MEASURES OF DISPERSION

MEASURES OF DISPERSION
What is Dispersion in Statistics?
Dispersion is the state of getting dispersed or spread. Statistical dispersion means the extent to which a
numerical data is likely to vary about an average value. In other words, dispersion helps to understand the
distribution of the data.

MEASURES OF DISPERSION - In statistics, the measures of dispersion help to interpret the variability of data i.e. to
know how much homogenous or heterogeneous the data is. In simple terms, it shows how squeezed or
scattered the variable is.
 TYPES OF MEASURES OF DISPERSION
There are two main types of dispersion methods in statistics which are:

• Absolute Measure of Dispersion

An absolute measure of dispersion contains the same unit as the original data set. Absolute dispersion
method expresses the variations in terms of the average of deviations of observations like –
• Range
• Mean Deviation
• Quartile Deviation
• Standard Deviation

• Relative Measure of Dispersion

The relative measures of dispersion are used to compare the distribution of two or more data sets. This
measure compares values without units. Common relative dispersion methods include:
• Co-efficient of Range
• Co-efficient of Variation
• Co-efficient of Standard Deviation
• Co-efficient of Quartile Deviation
• Co-efficient of Mean Deviation
 Coefficient Of Dispersion
The coefficients of dispersion are calculated (along with the measure of dispersion) when two series are compared, that
differ widely in their averages. The dispersion coefficient is also used when two series with different measurement units are
compared. It is denoted as C.D.

The common coefficients of dispersion are:

MEASURES OF DISPERSION - RANGE
 MEASURES OF DISPERSION – RANGE
Annual Incomes of three groups of families are given below:

SERIES I SERIES II SERIES III

Rs. Rs. Rs.
16800 15200 13000
16800 16000 25000
16800 16800 25000
16800 17600 14000
16800 18400 7000

Calculate Range and Relative Range.

 MEASURES OF DISPERSION – RANGE

Advantages of Range:

• It is simple to understand and easy to calculate.

• It is less time consuming.

Disadvantages of Range:

• It is not based on each and every item of the distribution.

• It is very much affected by the extreme values.

• The value of Range is affected more by sampling fluctuations

• Range cannot be computed in case of open-end distribution.

MEASURES OF DISPERSION – QUARTILE DEVIATION
 MEASURES OF DISPERSION – QUARTILE DEVIATION
Consider the following table containing X’s monthly earnings during the year. Compute Quartile Deviation, Median and
quartile coefficient of dispersion therefrom.
Months Monthly Earnings
(x) Rs. in ’00
1 39
2 40
3 40
4 41
5 41
6 42
7 42
8 43
9 43
10 44
11 44
12 45
 MEASURES OF DISPERSION – QUARTILE DEVIATION
Calculate the appropriate measure of dispersion from the following data.

Wages No. of Wage Earners

Below 35 14

35 – 37 60

38 – 40 95

41 – 43 24

Over 43 7
 MEASURES OF DISPERSION – QUARTILE DEVIATION
Advantages of Quartile Deviation

• It is not affected by the extreme (highest and lowest) values in the data set.

• It is an appropriate measure of variation for a data set summarized in open-ended class intervals.

• It is a positional measure of variation; therefore it is useful in the cases of irregular or highly skewed distributions.

Disadvantages of Quartile Deviation

• The QD is based on the middle 50 per cent observed values only and is not based on all the observations in the data set,
therefore it cannot be considered as a good measure of variation.
 It is not suitable for mathematical treatment.
 It is affected by sampling fluctuations.
 The QD is a positional measure and has no relationship with any average in the data set.
MEASURES OF DISPERSION – MEAN DEVIATION
 MEASURES OF DISPERSION – MEAN DEVIATION
Mean Deviation is the sum of the observations from an average divided by the number of items in a distribution. This
average may be AM, Median or Mode.
 MEASURES OF DISPERSION – MEAN DEVIATION : Individual Series
Consider the following table containing X’s monthly earnings during the year. Compute Mean deviation of Mean, as well as
median therefrom.
Months Monthly Earnings (x)
(Rs. in ’00s)
1 39
2 40
3 40
4 41
5 41
6 42
7 42
8 43
9 43
10 44
11 44
12 45
TOTAL 504
 MEASURES OF DISPERSION – MEAN DEVIATION : Individual Series
Calculate the Mean Deviation from Mean, Median & Mode for the following values. Also calculate its coefficient.
7 4 10 9 15 12 7 9 7

X
7
4
10
9
15
12
7
9
7
 MEASURES OF DISPERSION – MEAN DEVIATION : Discrete Series
Calculate the mean deviation from mean & coefficient of mean deviation of the following series:

Marks Number of Students

5 5

15 8

25 15

35 16

45 6
 MEASURES OF DISPERSION – MEAN DEVIATION : Continuous Series
Calculate the mean deviation about mean from the following data:

Marks Number of Students

0 – 10 6

10 – 20 5

20 – 30 8

30 – 40 15

40 – 50 7

50 – 60 6

60 – 70 3

TOTAL 50
 MEASURES OF DISPERSION – MEAN DEVIATION
Advantages of Mean Deviation

• It is simple to understand and easy to compute.

• It is based on each and every item of the data.
• Mean Deviation is less affected by the values of extreme items than the Standard deviation.

Disadvantages of Mean Deviation

• The greatest drawback of this method is that algebraic signs are ignored while taking the deviations of
the items.
• It is not capable of further algebraic treatments.
• It is much less popular as compared to standard deviation.
 MEASURES OF DISPERSION – MEAN DEVIATION : PROPERTIES OF MEAN DEVIATION
• Mean-deviation takes its minimum value when the deviations are taken from the
median.

• It is rigidly defined.

• It is based on all the observations and not much affected by sampling fluctuations.

• It is difficult to comprehend and its computation

• Mean-deviation remains unchanged due to a change of origin but changes in the same
ratio due to a change in scale

i.e. if y = a + bx, a and b being constants,

then MD of y = |b| × MD of x
MEASURES OF DISPERSION – STANDARD DEVIATION
 MEASURES OF DISPERSION – STANDARD DEVIATION
The STANDARD DEVIATION is a statistic that measures the dispersion of a dataset relative to its mean and is
calculated as the square root of the variance. The standard deviation is calculated as the square root of
variance by determining each data point's deviation relative to the mean.

If the data points are further, from the mean, there is a higher deviation within the data set; thus, the more
spread out the data, the higher the standard deviation.

KEY TAKEAWAYS:

• Standard deviation measures the dispersion of a dataset relative to its mean.

• It is calculated as the square root of the variance.

• Standard deviation, in finance, is often used as a measure of a relative riskiness of an asset.

• A volatile stock has a high standard deviation, while the deviation of a stable stock is usually rather low.
 MEASURES OF DISPERSION – STANDARD DEVIATION

Individual Discrete Continuous

Series Series Series

METHODS FOR FINDING STANDARD DEVIATION

Actual Mean Direct Assumed Mean Step – Deviation

Method Method Method Method
(Short-cut Method)
 MEASURES OF DISPERSION – STANDARD DEVIATION : Individual Series (Actual Mean Method)
Find out the standard deviation of the following items:
8 10 12 14 16 18 20 22 24 26

X
8
10
12
14
16
18
20
22
24
26
 MEASURES OF DISPERSION – STANDARD DEVIATION : Individual Series (Direct Method)
Find out the standard deviation of the following items:
8 10 12 14 16 18 20 22 24 26

X
8
10
12
14
16
18
20
22
24
26
 MEASURES OF DISPERSION – STANDARD DEVIATION : Individual Series (Assumed Mean Method)
Find out the standard deviation of the following items:
8 10 12 14 16 18 20 22 24 26

X
8
10
12
14
16
18
20
22
24
26
 MEASURES OF DISPERSION – STANDARD DEVIATION : Individual Series (Step Deviation Method)
Find out the standard deviation of the following items:
8 10 12 14 16 18 20 22 24 26
 MEASURES OF DISPERSION – STANDARD DEVIATION : Discrete Series (Actual Mean Method)
Find out the standard deviation from the following data:

X f

2 3

4 1

6 4

8 2
 MEASURES OF DISPERSION – STANDARD DEVIATION : Discrete Series (Direct Method)
Find out the standard deviation from the following data:

X f

2 3

4 1

6 4

8 2
 MEASURES OF DISPERSION – STANDARD DEVIATION : Discrete Series (Assumed Mean Method)
Find out the standard deviation from the following data:

X f

2 3

4 1

6 4

8 2
 MEASURES OF DISPERSION – STANDARD DEVIATION : Discrete Series (Step Deviation Method)
Find out the standard deviation from the following data:

X f

2 3

4 1

6 4

8 2
 MEASURES OF DISPERSION – STANDARD DEVIATION : Continuous Series (Actual Mean Method)
From the following frequency distribution, find the standard deviation.

Class Interval Frequency

10 – 20 9

20 – 30 18

30 – 40 31

40 – 50 17

50 – 60 16

60 - 70 9

TOTAL 100
 MEASURES OF DISPERSION – STANDARD DEVIATION : Continuous Series (Direct Method)
From the following frequency distribution, find the standard deviation.

Class Interval Frequency

10 – 20 9

20 – 30 18

30 – 40 31

40 – 50 17

50 – 60 16

60 - 70 9

TOTAL 100
 MEASURES OF DISPERSION – STANDARD DEVIATION : Continuous Series (Assumed Mean Method)
From the following frequency distribution, find the standard deviation.

Class Interval Frequency

10 – 20 9

20 – 30 18

30 – 40 31

40 – 50 17

50 – 60 16

60 - 70 9

TOTAL 100
 MEASURES OF DISPERSION – STANDARD DEVIATION : Continuous Series (Step Deviation Method)
From the following frequency distribution, find the standard deviation.

Class Interval Frequency

10 – 20 9

20 – 30 18

30 – 40 31

40 – 50 17

50 – 60 16

60 - 70 9

TOTAL 100
 MEASURES OF DISPERSION – STANDARD DEVIATION & VARIANCE

EXAMPLE: The Standard Deviation of a frequency distribution is 2.5. What will be the variance?

EXAMPLE: Variance of a frequency distribution is 9. Compute the standard deviation.

 MEASURES OF DISPERSION – STANDARD DEVIATION
Advantages of Standard Deviation

• Shows how much data is clustered around a mean value.

• It gives a more accurate idea of how the data is distributed.
• Not as affected by extreme values.

Disadvantages of Standard Deviation

• It doesn't give you the full range of the data.

• It can be hard to calculate.
• Only used with data where an independent variable is plotted against the frequency of it.
• Assumes a normal distribution pattern.
 MEASURES OF DISPERSION – COEFFICIENT OF VARIATION
The number of employees, daily wages per employee and the variance of the wages per employee for two
factories are given below:
Factory A Factory B
Number of Employee 50 100
Average daily wages per employee 120 85
Variance of the wages per employee per month 9 16

In which factory there is greater variation in the distribution of wages per employee?
 RELATIONSHIP BETWEEN MEASURES OF DISPERSION
4
• MD = σ
5

2
• QD = σ
3

5
• QD = 𝑀𝐷
σ

• 6 σ = 9 QD

• QD = 7.5 MD