Statistics & Probability- the Formula/Code for Success

From medical sciences to space sciences, weather forecasting to banking, computing the chances of winning the lottery to predicting the stock price movements and from psychology to actuarial science, probability and statistics is everywhere! 

By definition, statistics is a form of mathematical analysis that uses quantified models, representations and synopses for a given set of experimental data or real-life studies. In simple terms, statistics is that branch of applied mathematics that deals with data collection, organization, analysis, interpretation and presentation. In this article we will understand the importance of statistics and probability and their applications in various domains, conventional and otherwise. 

Why is understanding probability important?

Probability, in the most crude terms, is a number that reflects the chance or likelihood that a particular event will occur. We use probability in daily life to make decisions when we are not sure what the outcome will be. Most of the time, we don't perform actual probability problems, but we use subjective probability to make judgment calls and determine the best course of action.

 However, the concept of probability is as misunderstood as it is important. It is vital to have an understanding of the nature of chance and variation in life, in order to be a well-informed citizen. One area in which this is extremely important is, in understanding not only risk but also relative risk. If you are told that your chances of dying of some rare disease have just doubled, it is important that you understand that it may be because they have gone from one chance in a million to two chances in a million. Sure it has doubled, but it still is pretty trivial. An understanding of probability is also important in terms of gambling and resistance to the allures of games of chance. And more socially acceptable gambling, such as stock market trading, also requires an understanding of chance and variation. 

 Moreover, it is also essential to understand that statistics and probability are not the same. Statistics uses probability, as much as physics uses calculus. Thus, probability is primarily a theoretical branch of mathematics, which studies the consequences of mathematical definitions. Whereas, statistics is primarily an applied branch of mathematics, which tries to make sense of observations in the real world.

 Now that we have a clear understanding of both the concepts, let's move on to understanding their importance in various domains.

Studies show the human mind tends to understand things easily when it is presented to them in the form of numbers & infographics. In this information led world, the role of statistics is undeniable and it is increasing day by day. You must've heard the terms data driven or data backed decision making. At its crux, these big words basically mean that we are using statistical methods to analyse large amounts of data. Probability & Statistics also play a vital role in business and manufacturing industries.  For example, a company that manufactures thousands of products every day needs to make sure that they are selling the best quality of product. It is not practically possible for them to test each product. So the company uses quality tests with the help of statistics.

Another important concept in probability and stats is forecasting and making predictions about the future using historical data. These applications are particularly important in weather forecasting, stock markets and the banking sector. In medical studies, they are used to quantify the importance of a new drug or vaccine. They can also be used in genetics to determine what are the chances of a newborn being diagnosed with a disease that is prevalent in its family. 

Apart from this, the applications of these domains are also widely used in state management and policy formulation and implementation. It also forms the backbone of research and development. In research, it informs the researcher about the methods of data collection, guides them to negate or support a hypothesis, helps them to seek out outliers, uncertainty and errors in the data and lastly aids interpretation, summarization, and communication of datasets.

No matter which domain we choose, the use of statistics is far and wide. We therefore, have enough evidence to conclude that the uses of probability and statistics are significant [see what I did there? ;)]. Stay tuned to our blog for an in-depth understanding of the use of statistics in various domains. 

References:

https://www.studypug.com/blog/the-importance-of-statistics-in-scientific-research-and-development/  

https://statisticsbyjim.com/basics/importance-statistics/#:~:text=Statistical%20knowledge%20helps%20you%20use,on%20data%2C%20and%20make%20predictions. 

https://www.emathzone.com/tutorials/basic-statistics/importance-of-statistics-in-different-fields.html 

https://www.quora.com/What-are-the-importance-of-studying-statistics-and-probability 

https://creativemaths.net/blog/probability-2/