MODULE 3

Measures of Dispersion

Range – defined as the difference of the highest observed value and the lowest observed value

The Standard Deviation and the Variance

Definition. For a finite population of size N, the population variance is

∑𝑁
𝑖=1(𝑋𝑖 − 𝜇)
2
𝜎2 =
𝑁

and the population standard deviation is

∑𝑁 (𝑋𝑖 − 𝜇)2
𝜎 = √ 𝑖=1
𝑁

Definition. For a sample of size n, the sample variance is

n ___

 ( X i  X )2
s2  i 1
n 1

and the sample standard deviation is

n ___ 2

(X i  X)
s i 1
n 1

Computational formula:

Sample Population

2
𝑛 ∑𝑛𝑖=1 𝑋𝑖2 − (∑ 𝑋𝑖 )2 2
𝑁 ∑𝑛𝑖=1 𝑋𝑖2 − (∑ 𝑋𝑖 )2
𝑠 = 𝜎 =
𝑛(𝑛 − 1) 𝑁2
 Using Definitional Formula

Examples:

1. The following scores were given by 6 judges for a gymnast’s performance in the vault:
7, 5, 9, 7, 8, and 6. Find the standard deviation.

Using Definitional Formula

2
∑𝑁
𝑖=1(𝑋𝑖 − 𝜇 )
2
𝜎 =
𝑁
Find the mean or average.

= 7 + 5 + 9 +7 + 8 +6
6

42
=
6

=7

(7 − 7)2 + (5 − 7)2 + (9 − 7)2 + (7 − 7)2 + (8 − 7)2 + (6 − 7)2

𝜎2 =
6

2
(0)2 + (−2)2 + (2)2 + (0)2 + (1)2 + (−1)2
𝜎 =
6
0+4+4+0+1+1
𝜎2 =
6
10
𝜎2 =
6

𝜎 2 = 1.67

Standard deviation

𝜎 = √1.67

𝜎 = 1.29
 2. A sample of 5 households showed the following number of household members:
3, 8, 5, 4, and 4. Find the standard deviation.

n ___

(X i  X )2
s2  i 1
n 1

Find the mean or average.

= 3+ 8 + 5 +4 + 4
6

24
=
5

= 4.8

2
(3 − 4.8)2 + (8 − 4.8)2 + (5 − 4.8)2 + (4 − 4.8)2 + (4 − 4.8)2
𝑠 =
5−1

2
(−1.8)2 + (3.2)2 + (0.2)2 + (−0.8)2 + (−0.8)2
𝑠 =
4
3.24 + 10.24 + 0.04 + 0.64 + 0.64
𝑠2 =
4
14.8
𝑠2 =
4

𝑠 2 = 3.7

Standard deviation

𝑠 = √3.7

𝑠 = 1.92
 Examples:

1. The following scores were given by 6 judges for a gymnast’s performance in the vault:
7, 5, 9, 7, 8, and 6. Find the standard deviation.

Using Computational Formula

2
𝑁 ∑𝑛𝑖=1 𝑋𝑖2 − (∑ 𝑋𝑖 )2
𝜎 =
𝑁2

2
6(72 + 52 + 92 + 72 + 82 + 62 ) − (7 + 5 + 9 + 7 + 8 + 6)2
𝜎 =
62

2
6(49 + 25 + 81 + 49 + 64 + 36) − 422
𝜎 =
62

6(304) − 1764
𝜎2 =
62
60
𝜎2 =
36

𝜎 2 = 1.67

Standard deviation

𝜎 = √1.67

𝜎 = 1.29
 2. A sample of 5 households showed the following number of household members:
3, 8, 5, 4, and 4. Find the standard deviation.

Using the computational formula.

2
𝑛 ∑𝑛𝑖=1 𝑋𝑖2 − (∑ 𝑋𝑖 )2
𝑠 =
𝑛(𝑛 − 1)

2
5(32 + 82 + 52 + 42 + 42 ) − (3 + 8 + 5 + 4 + 4)2
𝑠 =
5(5 − 1)

5(9 + 64 + 25 + 16 + 16) − 242

𝑠2 =
5(4)

5(130) − 576
𝑠2 =
5(4)

650 − 576
𝑠2 =
20
74
𝑠2 =
20

𝑠 2 = 3.7

Standard deviation

𝑠 = √3.7

𝑠 = 1.92
Approximating the Variance from the Frequency Distribution

Population
2
∑𝑘𝑖=1 𝑓𝑖 (𝑥𝑖 − 𝜇 )
𝜎 =
𝑁

Sample
2
∑𝑘𝑖=1 𝑓𝑖 (𝑥𝑖 − 𝑥̅ )
𝑠 =
(𝑛 − 1)

or, using the computational formula,

Population
𝑘 2 𝑘 2
𝑁 ∑𝑖=1 𝑓𝑖 𝑥𝑖 − ( ∑𝑖=1 𝑓𝑖 )
𝜎2 =
𝑁2
Sample
2
2
𝑛 ∑𝑘𝑖=1 𝑓𝑖 𝑥𝑖2 − (∑𝑘𝑖=1 𝑓𝑖 )
𝑠 =
𝑛(𝑛 − 1)
Example:

Freq CM 𝑓𝑖 𝑥𝑖 2
Class 𝑓𝑖 𝑥𝑖
fi xi
6 - 11 9 8.5 76.5 650.25
12 - 17 4 14.5 58 841
18- 23 14 20.5 287 5883.5
24 - 29 8 26.5 212 5618
30 - 35 5 32.5 162.5 5281.25
Total 40 796 18274

2
𝑛 ∑𝑘𝑖=1 𝑓𝑖 𝑥𝑖2 − (∑𝑘𝑖=1 𝑓𝑖 )
2
𝑠 =
𝑛(𝑛 − 1)

40(18,274) − 7962
2
𝑠 =
40(39)

730,960 − 633,616
𝑠2 =
1560

97,344
𝑠2 =
1560

𝑠 2 = 62.4
Standard Deviation

𝑠 = √62.4

s = 7.90
MEASURES OF RELATIVE DISPERSION

The Coefficient of Variation

Definition. The coefficient of variation, CV, is the ratio of the standard deviation to the
mean and is usually expressed in percentage. It is computed as


CV  x 100%


and its sample counterpart

s
CV  ___
x 100%
X
Examples.

1. The foreign exchange rate is an indicator of the stability of the peso and is also an indicator
of the economic performance. In 1992, Bangko Sentral ng Pilipinas (BSP) put the peso on
a floating rate basis. Market forces and not government policy have determined the level
of the peso since. Government intervenes through the BSP, only when there are speculative
elements in the market. Given below are the means and standard deviations of the quarterly
$ exchange rate for the periods 1989 to 1991 to 1992 to 1994. Which of the two periods is
more stable?

Mean S.D.

1989-1991 22.4 1.84

1992-1994 26.4 1.16

1.84
CV8991  x 100%  8.21%
22.4

1.15
CV9294  x 100%  4.36%
26.4
2. Two of the quality criteria in processing butter cookies are the weight and color development
in the final stage of oven browning. Individual pieces of cookies are scanned by a
spectrophotometer calibrated to reflect yellow-brown light. The readout is expressed in
percent of a standard yellow-brown reference plate and a value of 41 is considered optimal
(golden-yellow). The cookies were also weighed in grams at this stage. The means and
standard deviations of 30 sample cookies are presented below.

Mean S.D.

Color 41.1 10
Weight 17.7 3.2

Which of the two quality criteria is more varied?

10
CVcolor  x 100%  24.33%
41.1

3.2
CVweight  x 100%  18.08%
17.7