7242 - Measures of Dispersion 1 11

THEEXTRACL ASS.
COM PAGE 1
MEASURES OF DISPERSION
Dispersion is a measure of the variation of the items - A.L Bowley.
OBJECTIVE OF MEASURING DISPERSION
1. To make a comparative study of two or more Series - measures of

dispersion are also useful in comparing two or more series with regard
to differences.
2. To test the reliability of an average - it enables us to understand whether

an average is really representative of the series. If the dispersion of
variability is very large the average may be unrepresentative of the
series and if the measure of dispersion is very small than average would
be a representative value.
3. To serve as Basis for Control and Variability - study of variation is done

for the purpose of analysing why large variations happen. This study
help to control the variation itself.
4. To serve as a basis for further statistical analysis - measure of dispersion

is very useful in the use of higher measures such as skewness, kurtosis,
correlation, regression etc.
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THEEXTRACL ASS.COM PAGE 2
METHODS OF MEASURING DISPERSION
1. ABSOLUTE MEASURE - When dispersion of series is expressed in terms

of the original unit of the series , it is called absolute measure of
dispersion. Absolute dispersion is measured in the same units ad the
data. For example, if the data are in kg, the measure will be in kg, if the
data are in litres , the absolute measure will also be in litres.
2. RELATIVE MEASURE - Comparing two or more series where units of

measure are different, relative measures are used because they are
calculated as the percentage or the coefficient of the absolute measure
of dispersion. therefore, it is called coefficient of dispersion or coefficient
of variation .
ABSOLUTE MEASURE RELATIVE MEASURE
Range Coefficient of Range
Quartile Deviation , Inter-Quartile

Coefficient of Quartile Deviation
Range
Mean Deviation Coefficient of Mean Deviation

Coefficient of Standard Deviation,
Standard Deviation Coefficient of variation
Lorenz Curve
RANGE
A. RANGE - It is the simplest measure of dispersion. It is the difference

between the largest and the smallest value in the distribution.
- In grouped frequency distribution, range is defined as the difference

between the upper limit of the highest class and the lower limit of the
smallest class.
- In frequency distribution the frequencies of the various classes are

immaterial since the range
Formula = L- S
Where, L is largest item
S is smallest item.
COEFFICIENT OF RANGE - As range is an absolute measure of dispersion

it cannot be used for comparisons. To make it comparable we find its
coefficient. It is the ratio between
a) the difference between the highest and lowest values of the series and
b) b) the sum of the lowest and highest values of the series.
COEFFICIENT OF RANGE (CR) = L-S / L+H
ADVANTAGES OF RANGE -
1. It is easy to understand and is simple to compute.
2. It is rigidly defined
3. It gives a big picture of the data quickly.
DISADVANTAGES OF RANGE -
1. Range cannot be computed in case of open - end distribution.
2. Range is very much affected by extreme values.
3. It does not tell anything about the distribution of items in the series to a
measure of central tendency.
INTER - QUARTILE RANGE AND QUARTILE DEVIATION
Inter - Quartile Range - Difference between third Quartile and first Quartile of
a series, is called Inter - Quartile Range.
Quartile Deviation - It is the half of inter Quartile Range. It is also called Semi -
inter Quartile Range.
Coefficient of Quartile Deviation - it is calculated by the following formula.
ADVANTAGES OF QUARTILE DEVIATION
1. It has a special use in measuring variation of open - end distribution.
2. It is very simple to calculate and easy to understand .
3. It is very useful when extreme values are likely to affect the results.
DISADVANTAGES OF QUARTILE DEVIATION
1. It is also not possible to give it further algebraic treatment.
2. It is affected by fluctuations of sampling.
3. This method does not show complete formation of the series.
MEAN DEVIATION
Mean deviation is the arithmetic average of deviations of all the values

taken from a statistical average ( mean, median, mode ) of series . In taking
deviations of values, algebraic signs + and - are not taken into
consideration, that is negative deviations are also treated as positive
deviations.
Formula -
Coefficient of Mean Deviation
1. Coefficient of MD from Mean = Mean Deviation / Arithmetic Mean
2. Coefficient of MD from Median = Mean Deviation / Median
3. Coefficient of MD from Mode = Mean Deviation / Mode
ADVANTAGES OF MEAN DEVIATION
1. Mean deviation is rigidly defined and its value is precise and definite.
2. It is very simple and a good measure of dispersion.
3. It is not affected very much by value of extreme items.
DISADVANTAGES OF MEAN DEVIATION
1. Calculation of mean deviation suffers from inaccuracy, because the + or -

signs are ignored.
2. Mean deviation is not capable of any further algebraic treatment.
3. This method becomes unreliable in some situation.
STANDARD DEVIATION
Standard deviation is the square root of the arithmetic average of the

squares of the deviations measured from mean .
Features of Standard Deviation -
- The value of its deviation is taken from arithmetic mean.

- Plus and minus signs of the deviations taken from the mean are not
ignored.
Coefficient of Standard Deviation = Standard Deviation / Mean
COMBINED STANDARD DEVIATION - The combined standard deviation oft

groups are calculated as follows -
N 1cr12 + N2cr22 + N 1d12 + N2d22

CT12 =
N1 + N2
VARIANCE - It is another measure of dispersion. Variance is the square of

the standard deviation.
Coefficient of variation - coefficient of variation is the percentage variation

in the mean, the standard deviation being considered as the total variation
in the mean.
Formula = Coefficient of Standard Deviation X 100
= Standard deviation / mean X 100
ADVANTAGES OF STANDARD DEVIATION
1. Standard deviation is a well defined and definite measure of

dispersion. It is rigidly defined and its value is always definite.
2. Standard deviation is capable of further algebraic treatment.
3. It is less affected by the fluctuations of sampling than most other

measures of dispersion.
DISADVANTAGES OF STANDARD DEVIATION
1. It is difficult to calculate and make use of standard deviation as a

measure of dispersion.
2. In the calculation of standard deviation, extreme values tend to get

greater importance.
LORENZ CURVE
The Graphic Method of studying dispersion is known as Lorenz Curve

Method. This curve was first used by Max Lorenz, hence it is called Lorenz
Curve. Lorenz Curve is a measure of deviation of actual distribution from the
line of equal distribution.
CONSTRUCTION OF LORENZ CURVE
Step - 1. The size of the items are made cumulative. Considering last
cumulative total as equal to 100, different cumulative totals are converted
into percentages.
Step - 2. As in the same manner frequencies are made cumulative.

Considering the last cumulative frequency items as equal to 100, all the
different cumulative frequencies are converted into percentages.
Step - 3. Cumulative frequencies are plotted X-axis of a graph, while

cumulative items are plotted on the Y-axis.
Step - 4. On both axes, we start from 0 to 100 and both X and Y axes take
the values from 0 to 100.
Step - 5. Draw a diagonal line joining the origin (0, 0) with the cumulative
frequencies (100, 100). This shows equal distribution. It is, therefore, called
Equality Line’ or line of Equal Distribution.
Step - 6. Actual data are plotted on the graph and a curve is obtained by
joining different points. This curve shows actual distribution.
Step - 7. Actual distribution curve is called Lorenz Curve. Closeness of

Lorenz curve to the Equal Distribution line shows lesser variation in the
distribution. Larger the gap between the actual distribution curve and the
Lorenz line, greater is the variation. If two lorenz curve are drawn on the
THEEXTRACL ASS.COM P A G E 11
same graph paper, the one which is further away from the equal distribution
line shows greater variation.

7242 - Measures of Dispersion 1 11

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THEEXTRACL ASS.

Dispersion is a measure of the variation of the items - A.L Bowley.

OBJECTIVE OF MEASURING DISPERSION

1. To make a comparative study of two or more Series - measures of

2. To test the reliability of an average - it enables us to understand whether

3. To serve as Basis for Control and Variability - study of variation is done

4. To serve as a basis for further statistical analysis - measure of dispersion

METHODS OF MEASURING DISPERSION

1. ABSOLUTE MEASURE - When dispersion of series is expressed in terms

2. RELATIVE MEASURE - Comparing two or more series where units of

ABSOLUTE MEASURE RELATIVE MEASURE

Range Coefficient of Range

Quartile Deviation , Inter-Quartile

Mean Deviation Coefficient of Mean Deviation

A. RANGE - It is the simplest measure of dispersion. It is the difference

- In grouped frequency distribution, range is defined as the difference

- In frequency distribution the frequencies of the various classes are

Where, L is largest item

COEFFICIENT OF RANGE - As range is an absolute measure of dispersion

b) b) the sum of the lowest and highest values of the series.

COEFFICIENT OF RANGE (CR) = L-S / L+H

1. It is easy to understand and is simple to compute.

3. It gives a big picture of the data quickly.

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

2. Range is very much affected by extreme values.

INTER - QUARTILE RANGE AND QUARTILE DEVIATION

Coefficient of Quartile Deviation - it is calculated by the following formula.

ADVANTAGES OF QUARTILE DEVIATION

1. It has a special use in measuring variation of open - end distribution.

2. It is very simple to calculate and easy to understand .

DISADVANTAGES OF QUARTILE DEVIATION

1. It is also not possible to give it further algebraic treatment.

2. It is affected by fluctuations of sampling.

3. This method does not show complete formation of the series.

Mean deviation is the arithmetic average of deviations of all the values

Coefficient of Mean Deviation

1. Coefficient of MD from Mean = Mean Deviation / Arithmetic Mean

2. Coefficient of MD from Median = Mean Deviation / Median

3. Coefficient of MD from Mode = Mean Deviation / Mode

ADVANTAGES OF MEAN DEVIATION

2. It is very simple and a good measure of dispersion.

3. It is not affected very much by value of extreme items.

DISADVANTAGES OF MEAN DEVIATION

1. Calculation of mean deviation suffers from inaccuracy, because the + or -

2. Mean deviation is not capable of any further algebraic treatment.

3. This method becomes unreliable in some situation.

Standard deviation is the square root of the arithmetic average of the

Features of Standard Deviation -

- The value of its deviation is taken from arithmetic mean.

Coefficient of Standard Deviation = Standard Deviation / Mean

COMBINED STANDARD DEVIATION - The combined standard deviation oft

N 1cr12 + N2cr22 + N 1d12 + N2d22

VARIANCE - It is another measure of dispersion. Variance is the square of

Coefficient of variation - coefficient of variation is the percentage variation

Formula = Coefficient of Standard Deviation X 100

= Standard deviation / mean X 100

ADVANTAGES OF STANDARD DEVIATION

1. Standard deviation is a well defined and definite measure of

2. Standard deviation is capable of further algebraic treatment.

3. It is less affected by the fluctuations of sampling than most other

DISADVANTAGES OF STANDARD DEVIATION

1. It is difficult to calculate and make use of standard deviation as a

2. In the calculation of standard deviation, extreme values tend to get