MEASURES OF DISPERSION.ppt

MEASURES OF
DISPERSION
Handout #7

Measures of Dispersion
• While measures of central tendency indicate what value
of a variable is (in one sense or other) “average” or
“central” or “typical” in a set of data, measures of
dispersion (or variability or spread) indicate (in one
sense or other) the extent to which the observed values
are “spread out” around that center — how “far apart”
observed values typically are from each other and
therefore from some average value (in particular, the
mean). Thus:
– if all cases have identical observed values (and thereby are also
identical to [any] average value), dispersion is zero;
– if most cases have observed values that are quite “close
together” (and thereby are also quite “close” to the average
value), dispersion is low (but greater than zero); and
– if many cases have observed values that are quite “far away”
from many others (or from the average value), dispersion is high.
• A measure of dispersion provides a summary statistic
that indicates the magnitude of such dispersion and, like
a measure of central tendency, is a univariate statistic.

Importance of the Magnitude
Dispersion Around the Average
• Dispersion around the mean test score.
• Baltimore and Seattle have about the same mean daily
temperature (about 65 degrees) but very different
dispersions around that mean.
• Dispersion (Inequality) around average household
income.

Hypothetical Ideological Dispersion

Hypothetical Ideological Dispersion (cont.)

Dispersion in Percent Democratic in CDs

Measures of Dispersion
• Because dispersion is concerned with how “close
together” or “far apart” observed values are (i.e., with the
magnitude of the intervals between them), measures of
dispersion are defined only for interval (or ratio)
variables,
– or, in any case, variables we are willing to treat as interval (like
IDEOLOGY in the preceding charts).
– There is one exception: a very crude measure of dispersion
called the variation ratio, which is defined for ordinal and even
nominal variables. It will be discussed briefly in the Answers &
Discussion to PS #7.)
• There are two principal types of measures of dispersion:
range measures and deviation measures.

Range Measures of Dispersion
• Range measures are based on the distance between
pairs of (relatively) “extreme” values observed in the
data.
– They are conceptually connected with the median as a measure
of central tendency.
• The (“total” or “simple”) range is the maximum (highest)
value observed in the data [the value of the case at the
100th percentile] minus the minimum (lowest) value
observed in the data [the value of the case at the 0th
percentile]
– That is, it is the “distance” or “interval” between the values of the
two most extreme cases,
– e.g., range of test scores

TABLE 1 – PERCENT OF POPULATION AGED 65 OR HIGHER
IN THE 50 STATES
(UNIVARIATE DATA)
Alabama 12.4 Montana 12.5
Alaska 3.6 Nebraska 13.8
Arizona 12.7 Nevada 10.6
Arkansas 14.6 New Hampshire 11.5
California 10.6 New Jersey 13.0
Colorado 9.2 New Mexico 10.0
Connecticut 13.4 New York 13.0
Delaware 11.6 North Carolina 11.8
Florida 17.8 North Dakota 13.3
Georgia 10.0 Ohio 12.5
Hawaii 10.1 Oklahoma 12.8
Idaho 11.5 Oregon 13.7
Illinois 12.1 Pennsylvania 14.8
Indiana 12.1 Rhode Island 14.7
Iowa 14.8 South Carolina 10.7
Kansas 13.6 South Dakota 14.0
Kentucky 12.3 Tennessee 12.4
Louisiana 10.8 Texas 9.7
Maine 13.4 Utah 8.2
Maryland 10.7 Vermont 11.9
Massachusetts 13.7 Virginia 10.6
Michigan 11.5 Washington 11.8
Minnesota 12.6 West Virginia 13.9
Mississippi 12.1 Wisconsin 13.2
Missouri 13.8 Wyoming 8.9

Problems with the [Total] Range
• The problem with the [total] range as a measure of
dispersion is that it depends on the values of just two
cases, which by definition have (possibly extraordinarily)
atypical values.
– In particular, the range makes no distinction between a polarized
distribution in which almost all observed values are close to
either the minimum or maximum values and a distribution in
which almost all observed values are bunched together but there
are a few extreme outliers.
• Recall Ideological Dispersion bar graphs =>
– Also the range is undefined for theoretical distributions that are
“open-ended,” like the normal distribution (that we will take up in
the next topic) or the upper end of an income distribution type of
curve (as in previous slides).

Two Ideological Distributions with
the Same Range

The Interdecile Range
• Therefore other variants of the range measure that do
not reach entirely out to the extremes of the frequency
distribution are often used instead of the total range.
• The interdecile range is the value of the case that stands
at the 90th percentile of the distribution minus the value
of the case that stands at the 10th percentile.
– That is, it is the “distance” or “interval” between the
values of these two rather less extreme cases.

The Interquartile Range
• The interquartile range is the value of the case that
stands at the 75th percentile of the distribution minus the
value of the case that stands at the 25th percentile.
– The first quartile is the median observed value among
all cases that lie below the overall median and the
third quartile is the median observed value among all
cases that lie above the overall median.
– In these terms, the interquartile range is third quartile
minus the first quartile.

The Standard Margin of Error Is a Range Measure
• Suppose the Gallup Poll takes a random sample of n respondents
and reports that the President's current approval rating is 62% and
that this sample statistic has a margin of error of ±3%. Here is what
this means: if (hypothetically) Gallup were to take a great many
random samples of the same size n from the same population (e.g.,
the American VAP on a given day), the different samples would give
different statistics (approval ratings), but 95% of these samples
would give approval ratings within 3 percentage points of the true
population parameter.
• Thus, if our data is the list of sample statistics produced
by the (hypothetical) “great many” random samples, the
margin of error specifies the range between the value of
the sample statistic that stands at the 97.5th percentile
minus the sample statistic that stands at the 2.5th
percentile (so that 95% of the sample statistics lie within
this range). Specifically (and letting P be the value of
the population parameter) this “95% range” is
(P + 3%) - (P -3%) = 6%, i.e., twice the margin error.

Deviation Measures of Dispersion
• Deviation measures are based on average deviations
from some average value.
– Since dispersion measures pertain to with interval variables, we
can calculate means, and deviation measures are typically
based on the mean deviation from the mean value.
– Thus the (mean and) standard deviation measures are
conceptually connected with the mean as a measure of central
tendency.
• Review: Suppose we have a variable X and a set of
cases numbered 1,2, . . . , n. Let the observed value of
the variable in each case be designated x1, x2, etc.
Thus:

Deviation Measures of Dispersion: Example

Deviation Measures of Dispersion (cont.)
• The deviation from the mean for a representative case i is xi - mean
of x.
– If almost all of these deviations are close to zero, dispersion is
small.
– If many of these deviations much different from zero, dispersion
is large.
• This suggests we could construct a measure D of dispersion that
would simply be the average (mean) of all the deviations.
But this does not work because, as we saw earlier, it is a property
of the mean that all deviations from it add up to zero (regardless of
how much dispersion there is).

Deviation Measures of Dispersion: Example
(cont.)

The Mean Deviation
• A practical way around this problem is simply to ignore
the fact that some deviations are negative while others
are positive by averaging the absolute values of the
deviations.
• This measure (called the mean deviation) tells us the
average (mean) amount that the values for all cases
deviate (regardless of whether they are higher or lower)
from the average (mean) value.
• Indeed, the Mean Deviation is an intuitive, understand-
able, and perfectly reasonable measure of dispersion,
and it is occasionally used in research.

The Variance
• Statisticians dislike this measure because the formula is
mathematically messy by virtue of being “non-algebraic”
(in that it ignores negative signs).
• Therefore statisticians, and most researchers, use
another slightly different deviation measure of dispersion
that is “algebraic.”
– This measure makes use of the fact that the square of any real
(positive or negative) number other than zero is itself always
positive.
• This measure --- the average of the squared deviations
from the mean (as opposed the average of the absolute
deviations) --- is called the variance.

The Variance (cont.)
• The variance is the average squared deviation from the
mean.
– The total (and average) average squared deviation from the mean
value of X is smaller than the average squared deviation from any
other value of X.
• The variance is the usual measure of dispersion in
statistical theory, but it has a drawback when researchers
want to describe the dispersion in data in a practical way.
– Whatever units the original data (and its average values and its
mean dispersion) are expressed in, the variance is expressed in
the square of those units, which may not make much (or any)
intuitive or practical sense.
– This can be remedied by finding the (positive) square root of the
variance (which takes us back to the original units).
• The square root of the variance is called the standard
deviation.

The Standard Deviation (cont.)
• In order to interpret a standard deviation, or to make a
plausible estimate of the SD of some data, it is useful to
think of the mean deviation because
– it is easier to estimate (or guess) the magnitude of the MD than
the SD; and
– the standard deviation has approximately the same numerical
magnitude as the mean deviation, though it is almost always
somewhat larger.
• The SD is never less than the MD;
• the SD is equal to the mean deviation if the data is distributed in a
maximally “polarized” fashion;
• Otherwise the SD is somewhat larger than the MD — typically about
20-50% larger.

Standard Deviation Worksheet
1. Set up a worksheet like the one shown in the previous slides.
2. In the first column, list the values of the variable X for each of the n cases.
[This is the raw data.]
3. Find the mean value of the variable in the data, by adding up the values in
each case and dividing by the number of cases.
4. In the second column, subtract the mean from each value to get, for each
case, the deviation from the mean. Some deviations are positive, others
negative, and (apart from rounding error) they must add up to zero; add
them up as an arithmetic check.
5. In the third column, square each deviation from the mean, i.e., multiply the
deviation by itself. Since the product of two negative numbers is positive,
every squared deviation is non-negative, i.e., either positive or (in the event
a case has a value that coincides with the mean value).
6. Add up the squared deviations over all cases.
7. Divide the sum of the squared deviations by the number of cases; this gives
the average squared deviation from the mean, commonly called the
variance.
8. The standard deviation is the (positive) square root of the variance. (The
square root of x is that number which when multiplied by itself gives x.)

The Mean, Deviations, Variance, and SD
• What is the effect of adding a constant amount to (or
subtracting from) each observed value?
• What is the effect of multiplying each observed value (or
dividing it by) a constant amount?

Adding (subtracting) the same amount to (from) every
observed value changes the mean by the same amount
but does not change the dispersion (for either range or
deviation measures)

Multiplying (or dividing) every observed value by the same
factor changes the mean and the SD [or MD] by that same
factor and changes the variance by that factor squared.

Sample Estimates of Population
Dispersion
• Random sample statistics that are percentages or averages
provide unbiased estimates of the corresponding population
parameters.
• However, sample statistics that are dispersion measures
provide estimates of population dispersion that are biased
(at least slightly) downward.
– This is most obvious in the case of the range; it should
be evident that a sample range is almost always smaller
than, and can never be larger than, than the
corresponding population range.

Sample Estimates of Population Dispersion (cont.)
• The sample standard deviation (or variance) is also biased
downward, but only slightly if the sample at all large.
– While the SD of a particular sample can be larger than the population
SD, sample SDs are on average slightly smaller than the corresponding
population SDs).
• The sample SD can be adjusted to provide an unbiased estimate of
the population SD
– This simple adjustment consists of dividing the sum of the squared
deviations by n - 1, rather than by n.
– Clearly this adjustment makes no practical difference unless the sample
is quite small.
• Notice that if you apply the SD [or MD or any Range] formula in the
event that you have just a single observation in your sample, sample
dispersion = 0 regardless of what the observed value is.
– More intuitively, you can get no sense of how much dispersion there is
in a population with respect to some variable until you observe at least
two cases and can see how “far apart” they are.
• This is why you will often see the formula for the variance and SD
with an n - 1 divisor (and scientific calculators often build in this
formula).
– However, for POLI 300 problem sets and tests, you should use the
formula given in the previous section of this handout.

Dispersion in Ratio Variables
• Given a ratio variable (e.g. income), the interesting
“dispersion question” may pertain not to the interval
between two observed values or between an observed
value and the mean value but to the ratio between the
two values.
– For example, fifty years ago, the income of the household at the
25th percentile was about $5,000 and the income of the
household at the 75th percentile was about $10,000, while today
the figures are about $40,000 and $80,000 respectively.
• While the interval between the two income levels (the interquartile
range) has increased from $5,000 to $40,000, the ratio between the
two income levels has remained a constant 2 to 1.
• Other examples pertain to income:
– One household “poverty level” is defined as half of median
household income.
– Households with more than twice the median income are
sometimes characterized as “well off.”
– The average compensation of CEOs today is about 250 times
that of the average worker, whereas 50 years it was only about
40 times that of the average worker.)

Dispersion in Ratio Variables (cont.)
• The degree of dispersion in ratio variables can naturally
be referred to as the degree inequality.
– For example the two sets of income levels ($5K vs.
$10K and $40K vs. $80K) at the 25th and 75th
percentiles respectively seem to be “equally unequal”
because they are in the same ratio.
• Thus the SD does not work well as a measure of
inequality (of income, etc.), because it takes no account
of the ratio property of [ratio] variables.

The Coefficient of Variation
• One ratio measure of dispersion/inequality is called the
coefficient of variation, which is simply the standard
deviation divided by the mean.
– It answers the question: how big is the SD of the distribution
relative to the mean of the distribution?
• Recall PS#6, Question #7, comparing the distributions of
height and weight among American adults.
– We naturally to want to say that in some sense that American
adults exhibit more dispersion in weight than height.
– But if by dispersion we mean [any kind of] range, mean
deviation, or variance/SD, the claim is strictly meaningless
because the two variables are measured in in different units
(pounds, kilograms, etc. vs. inches, feet, centimeters, etc.), so
the numerical comparison is not valid.

Coefficient of Variation (cont.)
Summary statistics for WEIGHT and HEIGHT (both ratio variables) of American adults in
different units:
Weight Height
Mean 160 pounds 66 inches
72.6 kilograms 5.5 feet
.08 tons 168 centimeters
SD 30 pounds 4 inches
13.6 kilograms .33 feet
.015 tons 10.2 centimeters
Which variable [WEIGHT or HEIGHT] has greater dispersion? [No meaningful answer can
be given]
Which variable has greater dispersion relative to its average, e.g., greater Coefficient of
Dispersion (SD relative to mean)?
30 = 13.6 = .015 = .18 4 = .33 = 10.2 = .06
160 72.6 .08 66 5.5 168
Note that the Coefficient of Variation is a pure number, not expressed in any units and is
the same whatever units the variable is measured in.

Coefficient of Variation
• The old and new SDs are the same.
• The old Coefficient of Variation was
SD/Mean = 2/14 = 1/7 = 0.143
• while the new Coefficient of variation is
SD/Mean = 2/4 = 0.5

Coefficient of Variation (cont)
• The old and new SDs are the same.
• The old Coefficient of Variation was
– SD/mean = 2/14 = 1/7 = 0.143
• The new Coefficient of Variation is
– SD/mean = 2/114 = 0.0175

Coefficient of Variation (cont)
• The new SD is 10 times the old SD.
• But the old and new Coefficients of Variation are the
same:
SD/mean = 2/14 = 20/140 = 1/7 = 0.143

The Gini Index
• Another measure of dispersion in ratio variables is the
Gini Index of Inequality.
– The Gini Index is based on a comparison between the
actual cumulative distribution when cases are ranked
ordered from lowest to highest value (e.g., from
poorest to richest) and the cumulative distribution that
would exist if all cases had the same value.
• Both the Coefficient of Variation and the Gini Index are
pure numbers, not expressed in any units ($, pounds,
inches, etc.) and unaffected by changing units.
– However, the Gini Index is also standardized, with
values that range from a minimum of 0 (perfect
equality) to a maximum of 1 (perfect inequality).

MEASURES OF DISPERSION.ppt

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