MEASURES OF DISPERSION / VARIABILITY / VARIATION

INTERPRETING AND UNDERSTANDING STANDARD DEVIATION

Standard deviation measures the variation of values about the

mean. Values close together will yield a small standard deviation, whereas values spread farther apart will yield a larger standard deviation. The standard deviation is an important tool in measuring variation.
CONCEPTS: Variation refers to the amount that values vary among themselves Values that are relatively close together have lower measures of

variation, and values that are spread farther apart have measures of variation that are larger

Different size and thickness, thus, value of variation is large

Similar in size and thickness, thus, value of variation is small

Size and thickness of each book is exactly the same, thus, value of variation is zero

Weekly Sales of Store A

Week
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

Weekly Sales of Store B

Week
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6

Sales
250,000 270,000 220,000 230,000 260,000 210,000

Sales
240,000 240,000 210,000 230,000 270,000 250,000

Mean Sales

240,000

Mean Sales

240,000

Measures of Variability or Dispersion

Measures of Absolute Variation

Measures of Relative Dispersion

Range

Variance

Standard Deviation

Quantiles

Coefficient of Variation

Median

Quartiles

Deciles

Percentiles

Range (R) A very rough measure of spread Provides useful but limited information since it depends only on the extreme values
DEFINITION
The RANGE (R) of a data set is the difference between the maximum and minimum data entries in the set. To find the range (R), the data must be quantitative Range (R) = (Maximum data entry) (Minimum data entry) = (Highest observed value) (Lowest observed value)

Range (R)
A corporation hired 10 graduates. The starting salaries for each graduate

are shown (in thousands of dollars). Find the range of the starting salaries for Corporation A.
Salary 41 38 39 45 47 41 44 41 37 42

Ordering the data helps to find the least and the greatest values
Salary 37 38 39 41 41 41 42 44 45 47

Range = (maximum value) (minimum value) Range = 47 37 = 10 So, the range of the starting salaries for a corporation is 10, or $10,000.

Sample Variance (s2)

Sample Standard Deviation (SD) or (s)

Most important measure

Important measure of

variation Shows variation about the mean

of variation Square root of Variance Has the same units as the original data

Finding the Sample Variance and Standard Deviation using sample mean
IN WORDS 1. Find the mean of the sample data set. 2. Find the deviation of each entry. 3. Square each deviation. 4. Add to get the sum of squares. IN SYMBOLS

5. Divide by n 1 to get the sample variance. 6. Find the square root of the variance to get the sample standard deviation.

Salary

41

38

39

45

47

41

44

41

37

42

Salary (x)

41

38

39

45

47

41

44

41

37

42

-0.5

-3.5

-2.5

3.5

5.5

-0.5

2.5

-0.5

-4.5

0.5


Salary (x) 41 -0.5
0.25

38 -3.5
12.25

39 -2.5
6.25

45 3.5
12.25

47 5.5
30.25

41 -0.5
0.25

44 2.5
6.25

41 -0.5
0.25

37 -4.5
20.25

42 0.5
0.25

Finding the Sample Variance and Standard Deviation using x and x2

IN WORDS 1. Find the sum scores of the sample data set. 2. Find the sum of the squared scores. 3. Multiple the sum of the squared scores by n and subtract it by the square of the sum of scores 4. Divide by n(n 1) to get the sample variance. IN SYMBOLS

5. Find the square root of the variance to get the sample standard deviation.


Salary 41 38 39 45 47 41 44 41 37 42

Salary (x)
(x)2

41

38

39

45
2025

47
2209

41
1681

44
1936

41
1681

37
1369

42
1764

1681 1444 1521

Sample Mean and Sample Standard Deviation: Two Most Important Descriptive Measures
Majority within one standard deviation for most frequency distribution, a majority (as often as 68%) of all observations are within one standard deviation on either side of the mean.

Sample Mean and Sample Standard Deviation: Two Most Important Descriptive Measures
Usual or normal within two standard deviation for most frequency distribution the usual or normal values (as often as 95%) of all observations are within two standard deviations on either side of the mean.

Sample Mean and Sample Standard Deviation: Two Most Important Descriptive Measures
Unusual values lie above and below two standard deviations of the mean. Very unusual or extremely unusual values lie above and below three standard deviations of the mean

Very Unusual value

Normal or usual values

Very Unusual value

Unusual value

Unusual value

SKEWNESS
Definition: A distribution of data is skewed (asymmetric) if

it is not symmetric and if it extends more to one side than the other. (A distribution of data is symmetric if the left half of its histogram is roughly a mirror image of its right half)

Definition: Skewness is a degree of asymmetry (or

departure from symmetry) of a distribution.

SKEWNESS

Lopsided to the right = Skewed to the left = Negatively Skewed Lopsided to the left = Skewed to the right = Positively Skewed Data not lopsided = Symmetric = Zero Skewness

SKEWNESS