Measures of Dispersion

Dispersion: Literal meaning of dispersion is scatteredness. Dispersion is the degree of the scatter
or variation of the variables about a central value.

The measurement of the scatterness of the values of a data set around a central value is called a
measure of dispersion.
Measures of Dispersion: Following are the measures of dispersion:
a) Absolute measures
1. Range
2. Mean deviation
3. Standard deviation
4. Quartile deviation

b) Relative measures
1. Coefficient of range
2. Coefficient of mean deviation
3. Coefficient of variation
4. Coefficient of quartile deviation

Range: The range is the simplest measure of dispersion. This is defined as the difference
between the highest and lowest values in a data set.
R=L−S (Ungrouped data)
R=l 2 −l 1 (Grouped data), where l1 is lower limit of the first class and l2 is the upper limit
of the last class.

Example
The following are the wages of 8 workers of a factory. Find the range of variation.
Wages in Tk.

1400 1450 1520 1380 1485 1495 1575 1440

Solution:
Range  L - S
Where, L  Largest value and S  Smallest value
Hence, L  1575 and S  1380

 Range  1575 -1380 =Tk.195

Example # 2
Calculate range from the following data:
Profits (Tk. lakhs) No. of Companies.
10-20 8
20-30 10
30-40 12
40-50 8
 50-60 4

Solution:
In a frequency distribution, range is calculated by taking the difference between the lower limit
of the lower class and the upper limit of the highest class.
Range = L - S = 60-10 =50

Mean Deviation: Let

x 1 ,x 2 ,....,x n be n observations of a variable with mean x , then mean
deviation is defined as:
n
∑ |x i−x|
i=1
M . D.( x )=
n (Ungrouped data)
n
∑ fi|x i −x|
i=1
M . D.( x )= x 1 ,x 2 ,....,x n be the mid-values and
n (Grouped data), where
f 1 ,f 2 , ... ., f n be their corresponding frequencies.

Standard deviation: Let 1 x ,x 2 ,....,x n be n observations of a variable with mean x , then

standard deviation is defined as

n n

√ √
2
S.D. = σ = ∑ ( x i− x́) ∑ x2i (Ungrouped data)
i=1 i=1
= − x́ 2
n n

n n

√ √ x 1 ,x 2 ,....,x n be the mid-

2
S.D. = σ = ∑ f i ( x i− x́ ) ∑ f i x 2i (Grouped data), where
i=1 i=1 2
= − x́
n n
values and f 1 ,f 2 , ... ., f n be their corresponding frequencies.

Variance: The square of the standard deviation is the variance.

n n

∑ ( x i−x́)2 ∑ x 2i (Ungrouped data)

σ 2= i=1 = i=1 − x́ 2
n n
n n

∑ f i ( x i−x́ )2 ∑ f i x 2i (Grouped data)

σ 2= i=1 = i=1 −x́ 2
n n

Example:
The following are the percentages of ash content in 12 samples of coal found in close proximity:
9.2 14.1 9.8 12.4 16.0 12.6 22.7 18.9 21.0 14.5 20.4 16.9
Solution
We know that,

n n

√ √
2
S.D. = σ = ∑ ( x i− x́) ∑ x2i
i=1 i=1
= − x́ 2
n n
By using calculator we get,
n n

∑ x 2i =3173.53 , ∑ x i=188.5, n=12

i=1 i=1

∑ xi188.5
x́= i=1 = =15.708
n 12

So that,
n n

√ √
2
∑ ( x i− x́) ∑ x2i 3173.53
σ= i=1
n
= i=1
n
− x́ 2
√
=
12
−15.708 2=√ 1772 =4.209

Quartile deviation: If Q1 is the first quartile and Q3 is third quartile, then the quartile deviation is
Q −Q
Q. D .= 3 1
defined as: 2

Coefficient of Variation:
The coefficient of variation is defined by:
σ
C . V .= × 100
x́
whereσ is the standard deviation and x̄ is the mean.

Example:
Measurements made with one micrometer of the diameter of a ball bearing have a mean of 3.92
mm and a standard deviation of 0.0152 mm, whereas measurements made with another
micrometer of the unstretched length of a spring have a mean of 1.54 inches and a standard
deviation of 0.0086 inch. Which of these measuring instruments is relatively more precise?

Solution:
We know that,
The coefficient of variation is
σ
C . V .= × 100
x́

Now for the 1st measurement,

 σ1 0.0152
C.V.1= ×100 = ×100=0.39 % where, σ 1 =0.0152 and x́ 1=¿3.92
x́ 1 3.92

Now for the 2st measurement,

σ2 0.0086
C.V.2= ×100 = × 100=0.56 % where, σ 2=0.0086 and x́ 2=¿1.54
x́ 2 1.54

Thus, the measurements made with the first micrometer are relatively more precise.

Why does coefficient of variation (CV) important?

 We know that cv is unit free. So, when two sets of data are in different units, to compare
them we use the cv.
 It is also suitable for comparing the homogeneity and uniformity of two or more
distribution.

[If we want to compare the variability of two or more series, we can use this method. The series
or groups of data for which the coefficient of variation is greater, indicates that the group is more
variable, less stable, less uniform, less consistent or less homogeneous. On the other hand, if the
coefficient of variation is less, it indicates that the group is less variable, more stable, more
uniform, more consistent or more homogeneous.]

Example
The prices of a Tea company shares in Dhaka and Chittagong Markets during the least ten
months are recorded below:

Month Dhaka Chittagong

January 105 108
February 120 117
March 115 120
April 118 130
May 130 100
June 127 125
July 109 125
August 110 120
September 104 110
October 112 135

Determine the arithmetic mean and standard deviation of the prices of shares. In which market
are the shares prices stable?

Solution
 For determining in which market prices of shares are more stable we shall compare the co-
efficient of variation. Let prices in Dhaka and Chittagong are denoted by X and Y respectively:

Dhaka:
n 1150
∑ xi = =115
10
x́ 1= i=1
n
n n

√ √
2
σ1 = ∑ ( x i− x́ 1) ∑ x 2i =8.33
i=1 i=1
= − x́ 12
n n
σ1 8.33
×100 ×100
= 115
¿
C.V.1 x́ 1 = 7.24%

Chittagong:
n 1190
∑ xi = =119
10
x́ 2= i=1
n
n n

√ √
2
σ 2 = ∑ (x i− x́ 2) ∑ x 2i =10.089 = 10.09
i=1 i=1
= − x́ 22
n n

σ2 10.09
¿ ×100 119 ×100
C.V.2 x́ 2 = = 8.478 = 8.48%
Since the co-efficient of variation is less in Dhaka, hence the share price in the Dhaka market
shows greater stability.

Skewness and Kurtosis: Skewness and Kurtosis are known as the shape characteristics of a
frequency distribution, because they throw light on the shape of a distribution. Skewness is the
degree of asymmetry, or departure from symmetry, of a distribution. The degree of peakness or
flatness of a distribution relative to a normal distribution is called kurtosis.

μ
32
β 1=
μ
Measure of skewness and kurtosis: The measure of skewness is given by 23 where,
n n
∑ ( x i− x̄ )2 ∑ ( x i− x̄ )3
i=1 i=1
μ2 = μ3 =
n and n
In a skewed distribution, when the curve has a longer tail to the right side, then the distribution is
said to be positively skewed and in the reverse case the distribution is said to be negatively
skewed.
 n

μ4 ∑ ( x i− x̄ )2
β 2= i=1
μ 2 μ2 =
The measure of kurtosis is given by 2 where, n and
n
∑ ( x i − x̄ ) 4
i =1
μ4 =
n There are three types of kurtosis.
If the value of  2 is greater than 3, the curve is more peaked than symmetric curve that is
leptokurtic.
If the value of  2 is less than 3, the curve is less peaked than symmetric curve that is platykurtic.
If the value of  2 is equal to 3, the curve is then symmetric curve and it is mesokurtic.

Question:
What is skewness? What are the types of skewness? Distinguish them.

Skewness:
Skewness is a measure that refers to the lack of symmetry of a distribution.
Skweness is of two types.
1. Positive skewness.
2. Negative skewness.

Based on the skewness,the distribution can be classified in 3 categories.

Positively skewed Negatively skewed Symmetric
1. If the long tail lies on the 1. If the long tail lies on the 1. When there exist no lack
 right (i.e. presence of
extreme values at the
positive end of the
distribution) of a distribution)
distribution so that the
mean is pulled in a
positive direction, is called
positively skewed
distribution.
2.
left (i.e. presence of of symmetry or skewness
extreme values at the then the distribution is
negative end of the called symmetric
of a distribution.
distribution so that the
mean is pulled in a
negative direction, is
called negatively skewed
distribution.
2. 2.

Mean<Median<Mode Mean=Median=Mode
Mean>Median>Mode
µ3 2. If µ3< 0, then the 3. If µ3=0 , then the
2. Since γ = 3 ; if µ3> 0,
1
distribution is negatively distribution is skewness.
µ 22 skewed.
then the distribution is
positively skewed.