BBA - 3 [MEASURES OF DISPERSION]

Dispersion:
By dispersion, we mean the extent to which the values in a series are spread out from the
average.

Measures of Dispersion:
Measures of dispersion are the measures which tell us how dispersed the data are.

Types of Measures of Dispersion:

The most common measures of dispersion are:
i. The Range
ii. The Mean Deviation / The Average Deviation
iii. The Standard Deviation / Variance

The Range:
The range is defined as the difference between the largest value and the smallest value in the
data. It is denoted by R.

R = Xm – X0 ; for ungroup data

Xm:The largest value in the data
X0 :The smallest value in the data

For group data:

R = Upper Class Boundary of the Highest Class - Lowest Class Boundary of the Lowest Class
R =Class Mark of the Highest Class - Class Mark of the Lowest Class

The Mean Deviation: (The Average Deviation)

The quartile deviation is defined as the average of the absolute deviations of the values from an
average (e.g. mean or median). It is denoted by M.D.

Formulae of Mean Deviation:

For Ungroup Data For Group Data

̅|
∑|X− X ̅|
∑ f|X− X
From Mean M.D. (from mean) = M.D. (from mean) =
n n

̃|
∑|X− X ̃|
∑ f|X− X
From Median M.D. (from median) = M.D. (from median) =
n n

Prepared By: Ms. AMARA NAZIR (Lecturer Statistics)

 BBA - 3 [MEASURES OF DISPERSION]

The Standard Deviation:

The standard deviation is defined as the positive square root of the mean of the squared
deviations of the values from their mean. It is denoted by S.

Formulae of Standard Deviation:

For Ungroup Data For Group Data

̅ )2
∑(X− X ̅ )2
∑ f(X− X → ∑f = n
Direct S=√ S=√
Method n n
∑ X2 ∑X 2 ∑ fX2 ∑ fX 2 → ∑f = n
S=√ − ( ) S=√ − ( ∑f )
Indirect
Method n n ∑f

→ D=X–A
∑ D2 ∑D 2 ∑ fD2 ∑ fD 2
S=√ − ( ) S=√ − ( ∑f )
Short-Cut A = Assumed
Method n n ∑f Value
X−A
∑ u2 ∑u 2 ∑ fu2 ∑ fu 2 →u =
S=hx√ S=hx√ − ( ∑f ) h
Coding
− ( ) ∑f
Method n n
h = Class Size

The Variance:
The variance is defined as the square of the standard deviation, i.e. the mean of the squared
deviation from the mean. It is denoted by S2.

Formulae of Variance:

For Ungroup Data For Group Data

̅ )2
∑(X− X ̅ )2
∑ f(X− X → ∑f = n
2 2
Direct S = S =
Method
n n
∑ X2 ∑X 2 ∑ fX2 ∑ fX 2 → ∑f = n
Indirect 2
S = − ( ) S = 2
∑f
− ( ∑f )
Method n n

∑ D2 ∑D 2 ∑ fD2 ∑ fD 2 → D=X–A
Short-Cut 2
S = − ( ) S = 2
∑f
− ( ∑f ) A = Assumed
Method n n Value
X−A
→u =
Coding ∑ u2 ∑u 2 2 2 h
Method S2 = h2 x [ n − (n) ] S =h x[
2 2 ∑ fu
− (
∑ fu
) ]
∑f ∑f
h = Class Size

Prepared By: Ms. AMARA NAZIR (Lecturer Statistics)

 BBA - 3 [MEASURES OF DISPERSION]

Properties of the Standard Deviation and Variance:

Some important properties of S.D and variance are as given below:
i. The S.D and variance of a constant is zero.
S.D. (a) = 0 and Var (a) = 0
ii. The standard deviation and the variance are independent of origin.
S.D. (X + a) = S.D. (X) and Var (X + a) = Var (X)
S.D. (X - a) = S.D. (X) and Var (X - a) = Var (X)
iii. The standard deviation and the variance are affected by change of scale.
S.D. (aX) = a S.D. (X) and Var (aX) = a2Var (X)
𝑿 𝟏 𝑿 𝟏
S.D. ( )= ( )S.D. (X) and Var( )= ( 𝟐 )Var (X)
𝒂 𝒂 𝒂 𝒂
iv. If two sets of data consisting of n1 values and n2 have variances 𝑺𝟐𝟏 and 𝑺𝟐𝟐 respectively, The
combined variance of both sets of data is given by
𝟐
∑𝐤 𝐢=𝟏 𝐧 𝐢 [𝐒 𝟐
𝐢
̅
+(𝐗 𝐢 − ̿
𝐗 ) ]
S2 =
∑𝐤
𝐢=𝟏 𝐧𝐢
v. The variance of the sum or difference of two independent random variables is the sum of
their respective variances.
Var (X + Y) = Var (X) + Var (Y)
Var (X - Y) = Var (X) + Var (Y)
vi. The variance or Standard deviation is minimum if and only if the deviations are taken
from their mean.

∑(𝑿− 𝒂)𝟐
̅.
is minimum if and only if a = 𝑿
𝒏
vii. For normal distributions
a. The interval 𝑿̅ – S to 𝑿
̅ + S includes 68.27% of the values.
̅
b. The interval 𝑿 – 2S to 𝑿̅ + 2S includes 95.45% of the values.
c. The interval 𝑿̅ – 3S to 𝑿
̅ + 3S includes 99.73% of the values.

This is shown in the Figure.

Prepared By: Ms. AMARA NAZIR (Lecturer Statistics)

 BBA - 3 [MEASURES OF DISPERSION]

Relative Dispersion:
These measures cannot be used to compare two or more series. Relative dispersion is the
appropriate measure to compare the variation of two or more series.
𝐀𝐛𝐬𝐨𝐥𝐮𝐭𝐞 𝐃𝐢𝐬𝐩𝐞𝐫𝐬𝐢𝐨𝐧
𝐑𝐞𝐥𝐚𝐭𝐢𝐯𝐞 𝐃𝐢𝐬𝐩𝐞𝐫𝐬𝐢𝐨𝐧 =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞

Measures of Relative Dispersion:

i. Coefficient of Variation
The most commonly used measure of relative dispersion is the coefficient of variation which was
introduced by Karl Pearson. It is denoted by C.V.

𝐒
𝐂. 𝐕. = × 𝟏𝟎𝟎
̅
𝐗

Prepared By: Ms. AMARA NAZIR (Lecturer Statistics)