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What are the Functions of Statistics?

What are the Functions of Statistics?

For students, professionals, or anyone with a curious mind, understanding the fundamental functions of statistics is essential. By the end of this post, you’ll have a clearer grasp of its significance in our daily lives. We will break down the core functions of statistics, from data analysis to decision-making, and discover how this field is the foundation of informed choices and understanding of our complex world. 

What is Statistics?

What is Statistics?

Statistics is a branch of mathematics and data analysis that involves collecting, analyzing, interpreting, and presenting data. It provides valuable tools and techniques for summarizing and making sense of complex information, enabling us to draw meaningful conclusions and make informed decisions. 

Statistics is used in various fields, including science, economics, social sciences, and business, to study patterns, trends, and relationships within data. Key concepts in statistics include probability, sampling, hypothesis testing, and regression analysis, which help us understand uncertainty and variability in data, aiding in problem-solving and decision-making processes.

Types of Statistics

Types of Statistics

There are two main types of statistics, which we have highlighted below: 

Descriptive Statistics

Descriptive statistics includes various techniques to summarize and explain key characteristics of a dataset. These methods involve Measures of Central Tendency, such as the mean, median, and mode, which reveal the dataset’s central tendencies. 

Additionally, Measures of Variability, including range, variance, and standard deviation, help assess the data’s dispersion. Frequency distributions are employed to display how often each value appears in the dataset, while graphical tools like histograms, bar charts, and box plots are used to provide a visual representation of the data’s attributes

Inferential Statistics

Inferential statistics play an important role in making predictions and drawing inferences about larger populations based on the analysis of representative data samples. These techniques includes hypothesis testing, which involves assessing population parameters through comparisons of sample means or proportions to determine significance. 

Confidence intervals offer a range of values that likely encompass population parameters with a specified confidence level. Regression analysis models relationships between independent variables and a dependent variable, with linear regression being a common example. 

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Top 8 Functions of Statistics

Top 8 Functions of Statistics

Functions of statistics, like summarizing data, testing hypotheses, and making predictions, enable informed decision-making in various fields. They provide a structured approach to analyzing, interpreting, and communicating information, making complex data more understandable. In essence, statistics functions are essential tools for uncovering patterns, trends, and insights, aiding in problem-solving, informed policy development, and better-informed choices in science, business, and everyday life.

Let’s see the top 8 functions of statistics, which are as follows:

To Test Hypothesis

Hypothesis testing is a critical application of statistics. In scientific research, a hypothesis is a statement or proposition that can be tested through experimentation or data analysis. Statistics provides a framework for determining whether the evidence from data supports or refutes a hypothesis.

Researchers use statistical tests, like t-tests, chi-squared tests, and Analysis of Variance (ANOVA), to compare observed data with what would be expected under a null hypothesis. If the observed data significantly deviates from what was expected, it suggests that the hypothesis may be valid.

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To Make Predictions

Statistical methods, including regression analysis and time series analysis, allow for making predictions based on historical data. For example, in finance, stock price forecasting relies on time series analysis to predict future prices.

Machine learning, a subset of statistics, uses algorithms to make predictions, like recommending products to consumers or detecting fraudulent transactions.

Statistics helps in recognizing patterns, trends, and relationships within datasets. This can reveal valuable insights. For example, in marketing, data on consumer behavior can be analyzed to identify trends and adapt strategies accordingly.

Visualization tools, such as scatter plots, bar charts, and heatmaps, aid in visually identifying patterns and trends in data.

Also, check out the blog on Correlation in Statistics.

To Solve Problems

Statistics provides a systematic approach to problem-solving by quantifying and analyzing data. For instance, quality control teams in manufacturing use statistical process control (SPC) to identify and rectify production issues.

Epidemiologists use statistics to track and control the spread of diseases, enabling them to develop effective intervention strategies.

To Design Experiments

Experimental design is crucial for obtaining valid and reliable results. Statistics helps in planning experiments, choosing sample sizes, and deciding how data should be collected.

For instance, in drug trials, statisticians work with researchers to determine the sample size needed to ensure the results are statistically significant.

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To Analyze Data

Statistical analysis involves techniques like descriptive statistics (mean, median, and standard deviation) to summarize data and inferential statistics to draw conclusions and make predictions. Multivariate analysis allows researchers to examine the relationships between multiple variables.

Techniques such as cluster analysis help identify groupings within data, while factor analysis reveals underlying factors influencing observed data patterns.

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To Interpret Results

Once the data is analyzed, the interpretation of the results is a critical step. Statisticians and researchers assess the significance of findings and determine their practical implications.

Confidence intervals provide a range within which a parameter (e.g., a population mean) is likely to fall, while p-values indicate the strength of evidence against the null hypothesis.

To Communicate Findings

Clear communication of results is essential for decision-makers and stakeholders to understand and act upon findings. Statistics uses various tools and methods to convey information effectively.

Visual aids, such as data visualization tools (e.g., graphs, charts, and dashboards), can make complex statistical findings more accessible to a broader audience.

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Statistics is not merely a subject taught in classrooms; it is a powerful tool that shapes our understanding of the world and drives decision-making in various fields. Whether it’s improving product quality, understanding patterns and trends, or making predictions about future events, the functions of statistics are widespread and indispensable. As data continues to grow in volume and complexity, the role of statistics will only become more crucial in helping us navigate an increasingly data-driven world.

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About the Author

Principal Data Scientist

Meet Akash, a Principal Data Scientist who worked as a Supply Chain professional with expertise in demand planning, inventory management, and network optimization. With a master’s degree from IIT Kanpur, his areas of interest include machine learning and operations research.