Statistics and Econometrics

Statistics is a branch of mathematics that deals with the collection and analysis of numerical data. The collected data must be organized, tabulated and presented for interpretation and decision making.

Simple forms of statistics have been used since the beginning of civilization, when pictorial representations or other symbols were used to record numbers of people, animals, and inanimate objects on skins or sticks of wood and the walls of caves

Before 3,000 BC the Babylonians used small clay tablets to record tabulations of agricultural yields and of commodities bartered or sold. The Egyptians analyzed the population and material wealth of their country before beginning to build the pyramids in the 31st century BC.

The ancient Greeks held censuses to be used as bases for taxation as early as 594 BC. The Roman Empire was the first government to gather extensive data about the population and wealth of the territories that it controlled.

Registration of deaths and births was begun in England in the early 16th century. In the 19th century, with the application of the scientific method to all phenomena in the natural and social sciences, investigators recognized the need to reduce information to numerical values to avoid the ambiguity of verbal description.

At present, statistics is a reliable means of describing accurately the values of economic, political, social, psychological, biological, and physical data.

In economics, statistical methods are widely used to analyze, interpret and predict various economic factors. The branch of economics that studies statistics and uses mathematical methods to describe and explain how economic systems work is called econometrics. Econometrics is concerned with finding relationships between values that change (variables). In this case, economists try to find out if economic variable A (value A) changes every time variable B changes. The development of the theory of probability increased the scope of statistical applications in science in general and economics in particular

Many people believe that you can use statistics to prove anything that you want to prove, and that politicians and companies sometimes use them in dishonest ways. People also sometimes mention a famous remark made by the US writer Mark Twain: “There are three kinds of lies: lies, damned lies, and statistics”.

TOPICAL VOCABULARY

Presenting statistics we can use the following verbs to describe upward () and downward () movements and changes in price, quantity and amount.

Intransitive Usage (N + V + Adv)

increase (to 15 %, sharply, slowly, by 20 %, slightly, steadily,

rise gradually, significantly, etc.)

go up NOTE: e.g. Sales of new cars in Europe fell/rose 9.6 %.

grow, climb (No preposition is used before 9.6 % to show how much

lower or higher in amount “sales” became).

decrease e.g. Sales of new cars in Europe fell/rose by 9.6 %.

fall (We use “by” forshowing how much “sales” changed

drop when we think of them as compared to other levels or

decline quantities).

go down

e.g. The population of the world is increasing steadily.

e.g. The prices of electronic goods have dropped/fallen/decreased

lately.

Transitive usage (V + N)

increase (production, profits, prices, etc.)

raise

reduce

decrease

cut

lower

e.g. The owners of the house reduced its price by 20%.

e.g. 700 jobs will be lost in order to cut costs and boost profits.

e.g. The university is working to raise the number of students from state

schools.

The corresponding nouns: an increase, a rise, a decrease, a fall, a drop, a decline, a reduction

e.g. There are several competing companies entering the market and this hascaused a 20 % drop in prices.

e.g. The company promised they would make no staff reductions next year.

Exercise 11. Complete the sentences below, using the words in the box to show what changes have occurred between last year and this year. Use each word once. The first has been done for you.

1. Tax last year: 10 %. Tax this year: 12 %.

The government has raised tax.

2. Cars last year: 2 million. Cars this year: 1.8 million.

There has been a _________in car production.

3. Price last year: $50. Price this year: $35.

The price of this product has been ________.

4. Employees last year: 40. Employees this year: 75.

There has been a ______ in the number of employees.

5. Orders last year: 10 million. Orders this year: 8 million.

Orders ______ this year.

6. Investment last year: $500,000. Investment this year: $650,000.

The company has _______ investment in new equipment.

7. Franchisees last year: 120. Franchisees this year: 300.

The number of franchisees has ______.

8. Budget last year: 100 %. Budget this year: 25 %.

There has been a _______ in the budget.

9. Sales last year: $30,000. Sales this year: $35,000.

Sales have _______.

10. Profits per factory last year: $1,000,000. Profits per factory this year: $850,000. There has been a _______ in profits per factory.

NOTE: When presenting statistics we often use the Present Perfect to denote achange or development that produces a particular result and is

likely to continue.