unit 1, we have studied the Meaning of Economics; Scope and
Importance of Statistics in Economics; in Unit 2, Collection and Organisation of Data;
and in Unit 3, About the Various Statistical Tools. These tools are Very important in
our daily life to analyse different economic activities such as consumption,
production, distribution, transport in land and foreign trade and different business
activities. In this chapter we will learn the method of developing a project report
which will help us in understanding the application of statistical tools to analyse the
various types of business activities.
Reports are prepared to give information about the development of institution,
business, product, government activities etc. For example,
1.
Consumer may be interested in knowing the quality, price and uses of
product in changing environment and technology, e.g., preference for landline
phone or mobile phone,^ detergent powder or detergent cake, fully automatic or
semi-automatic washing machine, etc. Such surveys are conducted by
manufacturing organisations.
2.
Shareholders may be interested to know about the earning of organisation
and possibility of getting dividend while holding the shares of the company. Such
surveys are conducted by non-government organisations, societies, etc.
3.
Central/state governments prepare reports for future development in priority
areas such as road, power, teleconununication, education, health, etc. For example,
for this purpose the government conducts surveys to know about likely requirement
of primary health centres and schools for basic education. Similarly government
decides the requirement of power (Mega Watts), roads to construct in the light of
changing population of a respective area.
4.
Reserve Bank of India plans the opening of new branches of commercial
banks, cooperative banks or agricultural banks in the light of increasing credit
requirement of population on the basis of survey reports. Chamber of Commerce,
namely.
395
Federation of Indian Chamber of Commerce and Industry (FICCI), Confederation ofIndian Industry (CII) conduct surveys of abroad to know the business opportunities
arising out of economic development of respective nation.
5. In the international context, United Nations Organisation (UNO) plans
humanitarian help (food, hfe saving drugs, etc.) in war, drought, earthquakes and
such other natural calamities based on survey reports.
In the light of above examples it is very clear that project reports help in
understanding the requirements of shareholders, consumers. Central and State
Governments, Reserve Bank of India and financial institutions and national and
international bodies to plan their activities for future operations. Those
organisations who ignore the changing requirement of the consumers or population
may fail in achieving their goals and objectives.
uroject
Uses of project report can be highlighted as under :
1.
To make aware individual groups about the present environment conditions of
business/government, etc.
2.
To help in the pohcy formation about the economic and social development of
the country.
3.
To direct the efforts of organisation in given objectives based on opportunities
provided in the changing environment.
4.
To pin-point the weaknesses of organisation so as to overcome such
weaknesses.
5.
To pay competitive prices for irequired goods by the consumer to take the
real value of the price paid to sellers.
6.
To invest in those securities that provides higher rate of interest/dividend to
shareholders.
7.
To exploit opportunities in the national and international markets by trade
associations:
8.
To provide food, medical help to badly affected areas due to any natural
calamities by national, international, social and non-government organisations.
9.
It helps in conducting research on various issues such as political, social,
economical, technological aspects of national and international significance.
^îmers iuvareni
Consumers may be exploited by manufacturers, government agencies, board of
directors and national and international agencies, e.g., manufacturers charge higher
price, provide poor quality, lesser weight, defective product, etc., to the consumers.
The Indian Consumer Protection Act, 1986 has provided various rights to the
consumers, such as right to basic needs, safety, choice, information, education,
redressal, representation and healthy environment. Any consumer is exploited on
this ground can approach to the appropriate authorities to seek compensation or
replacement of goods. For this consumers may be made aware about their rights
and informed about proper agencies, which they can approach for grievances.
^^^ Statistics for Econotnics-Xl
There are five steps in preparing a project report for consumer awareness :
1.
Identification of Problem
2.
Preparation of Questionnaire
3.
Collection of Data
4.
Analysis and Interpretation
5.
Conclusion
We want to know about consumers'/dealers' knowledge about the product of a
company manufacturing namely, colour TV., air-conditioner, washing machine,
refrigerator, car, scooter, computer etc. Let us take the example of air-conditioner
where we are interested to know from dealers about the performance of airconditioner with respect to price, cooling technology, quality, availability, warranty,
after sales service etc. keeping in view other air-conditioners' manufacturers
product available in the market in competition.
Preparation of Questionnaire
To know more about various aspects of air-conditioner in a more systematic manner,
we must design a questionnaire covering all the aspects discussed above.
questionnaire for dealers

Name:.....
Address :. Phone No.
Q. 1. Please recall some air-condition brand name :
W ........................................... {ii) ......................
{Hi) ............................................ {iv) ......................
Q. 2. Which brands of AC's do you currently deal in :
(/) Videocon
(//) Carrier
(f) Samsung {viii) Others

{iv) National {vii) Voltas
{Hi) Amtrex {vi) LG
Q 3. Which brand AC would you recommend to the customer? (rank them) (1-Best,
8-Worst)
(/) Videocon
{iv) National {vii) Voltas
{ii) Carrier {v) Samsung {viii) Others
{Hi) Amtrex {vi) LG

Q. 4. Reason behind above recommendation (rank the factors) : (1-Best, 8-Worst)
(ii) Quahty
(Hi) Performance
(v) After sale service (viii) Warranty

397
(vi) Authentic
(i) Price (iv) Availability (vii) Technology
Q. 5. Which is most demanding brand of AC. (mention the name)?
Name .............................................................................................................
Q. 6. Rank the customer conferences while buying an AC. (1-Best, 8-Worst)
(ii) Quality
(Hi) Performance
(v) After sale service (viii) Warranty

(vi) Authentic
(i) Price (iv) Availability (vii) Technology Q. 7. Does the brand name influence the
customer?
Yes ............... No................ Some time...................
If No, then what else influences him (specify) :
Q. 8. Which brand of AC has least customer complaints (mention the name)?
Name : ............................................................................................................
Q. 9. Rank the companies in regularity of supply (1-Best, 8-Worst) :
(iv) National
(/) Videocon
(ii) Carrier
(v) Samsung (vi) LG
(Hi) Amtrex
(vii) Voltas
(viii) Others
Q. 10. Which AC company provides the highest margins to their dealer?
Name of the company : .........................................................................................
Q. 11. Which AC company do you feel is the most aggressive in giving discounts and
scheme (please specify)?
Name of the company :....................................Specification :......................................
Q. 12. Do you agree that huge advertisement campaigns are the most responsible
factors for the changing market scenario and increasing demand?
(i) Agree very strongly (Hi) Agree (v) Disagree (vii) Don't know
Q. 13. Generally what short of problem do you face while doing a sale?
Specify : .......................................................................................................
398
j .
Q. 14. Which brand of AC in your opinion is having most advance technology?

Name the brand : ...................................
Q. 15. Warranty period offered by the companies (kindly tick) :
Brand name
(i) Videocon
(ii) Carrier
(iii) Amtrex
(iv) National
(v) LG
(vi) Samsung
(vii) Voltas
(viii) Others
Warranty
6 month-1 yr.
1-2 yrs.
2-3 yrs.
3 yrs. and above
Q. 16. What is the market size of the area you are dealing in'
(i) 0-1000 Machines
(ii) 1000-2000 Machines (iv) 3000-4000 Machines
(iii) 2000-3000 Machines (v) 4000 and above
Q. 17. Average No. of units sold per month from your counter.
(Please specify brandwise)
(i) Videocon fl () Carrier Q (Hi) Amtrex
(v) LG [j^ (vi) Samsung
(viii) Others
(iv) National (vii) Voltas
n 1 Brand name ___
Lastyr.
Window
Projected
Last yr.
----- '/f*"" ^^^ uiaiiu. Split

Projected
(/) Videocon
(ii) Carrier
(iii) Amtrex
(iv) National
(v) LG
(vi) Samsung
(vii) Voltas
(viii) Others Preparation of a Project Report
399
Q. 19. Please give the sales break-up for the month of April, May and June in last
three years :
{For the brand which you deal in)
Company name
200 i
No. nf sales (Monthwtse)

2004
2005
May
Apr.
May
June
Apr.
May
Jme
(i) Videocon
(ii) Carrier
(Hi) Amtrex
(iv) National
(v) LG
(vi) Samsung
(vii) Voltas
(viii) Others
Q. 20. To get a substantial growth in your present sale which of the following would
you prefer?
(/) Having a better brand name
If, name the brand ......................................................................................
{ii) Enhancing your infrastructure and sales persons' team.................................
Collection of Data
The above questionnaire with the help of investigators using sampling method will
be filled in by the dealers. The number and geographical areas depend upon our
requirement, where we want to position our product, namely, Delhi, Kolkata,
Chennai and other capital cities of states.
We can also collect the information from government and industrial publications to
know about the growth of air-conditioner industry and future government policy in
this respect.
Analysis and Interpretation
Data collected through questionnaire will be classified and presented in the form of
tables, graphs and diagrams, viz., bar diagrams, pie-diagram etc. For rigorous
analysis
400
standard deviation and eoeffident oTva^t ^ OnV^K""
""
also pro,eet fntnre demand tWongh
^-
Blustration: Table and dtagram (based on hypothetiea. data, are g.ven beiow ,
Table 1
Consumer Awareness about Air-conditioners
Atvareness
Brand Present Availability Price
After Sales Service Technology
Conclusion
(U
O<
ai o cr
UJ CL
consumer awareness about air-conditioners
Scale : 0.5 cm = 10 percentage on V-axis
Brand
Present Availability
Price
After sales Services
xxxxxxv xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx
Technology
E3 Videocon Amtrex H Samsung EHJ Voltas m Carrier g National
m LG
^ Others
Observation
obse?ve
bar diagram, e
of view of :
^ customers prefer to buy air-conditioner from the point
1.
Brand : Either Vidiocon or Samsung
2.
Present AvatlahtUty : Voltas or other brand
4
401
3.
Price : LG or Videocon
4.
After Sales Service : LG or Videocon
5.
Technology : Videocon or LG
Thus, the Air-conditioner company will come to know about the brand, present
availability, price, after sales service, technology etc. Through this observation the
company will be in a position to decide regularity of supply the number of units to
be produced and to improve after sales service as per requirements of future
consumers.
Analysis
Let us analyse the given data by applying different statistical tools (Mean, Standard
deviation and Coefficient of Variation) using the following formulae :
1.
Mean :
N
2.
Standard Deviation :
a=
nx-xf
N
N
3. Coefficient of Variation (C.V.)
100
a
=J"
Table 2
Consumer Awareness about Air-conditioners
(Figures in percentages)
Awareness
Name of Companies
Videocon
Others
Cjirrier
Amtrex
National
10
20
18
Present Availability 12
11
14
13
Price 25
12
28
After Sales Service 18
12
17
Technology 22
10
12
IX
34
40
75
8.8
6.8
Brand 24
101
10
44
Mean : X % 20.2
Samsung
17
17
21
12
17
14
10
97
60
49
15
19.4
12
LG
Voltas
9.8
Observation
Considering brand, present availability, price, after sales service and technology,
average percentage of customers of Videocon air-conditioner is the highest as
20.2% and hence will prefer to buy Videocon air-conditioner.
402
Videocm
Jf-f
fX-
Carrier
X-
(X~
X-
Si/^
+3.8 14.44 -5.8
33.64 +1.2
.-8.2
67.24 +0.2 0.04
+0.2
M.8
23.04 +1.2 1.44
-0.8
-2.2
4.84
+1.8 3.24
+3.2 10.24 -0.8

+1.2 1.44
Z(X XV
112.8
46.8
10.62
6.84
+0.2
Af
C.V
52.57
77.72
Thus, we get
j .
Calculation of Standard Deviation and Coefficient of Variation Name of Companies

1.44 0.04 0.64 0.64 0.04
2.8 1.67 24.56
+2 +3 -3 -2 0
4
9940
26 5.099 63.74
+5 -1 -3 +2 -3
- - -- LG
Vbit
t Othm 1
X - 1 /X -
X-X
flf-X)^ X -X
16
-0.8
25
+7.2 51.84
jf/'
M
25
-1.4
1.96
-6.4
40.96 +5
+8.6 73.96 -3
-4.8
23.04
+1.6 2.58
-1.8
3.24
-2.4
+2
+0.2 0.04
5.76
-4
0.64
48
125.22
6.93
11.19
7.35
8.88
46.2
57.68
61.25
90.61
Name of Companies
Videocon
Carrier
Amtrex
54
78.8
National
Samsung
LG
Voltas
others
Mean
X
20.2
Standard devtatton
8.8 6.8 8 15 19.4 12 9.8
10.62 6.84 1.67 5.099 6.93 11.19 7.35 8.88
Coefftcient of Variation
52.57
77.72
24.56
63.74
46.2
57.68
61.25
90.61
Observations
ruJr!'ôf variation is the highest for other brands as 90.61%, hence the
customers will not prefer to buy other branded air-conditioners.
Requirement
to gyJhTLT'"''^
dealers/consumers to fill in the questionnaire
raTned\ô' " ^^ ^he information

reoZd Ar Potential dealers/customers, they may be asked to prepare required tables,
graphs and diagrams etc.
4.
by
Further, students should be asked to analyse and interpret the data collected
5.
They may also suggest the future course of action for the company.
r
403
ivity
Productivity is the ratio between input and output of an organisation. Productivity

varies from company to company. For example, X company manufactures a colour
T.V. for Rs 10,000, while Y company manufactures the similar T.V. for Rs 11,000. In
this case X company is more productive than Y company because X company's
manufacturing cost of colour T.V. is less by Rs 1,000. Therefore, we say X company
is more productive than Y company. In addition to this productivity, we can also be
able to calculate productivity of different factors of production such as labour,
capital etc. For example, the cost of labour of X company to manufacture colour T.V.
is Rs 3,000 and that of Y company is Rs 2,500. In this case the labour productivity of
Y company is better, although overall productivity of X company is better as
compared to company Y.
Productivity is determined with internal and external factors. Internal factors are
technology, organisation structure, managerial ability, ability of the firm to
substitute different inputs, etc. External factors include growth of agriculture and
industrial production, price, growth of bank deposits and credit, composition and
growth of GDP, structure of foreign trade, savings and capital formation etc.
-4
We want to know productivity awareness amongst the enterprises of the following
economic problems. We can identify the problems like :
[a) Industrial production
{b) National budget
(c) Population growth

{d) Gross national product
(e) Financial assistance by All India Financial Institutions
Collection of Data
Different ministries and departments of Central and State Governments publish
regularly current information alongwith statistical data on the number of subjects.
This information is quite reliable for related studies. We can collect data about
identified problems from Newspapers/Economic Surveys/RBI Bulletin/Government
Budget of the State or the Nation/Census Reports/NSS Reports/Annual Survey of
Industries/ Labour Gazettes/Agriculture Statistics of India/Indian Trade Journals etc.
Statistical Tables and Analysis
Following are few illustrations for analysis.
404
Illustration 1.
P,
Table 1
Annual Growth Rates of Industrial Production in Major Sectors of Industry
(Base : 1993-94 = 100)
Period
Weights
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01 2001-02
2002-03
2003-04
2004-05
2004-05 (April-Dec.)
2005-06 (April-Dec.)
Mining and Quarrying
10.47
9.7 -1.9
6.9 -0.8 1.0
2.8 1.2 5.8 5.2 4.4 5.1
0.4
(In per cent)
Manufacturing
Electricity
Overall
79.36 10.17 100.0

14.1
8.1
13.0
7.3
4.0
6.1
6.7
6.6
6.7
4.4
6.5
4.1
7.1
7.3
6.7
5.3
4.0
5.0
2.9
3.1
2.7
6.0
3.2
5.7
7.4
5.1
7.0
9.2
5.2
8.4
9.2
6.4
8.6
8.9
4.8
7.8
economic survey : 2005-2006 (p 132) loofotconr'

from the second quarter of
^-'^^very that commenced
per cent compared ,o a groh of 8.6 per Li ,n Ae^Xondmgêrd'of'zm^^^^^

Impressive performance of the mannfacuring sector which grew at 8 9 n!
mwsmmsm
^ ...
----------iiivcstmen
capacity additions and contributed to this shortage

.vear^mctde"
during the current
H) normal business and investment cycles, (//) lack of domestic and external
demand'
405
(Hi)
lack of reforms in land and labour markets,
(iv)
bigh oil prices,
(v)
existence of excess capacity in some sectors,
(vi)
business cycle,
(vii)
infrastructure bottlenecks particularly power, roads and transport,
(viii)
continuing high real interest rates.
Illustration 2.
Table 2
Trends in Deficit of Central Government
(As per cent of GDP)
Year
Revenue
Primary s
Deficitbefkit y
Deficit
1990-91
3.3
2.8
6.6
1991-92
2.5
0.7
4.7
1992-93
2.5
0.6
4.8
1993-94
3.8
2.2
6.4
1994-95
3.1
0.4
4.7
1 , Bscat
1995-96
2.5
0.0
4.2
1996-97
2.4
-0.2
4.1
1997-98
3.1
0.5
4.8
1998-99
3.8
0.7
5.1
1999-00
3.5
0.7
5.3
2000-01
4.0
0.9
5.6
2001-02
4.4
1.5
6.2
2002-03
4.4
1.1
5.9
2003-04
3.6
0.0
4.5
2004-05=^ 2.5
0.6
4.1
2.7
0.5
(Provisional)
2005-06 (BE)
4.3
1
* Provisional and unaudited as reported by Controller General of Accounts,
Department of Expenditure, Ministry of Finance.
Notes: 1. The ratios to GDP for 2005-06 (BE) are based on CSO's Advance Estimates
GDP at current market prices prior to 1999-2000 based on 1993-94 series and from
1999-2000 based on new 1999-2000 series. 2. The fiscal deficit excludes the
transfer of States' share in the small savings collections.
Source : Budget Document, Economic Survey2005-06 (page 24).
Anlaysis : The Fiscal Responsibility and Budget Management Act (FRBMA), 2003
continued to provide a strong institutional mechanism for making sustained
progress at
406
demand on t^tt^lr^^^^^ a proportion of GDP, declined from 6.6 per cen, t itsTsi
o " cSrS^^^^^
A^drî^ l^rov.;, leading to a marked improvement m the quahty of deficit Th^
available ar,ha,
^ - <>' G^P
Budeet for 7005 n^ u.^ ' 7

..dj,
, ^ ^ P^'" cent, respectively. The
5S.S
Requirement
2. TTiey can also be asked ro make presentation of snch problems
ItotTr" "
1t
""rpretation of data of the stable they have

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PREFACE TO THE THIRD REVISED EDITION

Periodic updating and review accommodate new knowledge as well as adds

-derstanding w'fe bes d s tsp rin '

Collection, Organisation and Presentation of Data

Statistical Tools and Interpretation

Developing Projects in Economics

Meanmg scope and importance of statistics m Economics

and National Sam;:;! sT^.y^lZZT

Organisation of Data: Meaning and types of variables; Frequency Distribution.

deviat.o,_Lorez curvLMeaJ^aX ^^^ --Karl Pearson's method

production, uses of index numbers; inflation and iLx

Unit 4: Developing Projects in Economics

latlo^ both TaL tT^rV"

of L eimnl. f I' organisations outlets may also be encouraged. Some

IntroductionMeaning and Scope .

UNIT 2 : Collection and Organisation of Data

Collection of Primary and Secondary Data

UNIT 3 : Statistical Tools and Interpretation

Measures of Central Tendency

Positional Average and Partition Values

Introduction to Index Numbers

UNIT 4 : Developing Projects in Economics

Preparation of a Project Report

Economics as a Science (i^ Economics as an Art

tZ^ tn":^-' T"""

unlimited wLts in sZZ Z^LTZ

Catallactics or the science of exchange.

Plutology or the science of wealth.

Chrematistics or the science of money-making

~ "y't to^om- s''.'^'

has its origin into two Greek words : Oikos

Activities. These activities are those which have no economic aspect

or are not concerned with money or wealth, viz.

Dirtnday parties or marriages etc.

^"^"dwara, mosque or church to

worship God, attending mass prayer (Satsang), etc.

Parental activities, such as love and affection towards their children

^l^ey involve any

Activities. Different types of activities are performed bV different types

of people (doctors, teachers, businessmen, industrialists, lawyers etc.) so as taelT^

Investment : Investment is that economic activity which is concerned with

Statistics for Economics-XI

Wealth definitionAdam Smith

Material welfare definitionAlfred Marshall

Scarcity definitionLionel Robbins

GroAvth definitionPaul A. Samuelson

Welfare cannot be measured in terms of money.

Welfare definition makes economics a purely social science.

are scarce in relation

Hi) The definition makes economics a human science.

Statistics for Economics-XI

Minimum wage law increases unemployment.

Statistics for Economics-XI

normative statements. The normative statements, in fact, are the opinions of

"Economics is about making choices in the presence of scarcity." Explain. How

progJsst tcTs - - developments and

' ^^"^'^es of energy,

T? -^f^^ble. All this is possible

thinking and reasoning which had evo^

'""I' ^^ ^^"^^^e-is gifted with

electricity, machinery etc. We ntw ^^ ^^e irrigation system,

^PP^'ed itself in'findmg