Quantitative Techniques in Economics

Economics deals with a large amount of numerical information about prices, income, production, population and trade. Statistics is the science that helps us collect, organise, present, analyse and interpret such numerical data so that we can draw useful conclusions. This chapter introduces the basic statistical tools used in economics, namely the collection and organisation of data, measures of dispersion, and index numbers.

Introduction to statistics and data collection

In the singular sense statistics is the science of collecting, organising, presenting, analysing and interpreting numerical data, and in the plural sense statistics means the numerical data themselves. Statistics is used in economics to measure national income, to study price movements, to plan development and to test economic theories.

Data are of two kinds by source. Primary data are collected for the first time by the investigator directly from the field for a specific purpose, through methods such as direct interview, questionnaires and observation. Secondary data are data already collected by someone else and used by the investigator, obtained from sources such as government reports, the census, and publications of Nepal Rastra Bank and the National Statistics Office. Primary data are more reliable and specific but costly and time consuming, while secondary data are cheap and quick but must be checked for suitability and accuracy.

After collection, data are organised through classification, which groups the data into classes, and tabulation, which arranges them in rows and columns. They can then be presented through diagrams and graphs such as bar diagrams, pie charts and histograms for easy understanding.