BUS I NE S S RE S E ARCH

MEASURES OF
DISPERSION
DEFINITION
Measures of dispersion are descriptive
statistics that describe how similar a set of
scores are to each other
The more similar the scores are to each other, the
lower the measure of dispersion will be
The less similar the scores are to each other, the
higher the measure of dispersion will be
In general, the more spread out a distribution is,
the larger the measure of dispersion will be

DISPERSION
Dispersion indicates the measure of the extent
to which individual items differ. It indicates
lack of uniformity in the size of items.
Dispersion or spread is the degree of the
scatter or variation of the variables about
central value
The degree to which numerical data tend to
spread about an average value is called the
Variation or dispersion .


4
EXAMPLE
Which of the distributions
of scores has the larger
dispersion?
0
25
50
75
100
125
1 2 3 4 5 6 7 8 9 10
0
25
50
75
100
125
1 2 3 4 5 6 7 8 9 10
The upper distribution
has more dispersion
because the scores
are more spread out
That is, they are less similar to
each other
ABSOLUTE & RELATIVE MEASURES OF
DISPERSION
Absolute Measures of Dispersion:
The measures of dispersion which are expressed in
terms of original units of a data are termed as
Absolute Measures.

Relative Measures of Dispersion:
Relative measures of dispersion, are also known as
coefficients of dispersion, are obtained as ratios or
percentages.
These are pure numbers independent of the units
of measurement.
MEASURE OF DISPERSION
Range
This is not based on all the observations of the data

Mean Deviation
For Unclassified data: Let x
1
, x
2
,., x
n
are n
observations of given data. If n values x
1
, x
2
,., x
n

have an Arithmetic mean

MEASURE OF DISPERSION
Mean Deviation
For Classified data: Let the variable X has values x
1
,
x
2
,., x
n
with frequencies f
1
, f
2
,., f
n
and If n
values x
1
, x
2
,., x
n
have an Arithmetic mean
STANDARD DEVIATION
When the deviate scores are squared in
variance, their unit of measure is squared as
well
E.g. If peoples weights are measured in pounds,
then the variance of the weights would be
expressed in pounds2 (or squared pounds)
Since squared units of measure are often
awkward to deal with, the square root of
variance is often used instead
The standard deviation is the square root of
variance

STANDARD DEVIATION
Standard deviation = variance
Variance = standard deviation
2


STANDARD DEVIATION
For Unclassified data:
Let x
1
, x
2
,., x
n
are n observations of given
data. If n values x
1
, x
2
,., x
n
have an
Arithmetic mean
Then Standard deviation is given by

STANDARD DEVIATION
Standard Deviation
For Classified data: Let the variable X has
values x
1
, x
2
,., x
n
with frequencies f
1
, f
2
,.,
f
n
and If n values x
1
, x
2
,., x
n
have an
Arithmetic mean
Then standard Deviation is
STANDARD DEVIATION
Merits of Standard deviation

1. Standard deviation is rigidly defined.
2. Standard deviation is based upon all
observations.
3. Standard deviation is capable of further
mathematical treatment.
4. Standard deviation is less affected by
sampling variations


STANDARD DEVIATION
Demerits of Standard deviation:

Standard deviation is not simple to
understand and not easy to calculate.
Standard deviation is much affected by
extreme values.
Standard deviation can not be calculated
for open end classes without any
assumptions.


COEFFICIENT OF VARIATION (C.V.)
When this is expressed as percentage, that is
multiplied by 100, it is called Coefficient of
variation. The coefficient of variation is the ratio of
standard deviation to the arithmetic mean
expressed as percentage.

COEFFICIENT OF VARIATION (C.V.)
This is a dimension free measure of dispersion
The advantage of the CV is that it is unit-less. This
allows CVs to be compared to each other in ways
that other measures, like standard deviations or root
mean squared residuals, cannot be.