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AGBS | Bangalore

Measures of Dispersion
Summary Measures
Arithmetic Mean
Median
Mode
Describing Data Numerically
Variance
Standard Deviation
Coefficient of Variation
Range
Interquartile Range
Geometric Mean
Skewness
Central Tendency Variation Shape Quartiles
Quartiles
Quartiles split the ranked data into 4 segments with
an equal number of values per segment
25% 25% 25% 25%
The first quartile, Q
1
, is the value for which 25% of the
observations are smaller and 75% are larger
Q
2
is the same as the median (50% are smaller, 50% are
larger)
Only 25% of the observations are greater than the third
quartile

Q1 Q2 Q3
Quartile Formulas
Find a quartile by determining the value in the
appropriate position in the ranked data, where

First quartile position: Q
1
= n/4

Second quartile position: Q
2
= n/2 (the median position)

Third quartile position: Q
3
= 3n/4


where n is the number of observed values
(n = 9)
Q
1
is in the 9/4 = 2.25 position of the ranked data


so Q
1
= 12.25
Quartiles
Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22
Example: Find the first quartile
Q
1
and Q
3
are measures of noncentral location
Q
2
= median, a measure of central tendency
Quartiles
Example:
(continued)
Overtime
Hours
10-15 15-20 20-25 25-30 30-35 35-40 Total
No. of
employees
11 20 35 20 8 6 100
Calculate Median, First Quartile, 7
th
Decile & Interquartile Range
Same center,
different variation
Measures of Variation
Variation
Variance Standard
Deviation
Coefficient
of Variation
Range Interquartile
Range
Measures of variation give
information on the spread
or variability of the data
values.

Range
Simplest measure of variation
Difference between the largest and the smallest
values in a set of data:


Range = X
largest
X
smallest

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Range = 14 - 1 = 13
Example:
Ignores the way in which data are distributed



Sensitive to outliers


7 8 9 10 11 12
Range = 12 - 7 = 5
7 8 9 10 11 12
Range = 12 - 7 = 5
Disadvantages of the Range
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
Range = 5 - 1 = 4
Range = 120 - 1 = 119
Coefficient of Range
Coefficient of Range = [L-S]/[L+S]
Where,
L = Largest value in the data set
S = Smallest value in the data set
Interquartile Range
Can eliminate some outlier problems by using
the interquartile range

Eliminate some high- and low-valued
observations and calculate the range from the
remaining values

Interquartile range = 3
rd
quartile 1
st
quartile
= Q
3
Q
1

Interquartile Range
Median
(Q2)
X
maximum
X
minimum
Q1 Q3
Example:
25% 25% 25% 25%
12 30 45 57 70
Interquartile range
= 57 30 = 27
Coefficient of QD
Coefficient of QD= [Q3-Q1]/[Q3+Q1]
Quartile for Grouped Frequency
Distribution
Calculate the quartile deviation and
coefficient of quartile deviation
Calculate the quartile deviation and
coefficient of quartile deviation
n = 60
Average Deviation
Coefficient of AD = (Average Deviation)/(Mean or Median)
Calculate the Coefficient of AD
(mean)
Sales (in thousand Rs) No. of days
10-20 3
20-30 6
30-40 11
40-50 3
50-60 2
Average (approximately) of squared deviations
of values from the mean

Sample variance:
Variance
1 - n
) X (X
S
n
1 i
2
i
2

=

=
Where
= mean
n = sample size
X
i
= i
th
value of the variable X
X
Standard Deviation
Most commonly used measure of variation
Shows variation about the mean
Is the square root of the variance
Has the same units as the original data
Sample standard deviation:
1 - n
) X (X
S
n
1 i
2
i
=

=
Calculation Example:
Sample Standard Deviation
Sample
Data (X
i
) : 10 12 14 15 17 18 18 24
n = 8 Mean = X = 16
4.308
7
130
7
16) (24 16) (14 16) (12 16) (10
1 - n
) X (24 ) X (14 ) X (12 ) X (10
S
2 2 2 2
2 2 2 2
= =
+ + + +
=
+ + + +
=

A measure of the average


scatter around the mean
Population vs. Sample Standard
Deviation
Population vs. Sample Standard
Deviation (Grouped Data)
Calculate the Standard Deviation
for the following sample
Number of pins knocked down in ten-pin bowling matches
Solution
Number of pins knocked down in ten-pin bowling matches
Calculate the Standard Deviation
for the following sample
Heights of students
Solution
Calculate the Standard Deviation
for the following sample
Number of typing errors
Comparing Standard Deviations
Mean = 15.5
S = 3.338
11 12 13 14 15 16 17 18 19 20 21
11 12 13 14 15 16 17 18 19 20 21
Data B
Data A
Mean = 15.5
S = 0.926
11 12 13 14 15 16 17 18 19 20 21
Mean = 15.5
S = 4.567
Data C
Measuring variation
Small standard deviation

Large standard deviation
Advantages of Variance and
Standard Deviation
Each value in the data set is used in the
calculation

Values far from the mean are given extra
weight
(because deviations from the mean are squared)
Coefficient of Variation
Measures relative variation
Always in percentage (%)
Shows variation relative to mean
Can be used to compare two or more sets of
data measured in different units
100%
X
S
CV
|
|
.
|

\
|
=
Comparing Coefficient
of Variation
Stock A:
Average price last year = $50
Standard deviation = $5


Stock B:
Average price last year = $100
Standard deviation = $5
Both stocks
have the same
standard
deviation, but
stock B is less
variable relative
to its price
1 0 % 1 0 0 %
$ 5 0
$ 5
1 0 0 %
X
S
C V
A
= =
|
|
.
|

\
|
=
5 % 1 0 0 %
$ 1 0 0
$ 5
1 0 0 %
X
S
C V
B
= =
|
|
.
|

\
|
=
Sample vs. Population CV
Calculate!
Calculate the coefficient of variation for
the following data set.
The price, in cents, of a stock over five trading days
was 52, 58, 55, 57, 59.
Solution
Pooled Standard Deviation
Pooled Standard Deviation
Z Scores
A measure of distance from the mean (for example, a
Z-score of 2.0 means that a value is 2.0 standard
deviations from the mean)
The difference between a value and the mean, divided
by the standard deviation
A Z score above 3.0 or below -3.0 is considered an
outlier
S
X X
Z

=
Z Scores
Example:
If the mean is 14.0 and the standard deviation is 3.0,
what is the Z score for the value 18.5?




The value 18.5 is 1.5 standard deviations above the
mean
(A negative Z-score would mean that a value is less
than the mean)
1 .5
3 .0
1 4 .0 1 8 .5
S
X X
Z =

=
(continued)
If the data distribution is approximately
bell-shaped, then the interval:
contains about 68% of the values in
the population or the sample
The Empirical Rule
1

68%
1
contains about 95% of the values in
the population or the sample
contains about 99.7% of the values
in the population or the sample
The Empirical Rule
2
3
3
99.7% 95%
2
Calculate!
Mean = 32.22 & SD = 11.92
(after calculation)
Calculate!
Calculate the mean & the standard dev.
Calculate the percentage of observations
between the mean &
2
Variable Frequency
44-46 3
46-48 24
48-50 27
50-52 21
52-54 5
Skewness
A fundamental task in many statistical analyses is to
characterize the location and variability of a data set
(Measures of central tendency vs. measures of
dispersion)
Both measures tell us nothing about the shape of the
distribution
It is possible to have frequency distributions which differ
widely in their nature and composition and yet may
have same central tendency and dispersion.
Therefore, a further characterization of the data
includes skewness

Positive & Negative Skew
Positive skewness
There are more observations below the mean than
above it
When the mean is greater than the median
Negative skewness
There are a small number of low observations and a
large number of high ones
When the median is greater than the mean

Measures of Skew
The Rules
I. Rule One. If the mean is less than the
median, the data are skewed to the left.

II. Rule Two. If the mean is greater than the
median, the data are skewed to the right.

Karl Pearson Coefficient of Skewness
Karl Pearson Coefficient - Properties
Advantage Uses the data completely
Disadvantage Is sensitive to extreme values
Calculate!
Calculate the coefficient of skewness & comment on
its value
Calculate!
Calculate the coefficient of skewness & comment on
its value
Profits (lakhs) No. of Companies
100-120 17
120-140 53
140-160 199
160-180 194
180-200 327
200-220 208
220-240 2
Bowleys Coefficient of Skewness
Bowleys Coefficient - Properties
Advantage Is not sensitive to extreme values
Disadvantage Does not use the data completely
Calculate!
Kellys Coefficient of Skewness
Calculate!
Obtain the limits of daily wages of the central 50% of the
workers
Calculate Bowleys & Kellys Coefficients of Skewness
Wages No. of Workers
Below 200 10
200-250 25
250-300 145
300-350 220
350-400 70
Above 400 30