Page 78 - DECO504_STATISTICAL_METHODS_IN_ECONOMICS_ENGLISH

Statistical Methods in Economics Pavitar Parkash Singh, Lovely Professional University

Notes Unit 6: Dispersion: Meaning and Characteristics, Absolute
and Relative Measures of Dispersion including Range,

Quartile Deviation and Percentile

CONTENTS
Objectives
Introduction
6.1 Meaning and Characteristics of Dispersion
6.2 Absolute and Relative Measures of Dispersion
6.3 Range, Quartile Deviation and Percentile
6.4 Summary
6.5 Key-Words
6.6 Review Questions
6.7 Further Readings

Objectives

After reading this unit students will be able to:
• Know the Meaning and Characteristics of Dispersion.
• Explain Absolute and Relative Measures of Dispersion.
• Discuss Range, Quartile Deviation and Percentile.
Introduction

Series of date definitely have a great utility but they fail to reveal many facts about the phenomenon.
There may be many different series, whose average/mean may come out to be identicle. But when
they are studied in depth, they reveal entirely different stories. For example, the income of 5 people
is — Rs. 50, 50, 50, 50, 50. Then the average will come out to be Rs. 50. The incomes of another five (5)
people are Rs. 20, 80, 25, 25, 100. The average would again come out to be Rs. 50. Now if we consider
incomes of another five people, they are Rs. 150, 20, 10, 10, 60. This would again average to Rs. 50
only. But in all the three cases, the average does not seem to represent the data fully. In the first case,
the incomes are equal, in the second case, they have less variations in income but in the third case,
there is vast variation of income. Therefore concluding about the data only on the basis of averages,
considering it to be representative of the series may be misleading. Therefore, there is a need to
measure the variations in the data. These variations are also called dispersion. Measures of central
tendency are based on items of a series, therefore, they are called ‘averages of the first order’. Measures
of dispersion, on the other hand, are based upon average of the deviations of the different values
from mean.
They are therefore called ‘averages of the second order’.
6.1 Meaning and Characteristics of Dispersion

Meaning and Definition of Dispersion
The term dispersion refers to the variability of the size of items. Dispersion explains the size of various
items in a series are not uniform rather, they vary. For example, if in a series the lowest and highest
values vary only a little, the dispersion is said to be low. But if this variation is very high, dispersion
is said to be considerable. In a series of ten students, the marks obtained are 10, 6, 8, 5, 10, 10, 8, 10, 5, 8.

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