Statistics

Spellbound Centre for Professional Studies, Hyderabad
Quantitative Aptitude 2.1 Measures of Central Tendency

CHAPTER-II
MEASURES OF CENTRAL TENDENCY
Introduction:
After classifying and tabulating the data, the statistician is usually interested in analyzing
the data. This is done with the help of various numerical measures which describe the
inherent characteristics of a frequency distribution.
A statistical measure summarizes the data and brings out the important characteristics of
the data in such a way that a clear and accurate picture emerges.

Meaning:
The word measures means methods and the word central tendency means average
value of any statistical series. The combined term Measures of central tendency means
the methods of finding out the central value or average value of a statistical series or any
other series of quantitative information.
The statistical measure which tells us the location or position of central value or central
point to describe the central tendency of the entire mass of data is known as measures of
central tendency or measure of central value or measure of location or average of first
order.
An average or measure of central tendency is a single figure that is computed from a
given series to give complete idea about the entire series. Its value lies between the
maximum and the minimum value of a series and represents all the items belonging to the
series.

Need for the average:
1. It is not possible to remember each and every fact relating to a field of enquiry as
human mind is not capable of storing all facts.
2. It is not desirable to remember or take note of all the facts relating to a study because
it may lead to confusion in the mind of a person if all the facts are presented before him.
3. It is the average value which is quite fit to give a clear picture or efficacy about the
field under study for guidance and necessary conclusion.

Definitions:
1. Average is a value which is typical or representative of a set of data.
2. Average is an attempt to find one single figure to describe whole of figures.
3. An average is a single number describing as the features of a set of data.
Thus, A Statistical Average can be defined as A single simple expression in which the net
result of huge mass of unwieldy numerical data or a series or a frequency distribution is
concentrated and which is used to represent the whole data is called a statistical
average.

Characteristics of an average:
1. It is a single figure expressed in some quantitative form.
2. It lies between the extreme values of a series.
3. It is a typical value that represents all the values in a series.
4. It is capable of giving a central idea about the series it represents.
5. It is determined by some method or procedure.



Objectives of an average:
The main objectives of an average are:
1. To determine one single value that may be used to describe the characteristics of the
entire series.
2. To facilitate comparison at a particular point of time or over a period of time.
3. To facilitate statistical inference. An average obtained from a sample is used in
estimating the average of the population.
4. To facilitate quick understanding of complex data.
5. To help the decision-making process. The averages help the managers in decision-
making. The managers are often interested in knowing normal output of a plant,
representative sales volume, overall productivity index, price index, etc., these all are
the connotations of an average.

Characteristics of an Ideal average:
1. It should be rigidly defined so that there is no confusion with regard to its meaning
connotation.
2. It should be easy to understand.
3. It should be simple to compute.
4. Its definition should be in the form of mathematical formula.
5. It should be based on all the items in the data.
6. Any single item or a group of items should not unduly influence it.
7. It should be capable of further algebraic treatment.
8. It should be capable of being used in further statistical computation.
9. It should have sampling stability.

Advantages of an average:
1. An Average presents the salient features of numerical data in simple and summarized
form. It simplifies the complexity of data.
2. An average provides a common denominator for comparison of groups of data.
3. An average gives a picture of a complete group.
4. An average is valuable in setting standards, estimating and planning.
5. An average is a basis for many other techniques of statistical analysis.
6. An average traces mathematical relationship between different groups of data.
7. An average is helpful in making the decisions or in the process of experimentation and
research.
8. It is easy to remember.

Disadvantages of an average:
1. It may give rise to a figure which may not belong to the series.
2. It may give rise to a result which is practically impossible and absurd.
3. In certain types of frequency distributions like U-shaped or J-shaped, an average may
fail to represent the entire data. That is unless the data show a clear single
concentration of observations; an average may not be meaningful at all.
4. It may lead to dangerous results.
5. It may give different results.
6. It does not reveal the entire story of a phenomenon.
7. It does not have sympathy for individual item.



Types of Average:
There are three types of averages.
A. Mathematical Averages:
1. Arithmetic Average or mean
2. Geometric Mean
3. Harmonic Mean

B. Positional Averages:
1. Median
2. Mode

C. Commercial Averages:
1. Moving Average
2. Progressive Average

A. Mathematical Averages:
1. Arithmetic Mean:
Meaning of Arithmetic Mean:
The arithmetic mean is a measure of central tendency and is popularly known as mean.
Arithmetic mean is obtained by dividing the sum of the values of all items of a series by
the number of items of that series. Normally, arithmetic mean is denoted by X which is
read as X bar. It can be computed for unclassified or ungrouped data or individual series
as well as classified or grouped data or discrete or continuous series.
1. Arithmetic Mean
A. Simple arithmetic Mean.
B. Weighted arithmetic Mean.
C. Combined arithmetic Mean.

A. Simple Arithmetic Mean:
The simple arithmetic mean can be computed in two ways;
1) Direct method.
2) Short cut method.

Computation of simple Arithmetic Mean:
Individual series:
Direct Method Steps involved are:
1. Identify the variable and denote it by x.
2. Sum up the observations i.e. x.
3. Count the number of observations. i.e. n.
4. Apply the following formula.
n
x
x

=
Where, x =Arithmetic Mean, x =sum of the variable x, and n=the total number of observations.

Short cut Method Steps involved are:
2. Select an assumed mean or provision mean A from the values of variables or any value.
3. Take the deviations of the values of the variable x from the assumed mean,
i.e., (d=x-A). The deviations are denoted by d


4. Sum up the deviations d i.e. d
5. Divide the sum of deviations by the number of observations and add the resulting
figure to the assumed mean or apply the following formula.
n
d
A X

+ =
Where,
X = Arithmetic mean, A = Assumed mean
d = Sum of the deviations of individual values from assumed mean.
N = f=Number of observations.

Discrete Series
Discrete series means where frequencies are given but without class intervals.
1. Identify the variable (x) and frequency (f) from the data given.
2. Multiply each variable with respective frequency. i.e. fXx

N
fx
X

=
Where, f = frequency, x = the value of the variable and N = the sum of frequency or f

Short Cut Method Steps involved are:
1. Identify the variable (x) and frequency (f) from the data given.
3. Take the deviations of the values of the variable x from the assumed mean, i.e., (d=x-A).
The deviations are denoted by d
4. Multiply each frequency with respective deviation (fXd) and their summation (fXd).
f
fd
A X
+ =
Where, A = Assumed Mean, d = (x A), f = frequency And f or N = total number of items.

Continuous Series:
Continuous series means where frequencies are given along with class intervals.
Here we take the mid-point of every class interval as x multiple these values with
respective frequencies.
1. Convert the class series into exclusive series if given in the open-ended or cumulative
series. It may be noted that the mean can be easily calculated if the problem is given in
inclusive series or mid-value series.
2. Find out the mid-value of each class and denote them by x.
3. Find N; the total of the frequencies (N = f )
4. Multiply each mid-value with the respective frequency and find out (fx).
5. Apply the following formula
N
fx
f
fx
X

=
= .
Where, f is frequency; x the mid-point of interval and N = f .


Short Cut Method Steps involved are:
2. Find out the mid-value of each class and denote them by x.
4. Take the deviations of the values of the variable X from the assumed mean, i.e., (d=x-A).
The deviations are denoted by d
5. Multiply each frequency with respective deviation (fxd) and find their summation (fxd).
N
fd
A X

+ =
Where, A = Assumed Mean, d= A), f= frequency And or N = total number of items.

B. Weighted Arithmetic Mean
Weighted Arithmetic Mean is useful where all items of a group do not have equal
importance, and simple mean will fail to present the real picture. The term weight stands
for the relative importance of the different items of the series. Weighted arithmetic mean
refers to the arithmetic mean calculated after assigning weights to different values of
variable. It is suitable where the relative importance of different items of variable is not the
same. It is especially useful in problems relating to:
a. Construction of index numbers.
b. Standardized birth and death rates.
c. Computation of Average prices, Weights, mileage etc.

Relationship between Simple and Weighted Arithmetic Mean:
The relationship between simple arithmetic mean and weighted arithmetic mean is
summarized below:
1. AM=WAM if equal weights are assigned to all the items of a series.
2. AM>WAM if smaller weight is assigned to the higher values and greater weight is
assigned to the lower values.
3. AM<WAM if greater weight is assigned to the higher values and smaller weight is
assigned to the lower values.

Weighted Arithmetic Mean
Formula:

W
WX
w X

Where, x is variable, W is assigned weight and w X is weighted Arithmetic Mean.

C. Combined Arithmetic Mean:
When we are required to find the overall mean or grand mean of k sets of data having
the means x1, x2, x3,.., and consisting respectively, of n1, n2, n3, ., and nk
measurements, the result is given by
k
k k
n n n n
x n x n x n x n
x
....
.......
3 2 1
3 3 2 2 1 1
+ + +
+ + +
=
Where the numerator is the total of all the measurements or observations, and the
denominator is the size of combined data.
f


Mathematical Properties of Arithmetic Mean:
1. The sum of the deviations of the items from the arithmetic mean is always zero i.e.,
( ) 0 = X X that is why the mean is characterized as a point of balance i.e., the sum of
the positive deviations from it is equal to the sum of the negative deviations from it.
2. The sum of the squared deviations of the items from arithmetic mean is minimum or the
least, i.e., ( ) .
2
Minimum X X = In other words, this sum will always be less than the
sum of squared deviations of the items from any other value.
3. The formula of arithmetic mean can be extended to compute the combined average of
two or more related series.
4. If the given items of x can be changed to items on Y = a + bx, then Y = a + bX
.
5. If each of the values of a variable x is increased or decreased by some constant C, the
arithmetic mean also increases or decreases by C. Similarly, when the values of a
variable x are multiplied by a constant, say k, the arithmetic mean is also multiplied by
the same quantity k. when the values of variable x are divided by a constant say d,
the arithmetic mean is also divided by the same quantity d.
6. The arithmetic mean of the first n natural numbers can be calculated by applying the
formula: X

Merits of Arithmetic Mean:
1. It is easy to understand.
2. It is simple to calculate.
3. It is based on all the items of the series. In its computation no item is ignored.
4. It is rigidly defined by a mathematical formula so that the same answer is derived by
everyone who computes it.
5. It is capable of further algebraic treatment so that its utility is enhanced. The formula of
arithmetic mean can be extended to compute the combined average of two or more
related series.
6. It has sampling stability. It is least affected by sampling fluctuations.
7. Its computation does not require arrangement of items since it is not based on position
in the series.
8. It is characterized as a centre of gravity a point of balance, balancing the value on
either side of it.
9. Arithmetic average can be calculated if we know the number of items and aggregate.
10. It provides a good basis for comparison.
11. The mean is a more stable measurer of central tendency (Ideal average)

Limitations of Arithmetic Mean:
1. Since it includes all the items, its value may be distorted by extreme values.
2. It cannot be calculated if any item of the series is missing.
3. The average may not coincide with any of the actual items in a series.
4. In cases where the items cannot be represented quantitatively, like intelligence, honesty
and character but can be ranked, the arithmetic average is not an appropriate measure
of central tendency.
5. It cannot be located by observation or the graphic method.
6. It gives greater importance to bigger items of a series and lesser importance to smaller
items.


7. It cannot be calculated in a distribution with open-ended class series and cumulative
series without converting the class series into exclusive series.
8. It fails to provide a characteristic value or a representative value where the distribution
of the series is not normal and gives a U shaped curve rather than a bell shaped (
curve.

2. Geometric Mean:
A. Simple Geometric Mean.
B. Weighted Geometric Mean.
C. Combined Geometric Mean.

A. Simple Geometric Mean.
Meaning of geometric mean:
Geometric mean is the n
th
root of the product of n number of non-negative values. It means
if there are two values then Geometric mean is square root of the product of two values.
Symbolically,
G.M. =
n
n
X X X X ........
3 2 1

Where, X1, X2 . refer to the values of various items of the series
n = Total no. of items of the series.

Computation of Geometric Mean:
Practical steps involved in the computation of G.M. in case of individual series
1. Take the logarithms of each item of variable, and enter in the column headed as log X
and obtain their total i.e., log X.
2. Calculate G.M. As follows:
G.M. = Antilog
|
\
|
n
X log

Where, n = Total no. of items

Calculation of Geometric Mean Discrete Series
Let X1, X2, X3.Xn be the given values of a variable and f1, f2, f3 fn, are their respective
frequencies. Then the geometric mean is given by the formula.
Log g =
n
n n
f f f f
X f X f X f
......
log ...... log log
3 2 1
2 2 1 1
+ + +
+ + +

Log g =
=
n
i
i
X f
1
log or g = Antilog
=
n
i
i
X f
1
log
Steps to calculate Geometric Mean for Discrete Series:
1. Take log values of all the items of a given series.
2. Multiply each log value to its respective frequencies
3. Add the values and divide by the total number of frequencies
4. Take the value of antilog from the antilog table and the result would be the geometric
mean.
5. Apply the formula; G.M. = Antilog
|
\
|
N
X f log


Calculation of Geometric Mean Continuous Series
In case of continuous series, the following steps are observed.
2. Take the mid-value of each of the class group and denote it by X.
3. Take log value of these mid-values i.e. Log x.
4. Multiply log values with their respective frequencies i.e. f x log X.
5. Add them to find f log X.
6. Apply the formula.: g = Antilog or Antilog
|
\
|
N
X f log

B. Weighted geometric mean:
Steps involved in the calculation of weighted G.M.
1. Take the logarithms of each item of variable X and enter in the column headed as log X.
2. Multiply these logarithms (log X) with the respective weights (W) and enter these products (W
log X) in the column headed as W log X and then obtain their total i.e. W log X.
3. Calculate Weighted Geometric Mean by applying the following formula.

n
W
n
X W X W X
w
M G .....
2 2 1 1
. . = OR G.M. = Antilog
|
|
\
|

W
X W log

C. Combined Geometric Mean:
If geometric means of two or more groups are given the geometric mean of the combined
group can be contained, as follows
Combined G.M. = Antilog
(
+ + +
+ +
k
k k
n n n
GM N GM N GM N
....
log ....... log log
2 1
2 2 1 1

Where, GM1 = Geometric mean of the first group
GM2 = Geometric mean of the second group
GMk = Geometric mean of the K
th
group

D. Special situations where geometric mean is a suitable average:
The following the fields where geometric mean is specifically used to get the correct
average value where all other averages fail to give so.
1. In averaging the ratios and percentages
2. In finding the average of index number
3. In the social and economic fields where more weights are given to the smaller items
and vice versa
4. In the gradual increase or decrease of a given value over a certain period of time.

Computation of average rate of change:
Average Rate of Change in a variable between any two periods such as Average Rate of
Increase in Population, Average Rate of Increase in GNP, Average Rate of Increase in
Sales/Profits/Wages, Average Rate of Depreciation etc., can be computed by using
Compound Interest Formula as follows:
Pn = P0 (1+r)
n

Where, P0 = the value at the beginning of the period;
Pn = the value at the end of the period n;
r = Rate of change; n = length of time period.
=
n
i
i
X f
1
log


Note: If any three values of the four used in the above formula are known, the fourth value
can be found out.
Tutorial Note: In case annual rate of decrease in variable (e.g. depreciation on fixed assets)
is to be calculated, the Compound Interest Formula will be modified as follows:
Pn = Po (1-r)
n

Properties of Geometric mean:
1. The logarithm of G for a set of observations x1,x2,x3, x4, .xn is the arithmetic mean of the
logarithm of the observation, i.e. Log G=
(
+ +
n
n x x
k
log ....... log log
2 1
.
2. If all the observations of a variable assumes the same constant value k, i.e. x1=x2=x3=
x4.xn=k, then the geometric mean of these observations is also k.
3. For any series of positive values the geometric mean is smaller than the arithmetic
mean.
4. If any value is zero, the value of geometric mean is infinity and thus inappropriate.
5. It cannot be calculated if number of negative values is odd.
6. The geometric mean of two variables is the product of their G.M. i.e., if Z=xy, then G.M.
of Z= (G.M. of x) x (G.M. of y).
7. The geometric mean of the ratio of two variables is the ratio of the G.M. of these two
variables i.e., if Z=x/y. then G.M. of Z= (G.M. of x) (G.M. of y).

Merits of Geometric mean
1. It is based on all observations
2. It is rigidly defined
3. It is useful in averaging ratios and percentages and in determining rates of increase and
decrease.
4. It is capable of algebraic treatment. Its formula can be extended to calculate combined
G.M. as follows:

12
.M. G = Antilog
(
+
+
2 1
2 2 1 1
. . log . . log
N N
M G N M G N

5. It gives less weight to large items and more to small ones than does the arithmetic
average. It is because of this reason that geometric mean is never larger than the
arithmetic mean, on occasions it may turn out to be same as the arithmetic mean, but
usually it is smaller.
6. It is useful in studying economic and social data.

Limitations of Geometric Mean
1. It is difficult to understand.
2. It is difficult to compute. Non-mathematical persons cannot do calculations.
3. The Geometric mean cannot be computed if any item in the series is negative or zero.
4. It has restricted application.
5. It is biased for small values as it gives more weight to small values.
6. At times it gives a value which may not be found in the series and even may be absurd.



3. Harmonic Mean:
A. Simple Harmonic Mean.
B. Weighted Harmonic Mean.
C. Combined Harmonic Mean.

A. Simple Harmonic Mean.
Meaning of Harmonic Mean:
Harmonic mean of various items of a series is the reciprocal of the arithmetic mean of their
reciprocals.

Individual series:
Steps to calculate H.M
1. Identify the variable and denote it by X.
2. Calculate the reciprocal of values of variable i.e. 1/x and find its summation.
|
|
\
|
+ +
=
n
X X X X
n
M H
1
...
1 1 1
. .
3 2 1

Where, X1, X2..Xn refer to the value of various items of the series.
n = Total no. of items of the series.
Note: To simplify the calculations, reciprocals of the various items are taken from the
mathematical tables.

Discrete series:
Steps to calculate H.M
1. Identify the variable(x) and frequency (f) from the data given.
2. Divide each frequency with the respective value of the variable i.e. (f/x) and find their
summation i.e. (f/x).

|
|
\
|
+ +
=
n
x
f
x
f
x
f
x
f
N
M H
...
. .
3 2 1
Where, N= f.
Continuous Series:
Steps to calculate
2. Take the mid-value of each of the class group and denote it by X.
3. Divide each frequency with the respective value of the variable i.e. (f/x) and find their
summation i.e. (f/x).

|
|
\
|
+ +
=
n
x
f
x
f
x
f
x
f
N
M H
...
. .
3 2 1
Where, N= f.



B. Weighted Harmonic Mean
Steps to calculate:
1. Identify the variable(X) and weights (W) from the data given.
2. Divide each weight with the respective value of the variable i.e. (w/x) and find their
summation i.e. (w/x).
3. Apply the following formula:

( ) x W
W
W
x
W
x
W
x
W
M H
n
n
w
/
1
....
1 1
. .
2
2
1
1
=
|
|
\
|
+
|
|
\
|
+
|
|
\
|
=

C. Combined Harmonic Mean
Steps to calculate:
1. Identify the number of observations in each group and denote them n1, n2, n3, n4nm.
2. Identify the respective harmonic means H.M1, H.M2, H.M3, H.M4 H.Mm.
3. Apply the formula:
|
|
\
|
+
+
=
2
2
1
1
2 1
. .
H
n
H
n
n n
M H

Properties of Harmonic Mean
1. If all the observations of a variable assumes the same constant value k, i.e. x1=x2=x3=
x4.xn=k, then the geometric mean of these observations is also k.
2. Harmonic mean can be computed from a series with any number of negative values.
3. Harmonic mean cannot be computed from a series from a series if any of its value is
zero.
4. For any series in which all the values are not equal nor any value is zero, the value of
the harmonic is less than the geometric mean and arithmetic mean.
5. If there are two groups with n1 and n2 observations and H1 and H2 as respective H.Ms
then the combined H.M. is given by
|
|
\
|
+
+
=
2
2
1
1
2 1
. .
H
n
H
n
n n
M H
Uses of Harmonic Mean:
1. For the rates and ratios involving speed, time and distance, harmonic mean is used to
find out the average speed at which journey has been performed.
2. For the rates and ratios involving price and quantity (both amount of money spent and
the units per rupee are given), harmonic mean is used. To find out the average price at
which an article had been sold or purchased.
3. When it is desired to assign greater weight to smaller values and smaller weight to
larger values of a variate, its use is recommended.
4. In a given data set if there are a few large values, the reciprocals will turn down the
effect of large numbers. In such cases harmonic mean is to be used.

Merits:
1. It is rigidly defined.
2. It is based on the all the observations of the series.
3. It is suitable in case of series having wide dispersion.
4. It is suitable for further mathematical treatment.


5. It gives less weight to large items and more weight to small items.
6. It is the most suitable average for measuring the time, speed, etc.,

Demerits:
1. It is difficult to calculate and not easy to understand.
2. All the values must be available for computation.
3. It is not popular.
4. It is usually a value which does not exist in series.
5. It cannot be computed when one or more items are zero
6. It gives largest weight to smallest items. Hence, it is not useful for analyzing the
economic data.

Relationship among the Averages
(a) where values of all items are identical
(b) where values of all items are not identical
A.M. = G.M. = H.M.
A.M. > G.M. > H.M.

B. Positional Averages:
1. Median
Meaning of Median:
Median is the central value of the variable that divides the series into two equal parts in
such a way that half of the items lie above this value and the remaining half lie below this
value. Median is called a positional average because it is based on the position of a given
observation in a series arranged in an ascending or descending order and the position of
the median is such that an equal number of items lie on either side of it. It concentrates on
the middle or centre of a distribution.
According to L.R. Connor, Median is that value of the variable which divides the group
into two equal parts, one part comprising all the values greater, and the other all values
less than the Median. Median is usually denoted by Med. or Md. Median can be
computed for both ungrouped data (Individual Series) and grouped data (or
Discrete/continuous Series).

Calculation of Median
Individual Series
To find the value of Median in this case the values are arranged in ascending or descending
order first; and then the middle most value is taken as Median.
The terms are arranged in ascending or descending order and then
|
\
| +
2
1 n
th
term is taken
as Steps to Calculate
1. Arrange the terms in ascending or descending order
2. Count the number of terms. Put = n
3. Calculate
|
\
| +
2
1 n
th
value,
|
\
| +
2
1 n
th
value is Median.

Discrete Series
Steps to Calculate
1. Arrange the data in ascending or descending order
2. find cumulative frequencies

3. find the value of the middle item by using the formula; Size of
|
\
| +
2
1 N
th
item
4. By inspecting cumulative frequencies, Find out that cumulative frequency in the
cumulative frequency column which is equal to
|
\
| +
2
1 N
th
or next greater than
th
value.
5. Locate the value of the variable corresponding to that cumulative frequency. This is the
value of median.

Continuous series:
Steps to Calculate:
1. Convert the class series into exclusive series if they are given in inclusive series, mid-
value series or cumulative series. Median can be calculated if class series are given in
exclusive series or open-ended series.
2. Arrange the data in ascending order.
3. Find the cumulative frequencies.
4. Find the Median class by ascertaining the class where the cumulative frequency is equal
to or greater than N/2.
5. Apply the formula: M = L + c
f
f C N o
.
1

N1 = N/2
C.fo = cumulative frequency preceding the cumulative frequency of median class.
F = frequency of the median class.
C = class interval of the median class.

Mathematical property of median
1. If the two variables x and y are related by Y= a+bx, where a and b are the constants.
Also the value of median of x is given, then Ymd =a+bxmd.
2. The sum of the absolute deviations (i.e., deviations ignoring signs) from the median
is minimum i.e.,
d
M X is the minimum.

Merits of median
2. It is quite rigidly defined.
3. It does not require all the observations of the data for its determination.
4. Median is useful in case of open-ended series such as income distribution since median
is based on the position and not on the values of items.
5. Median is easier to compute than mean in case of unequal class-intervals.
6. It is not affected by extreme values.
7. It is most suitable average for dealing with qualitative data i.e., where ranks are given.
8. It can be determined graphically.
9. It is capable of being expressed in qualitative form as it is not computed but located.
10. It gives a value, which very much exists in the series, and is a round figure in most of
the cases.
11. It minimizes the total absolute deviations.

Limitations of median
1. It requires the arrangement of data in ascending/descending order.
|
\
| +
2
1 N


2. It is not rigidly defined and as such its value cannot be computed but located.
3. It is not based on all items of the series.
4. It is not capable of algebraic treatment. Its formula cannot be extended to calculate
combined Median of two or more related groups.
5. It is affected more by sampling fluctuations than the value of mean.
6. The computation formula of a median is in a way an interpolation under the
assumption that the items in the median class are uniformly distributed, which is not
very true, i.e. In case of continuous series, the median is estimated, but not calculated.
7. Typical representative of the observations cannot be computed if the distribution of
item is irregular. For example 1, 2, 3, 100 and 500, the median is 3.
8. It ignores the extreme items.
9. Where the number of items is large, the prerequisite process. i.e. arraying the items is a
difficult process.

Partition values
Partition values are the positional measures which divide the series into equal parts say 4
equal parts or 10 equal parts or 100 equal parts. The most popular partition values used are
Quartiles, Octiles, Deciles and Percentiles.

Quartiles
Meaning of Quartiles
The values of a variate that divide the series or the distribution into 4 equal parts are
known as Quartiles. Since three points are required to divide the data into 4 equal parts, we
have three quartiles Q1, Q2, Q3.
Range

Q1 Q2 Q3
Median = Q2
The first quartile (Q1), known as a lower quartile, is the value of a variate below which
there are 25% of the observations and above which there are 75% of the observations.
The second quartile (Q2) known as middle quartile or median is the value of a variate
which divides the distribution into two equal parts. it means, there are 50% observations
above it and 50% below it.
The third quartile (Q3), known as an upper quartile, is the value of a variate below which
there are 75% observations and above which there are 25% observations.
It is clear that Q1 < Q2 < Q3.

Computation of Quartiles
The procedure for computing quartiles is the same as the median as explained earlier.
I. In case of Individual and discrete Series (after arranging the size of item in
ascending/descending order)
Q1 = Size of
4
1 + N
th
item, Q2 = Size of
( )
4
1 2 + N
th
item, and Q3 = size of
( )
4
1 3 + N
th
item

II. In case of Continuous Series (i.e., frequencies with Class Intervals)


c
f
f c
N
L Q c
f
f c
N
L Q c
f
f c
N
L Q
+ =
+ =
+ =
. .
4
3
,
. .
4
2
,
. .
4
3 2 1

Where, L = Lower limit of quartile class
c.f = Cumulative frequency preceding the quartile class
f = Simple frequency in the quartile class
c= class-interval of quartile class
Octiles
Meaning of Octiles
The value of a variate which divides a given series or the distribution into 8 equal parts are
known as octiles. Each octile contains 12.5% of the total number of observations. Since
seven points are required to divide the data into 8 equal parts, we have 7 octiles in the
distribution.O1 to O7.
Computation of Octiles
I. In case of Individual and Discrete Series (after arranging the size of items in
8
) 1 (

+
=
N j
of size O
j

th
item where, j = 1 to 7
(e.g. O4 = size of
8
) 1 ( 4 + N
th
item
II. In case of continuous series (i.e., frequencies with class-intervals)
i
f
f c
jN
L O
j

+ =
. .
8
Where, j = 1 to 7
Where c.f. is the cumulative frequency preceding the j
th
octile class, the other symbols have
usual meaning.

Deciles
Meaning of Deciles
The values of a variate that divide the series or the distribution into 10 equal parts are
called Deciles. Each part contains 10% of total observations. Since nine points are required
to divide the data into 10 equal parts, we have 9 deciles, D1 to D9. They are called first
decile, second decile, etc., The 5
th
decile (D5) is the median.
Computation of Deciles
I. In case of Individual and Discrete Series (after arranging the size of items in
Dj = Share of
|
\
| +
10
1 N
j th item. Where j = 1 to 9

II. In case of continuous series (i.e., frequencies with Class Intervals)
i
f
f c
jN
L D
j

+ =
.
10
Where j = 1 to 9
Where c.f. is the cumulative frequency preceding the j
th
decile class, the other symbols have
usual meaning.

Percentiles


Meaning of Percentiles
The value of a variate which divides a given series or distribution into 100 equal parts are
known as percentiles. Each percentile contains 1% of the total number of observations.
Since ninety nine points are required to divide the data into 100 equal parts, we have 99
percentiles P1 to P99. The percentile Pj is that value of the variate upto which lie exactly j% of
the total number of observations. For Example
P10= Value of a variate upto which lies exactly 10% of observations. This is same as D1.
P25= Value of a variate upto which lies exactly 25% of the total number of observations. This
is same as Q1.
P50= Value of a variate upto which lies exactly 50% of the total number of observations. This
is the same as D5 or Q2, or median.

Computation of Percentiles
I. In case of Individual and Discrete Series after arrangement of the size of items in
Pj = size of
100
) 1 ( + N j
th
item where j = 1 to 99
II. In case of Continuous Series (i.e. frequencies with Class Intervals)
Pj = i
f
f c
jN
L
+
.
100
where j = 1 to 99
Where, c.f. is the cumulative frequency preceding the j
th
percentile class. The other symbols
have usual meaning.

Mode
Meaning of mode:
The word mode is derived from the French word La Mode which means Fashion or
system. Mode is often said to be that value in a series which occurs most frequently or
which has the greatest frequency. But it is not exactly true for every frequency distribution.
Rather it is that value around which the items tend to concentrate most heavily. It is also
called the most typical or fashionable value of a distribution because it is the value
which has the greatest frequency density in its immediate neighbourhood. It is usually
denoted by M0. It may be noted that a distribution may have one mode or two modes or
several modes.

Definition:
According to Boddington, Mode may be defined as the predominant kind, type or size
or item or the position of greatest density.
According to Tuttle, Mode is the value which has the greatest frequency density in its
immediate neighbourhood.

Unimodal A distribution is said to be Unimodal if it has only one mode.
Bimodal A distribution is said to be bimodal if it has two modes.
Multimodal A distribution is said to be multimodal if it has more than two modes.
Mode may be calculated for ungrouped data or individual series and grouped data or
discrete and continuous series.

Calculation of Mode:
Individual Series:


The terms are arranged in any order, Ascending or Descending, if each term of the series is
occurring once, then there is no mode, otherwise the value that occurs Maximum number
times is known as Mode.
Method to calculate Mode
1. Arrange the terms in ascending or descending order
2. Note the term occurring maximum number of times if any.
3. This term is mode.
Note: If all terms occur once or some terms occur equal number of times, we cant find
Mode by this method.

Discrete Series
The mode can be determined by Inspection Method or grouping method.
Under Inspection method Mode is that value of the variable which has the highest
frequency.
But this method is applicable if the following conditions are fulfilled:
1. There must be one item which has maximum frequency.
2. The maximum frequency should be located at most in the middle or centre of the series.
3. The frequencies should follow a particular pattern, i.e., they should gradually rise and
reach maximum level and thereafter decline.
4. The difference between highest frequency and second highest frequency should be
large.
However, sometimes it becomes impossible to locate Mode by inspection as concentration
of frequencies is not in a unique manner or fashion as desired for this method. In such cases
grouping method should be used to find the modal value. And for such a distribution we
have to prepare the (1) grouping Table and (2) Analysis Table

1. Grouping Table:
It has Six Steps as given below:
1. Take the Frequency column as column number 1
2. Frequencies are added in groups of two(s) and leave the incomplete group.
3. Leaving first frequency, add frequencies in groups of two(s) & leave the incomplete
group.
4. Add the frequencies in groups of three(s) & leave the incomplete group.
5. Leaving first frequency, add the frequencies in the groups of three(s) and leave the
incomplete group.
6. Leaving first two frequencies, add frequencies in groups of three(s) and leave the
incomplete group.
In each case, take maximum total and put it in a circle or a box to distinguish it from others.

2. Analysis Table:
It has following steps:
1. Note highest value in each column.
2. Note the variable(s) in each column corresponding to that total.
3. Check if that total is of individual items or of group of many items (2 or 3).
4. It the total consists of two or more frequencies, all such variables have to be marked
with the signs as or .
5. Count or marks in each column.
6. Variable with maximum or marks denotes mode.


Continuous Series:
In the case of Continuous Series, we go only one step ahead of the method for discrete
series. We get the value of Mode by Interpolation as is the case with Median.
Steps involved:
1. Convert the class series into exclusive series if it is given in inclusive series, mid-value
series or cumulative series. Mode can be calculated the series is exclusive or open-ended
series.
2. Arrange the data in the ascending order.
3. Convert the class intervals into equal class intervals if they are unequal.
4. Find out the modal class either by inspection method or grouping method.
5. Apply the formula: c
f f f
f f
L Mode

+ =
2 0 1
0 1
2

Where, L = is the lower limit of Modal Interval

1
f is the frequency corresponding to Modal Interval

0
f is the frequency preceding Modal Interval

2
f is the frequency succeeding Modal Interval
C is the length of Modal Interval.
We can put this formula in following shape also:

Mode c
D D
D
L
+
+
2 1
1

Here;
0 1 1
f f D =

2 1 2
f f D =
Here only the positive values are taken
Mode can also be calculated taking upper Limit.
c
f f f
f f
L Z Mode

=
2 0 1
2 1
2
) (

Or c
D D
D
L Z Mode
+
=
2 1
1
) (
Here: L is the upper limit
Other values are the same as in above given formula.
Note:
1. If first class is the modal class then
0
f will be zero.
2. Similarly if last class is modal class, then
2
f is zero.
3. If Modal Value lies in any other interval than with highest frequency, the following
method is suggested to calculate method
i
f f
f
L Mode
+
+ =
2 0
2

Merits of mode


1. It is easy to understand as well as easy to calculate. In certain cases, it can be found out
by inspection
2. It is usually an actual value as it occurs at the most highest frequency in the series.
3. The mode is a measure which actually indicates what many people incorrectly believe
the arithmetic mean indicates. In certain situations mode is the only suitable average,
e.g., modal size of garments, modal size of shoes, modal wages, etc.,
4. It is not affected by extreme values.
5. Its value can be determined in open-end distribution without ascertaining the class-
limits.
6. It can be used to describe qualitative phenomenon. For e.g. in market research to
determine the consumer preferences for different types of products, modal preference
can be used.
7. Its value can be determined graphically.
8. It indicates the point of maximum concentration in case of highly skewed or non-normal
distributions.

Limitations of Mode
1. In case of bi-modal/multimodal series, mode cannot be determined.
2. It is not capable of further algebraic treatment. For example, combined mode of two or
more series cannot be calculated.
3. It is not based on all the items of series.
4. It is not rigidly defined measure because different formulae give somewhat different
answers.
5. Its value is affected significantly by the size of the class-intervals.
6. It is difficult to compute when there are both positive and negative items in a series and
when there is one or more items are zero.
7. It is stable only when the sample is large.

Properties of mode
1. If the two variables x and y are related by Y= a+bx, where a and b are real constants
variates and Also the value of mode of x is given, then the mode of Y is given by the
equation Ymo =a+bxmo.

Relationship between Mean, Median and Mode
The relationship between Mean, Median and Mode depends upon the shape of the
frequency distribution. The following the possible ways of expressing relationship between
Mean, Median and Mode.
Nature of distribution Relationship between
1. Symmetrical or Normal distribution Mean = Median=Mode.
2. Asymmetrical distribution Cannot be established
3. Moderately asymmetrical distribution Mode = 3Median 2Mean

Empirical relationship between Mean, Median and Mode was discovered and propounded
by Prof. Karl Pearson. Through his experiments he found that in a moderately skewed
distribution the distance between Mean and the median is about one-third the distance
between the mean and the mode. Thus, Karl Pearson has expressed the relationship as
follows:
Mode = 3 Median 2 Mean


Median= (Mode + 2 Mean)/3
Mean = (3 Median Mode)/2

COMMERCIAL AVERAGES:
A. Moving Averages
Meaning: Moving average is an arithmetic average of data arising over a period of time
and is calculated by replacing the first item in the average by the newly arising item. Each
moving average is based on values covering a fixed time span which is called period of
moving averages.

Usefulness
The successive averaging process does a smoothing operation in the time series data, i.e., it
irons out fluctuations of uniform period and intensity. They can be completely eliminated
by choosing the period of moving average that coincides with the period of the cycle.

Limitation
The moving averages cannot be computed for all the given years.

Progressive Average
Meaning Progressive average is an arithmetic mean of the progressive total (i.e.,
cumulative total).

Computation
Progressive totals of variable are calculated and then divided by the progressive (i.e.,
cumulative) number of items. No previous figure is left as is done in the case of moving
average. The progressive average for the first year would remain the same; the progressive
average for the second year is equal to
2
b a +
; for the third year
3
c b a + +
, for the fourth year
4
d c b a + + +
, and so on.
Usefulness
Progressive averages are useful in order to find out how a business/economy is growing.
Such averages can be obtained for all the years for which the data are given.

Choice of a suitable average
No single average can be considered as best for all circumstances. The suitability of a
particular average depends on the following factors:
1. Purpose: The choice should be made according to the purpose that an average is
designed to serve. Following guidelines are suggested in this regard:
Purpose Suitable average
(a) To give equal importance to all the items of series (a) Arithmetic Mean
(b) To locate the position of an item in relation to other
items
(b) Median and other partition
values
(c) To find out the most common or most fashionable
item
(c) Mode
(d) To give more importance to small items than big
items
(d) Geometric Mean
(e) To give greatest importance to small items (e) Harmonic Mean



2. Nature and form of Data: The choice should be made according to the nature and form
of data available. Following guidelines are suggested in this regard:
(a) For open-end distributions particularly when the
distribution is found to be j-shaped or reverse j-
shaped. For example, price distribution and
Income Distribution
(a) Median
(b) To describe qualitative data. For example, to study
the consumer preferences for different products
(b) Mode
(c) To compute average rates of increase/decrease,
average ratios, averages percentages
(c) Geometric Mean
(d) To compare the value of a variable with another
variable which is constant. For examples varying
speed with constant distance, varying quantities
bought/sold per rupee.
(d) Harmonic Mean
(e) In other cases (e) Arithmetic Mean
Note: Arithmetic mean should not be used in the following cases:
1. In case of highly skewed distributions.
2. In case of open-end distribution.
3. When there are extreme items i.e., very large and very small items.
4. To compute average ratios and rates of change.
5. When the distribution is unevenly spread, concentration being small or large at
irregular points.

3. Amenability to further Algebraic Treatment: If an average is to be used for further
algebraic treatment, arithmetic mean is considered to be the best as it is very widely
used.
4. Special Purposes: For calculating trend in time-series analysis, the moving average
would be the most suitable average.



MEASURES OF DISPERSION
Meaning of Dispersion:
The word dispersion is used in two senses in statistics:
1. The scatteredness of values of a variable due to variation among themselves.
2. The scatteredness of the deviations from measure of central tendency or any other fixed
value.

Meaning of Measures of Dispersion:
The word measure means a method of measuring or ascertaining certain values.
Dispersion means scatter, spread or variation of values from the central value. Thus, the
phrase Measures of Dispersion means the various possible methods of measuring the
dispersion or deviations of the different values from a designated value of the series. The
designated value may be average value or any other extreme value.
It may be noted that the measures of dispersion measure only the degree (i.e., the
amount of variation) but not the direction of the variation. The measures of dispersion are
also called averages of the second order because these measures give an average of the
differences of various items from an average.

Characteristics of dispersion:
1. It consists of different methods through which variation can be measured in
quantitative manner.
2. It deals with a statistical series.
3. It indicates the degree or extent to which various items of a series deviate from its
central value.
4. It supplements the measures of central tendency in revealing the characteristics of a
frequency distribution.
5. It speaks of the reliability or otherwise of the average value of a series.

Significance of measuring Dispersion
Measures of dispersion are calculated to serve the following purposes:
1. To determine the reliability of an average Measuring variability determines the
reliability of an average by pointing out to what extent the average is representative of
the entire data.
2. To facilitate comparison Measures of dispersion facilitate comparisons of two or more
distributions with regard to their variability.
3. To facilitate control Measures of dispersion determine the nature and cause of
variation in order to control the variation itself.
4. To facilitate the use of other statistical measures Measuring variability facilitates the
use of other statistical measures such as correlation, regression, statistical inference, etc.,

Properties of a good measure of Dispersion
Since a measure of dispersion is the average of the deviations of items from an average, it
should also posses all the qualities of a good measure of an average. According to Yule and
Kendall, the qualities of a good measure of dispersion are as follows: -
1. Simple to Understand It should be simple to understand
2. Easy to Calculate It should be easy to calculate.


3. Rigidly Defined - It should be rigidly defined. For the same data, all the methods
should produce the same answer. Different methods of computation leading to different
answers are not proper.
4. Based on all Items It should be based on all items. When it is based on all items, it will
produce a more representative value.
5. Amenable to further Algebraic Treatment It should be amenable to further algebric
treatment. This means combining groups, calculation of missing values, adjustment for
wrong entries, etc., which are possible without the knowledge of actual values of all
items. Such treatment should be possible with a good measure of dispersion also.
6. Sampling Stability It should have sampling stability. It means that the average
difference between the values obtained from the sample and the corresponding values
from the population should be the least. If it is so far a measure of dispersion, it is the
best measure.
7. Not Unduly Affected by Extreme Items It should not be unduly affected by the
extreme items. Extreme items, many times, are not true representatives of the data. So
their presence should not affect the calculation to a large extent.

Measures of Dispersion
Measures of Dispersion may be:
1. Absolute Measure of Dispersion:
2. Relative Measures of Dispersion:

1. Absolute Measure of Dispersion:
Absolute measure is the measure of dispersion which is expressed in the same statistical
unit in which the original data are given such as Kilograms, Tonnes, Kilometers, and
Rupees etc. These measures are suitable for comparing the variability in two distributions
having variables expressed in the same units and of the same average size. These measures
are not suitable for comparing the variability in two distributions having variables
expressed in different units. Following are the absolute measures of dispersion:

2. Relative Measures of Dispersion:
Relative measure of dispersion is the ratio of a measure of absolute dispersion to an
appropriate average or the selected items of the data. It may be noted that the same average
base should be used as has been used while computing absolute dispersion. Relative
measures of dispersion are also called as Coefficient if Dispersion because relative
measure is a pure number that is independent of the unit of measurement. Following are
the relative measures of dispersion
Absolute Measures of Dispersion
Based on Selected Items Based on All Items
1. Range
2. Inter-Quartile Range
1. Mean Deviation
2. Standard Deviation


1. Range
Range is defined as the difference between the value of largest item and the value of
smallest item included in the distribution. Measures of range may be absolute or relative.

Individual series
Steps to calculate:
1. Ascertain largest value and smallest value.
2. Calculate Range by taking out the difference between largest value and smallest value:
Range = Largest value Smallest value.
3. Calculate coefficient of Range by dividing the difference between largest value and
smallest value by the aggregate of largest value and smallest value.
Coefficient of Range = L-S/L+S.

Discrete series
Steps to calculate:
1. Identify the variable(x) and frequency (f) from the data given.
2. Ascertain largest and smallest value from the values of variable.

Tutorial Note: Frequencies are not considered at all for computing Range and its
Coefficient.

Continuous series
Steps to calculate:
1. Convert the class series into exclusive series if given in any other series.
2. Ascertain largest and smallest value from the values of variable i.e. Ascertain the upper
limit of highest class and lower limit of lowest class.

Relative Measures of Dispersion
Based on Selected Items Based on All Items
1. Coefficient of Range
2. Coefficient of quartile
Deviation
1. Coefficient of Mean Deviation
2. Coefficient of Standard Deviation
or Coefficient of Variation


Tutorial Note: Frequencies are not considered at all for computing Range and its
Coefficient.

Interpretation of Range
If the averages of the two distributions are almost same, the distribution with smaller range
is said to have less dispersion and the distribution with larger range is said to have more
dispersion.

Merits of Range
The merits/advantages of range are as follows:
2. It is easy to calculate
3. It does not require any special knowledge.
4. It takes minimum time to calculate the value of range.

Limitations of range
The demerits/disadvantages/limitations of range are as follows:
1. It does not take into consideration all items of the distribution
2. Only two extreme values are taken into consideration
3. It is affected by extreme values
4. It is not possible to find out the range in open-end frequency distribution
5. It does not present very accurate picture of the series.
6. It is not suitable for mathematical treatment
7. It does not indicate the direction of the variability.

Uses of Range:
1. Range is used in industries for the statistical quality control of the manufactured
product by the construction of Control Chart. If the range increases beyond a certain
point, the product may be examined to find out the reasons for variations.
2. Range is useful in studying the variations in the prices of stock, shares and other
commodities that are sensitive to price changes from one period to one period.
3. The meteorological department uses the range for weather forecasts since public is
interested to know the limits within which the temperature is Likely to vary on a
particular day.

Properties of range
1. If all the observations assumed by a variable are constant, say k, then the range is zero.
2. Range remains unaffected due to a change of origin but is affected in the same ratio due
to a change in scale, if for any two constants a and b, the two variables x and y are
related by Y= a+bx, then the range of y is given by Ry=|b|x Rx.

Quartile Deviation:
Meaning Of Quartile Deviation or Semi-Inter Quartile Range:
Quartile Deviation (or Semi-Inter Quartile Range) is half of the difference between upper
quartile (Q3) and lower quartile (Q1). Quartile deviation indicates the average amount by
which the two quartiles differ from the median. In symmetrical distribution the two
quartiles (Q1 and Q3) are equidistant from the median [i.e., Median Q1 = Q3 - median]. As
a result Median Q.D. covers exactly 50% of the observations of the distribution.
Measures of Quartile Deviation may be absolute or relative.


Individual series, discrete series and Continuous series
Steps to calculate:
1. Calculate lower quartile (Q1)
2. Calculate Upper Quartile (Q3)
3. Calculate Quartile deviation and its coefficient by applying the formula given below.
Measure of Quartile Deviation Formula
1. Absolute Measure of Quartile
Deviation
Q.D. =
2
1 3
Q Q

Q.D. = Quartile Deviation
Q3 = Third Quartile or Upper Quartile
Q1 = First Quartile or Lower Quartile
2. Relative Measure of Quartile
Deviation
Coefficient of Q.D. =
1 3
1 3
Q Q
Q Q
+

Tutorial Note: In case of symmetrical distribution, Median = (Q3 + Q1)/2

Merits of Quartile Deviation:
1. It is easy to understand
2. It is easy to calculate
3. It can be used in Open-end frequency distribution
4. It is lest affected by extreme items.

Limitations of Quartile Deviation:
1. This method of dispersion is not based on all the items of the series. It ignores the first
25% of the items and the last 25% of the items.
2. It is a positional average; hence not amenable to further mathematical treatment.
3. It is very much affected by sampling fluctuations
4. It is not a proper measure of dispersion since it shows the distance on a scale and not
the scatter around an average. It is a positional average and is not measured from an
average.
5. It gives only a rough measurement.

Properties of Quartile Deviation
1. Quartile Deviation remains unaffected due to a change of origin but is affected in the
same ratio due to a change in scale, if for any two constants a and b, the two variables x
and y are related by Y= a+bx, then the Quartile Deviation of y is given by
Q.D of y =|b|x Q.D of x.

Mean Deviation
Meaning of mean deviation
Mean Deviation is the arithmetic mean of the absolute deviations (i.e., deviations treated as
positive regardless of their actual signs) of all items of the distribution from a measure of
central tendency, which could be mean or median or sometimes even mode. It is also
known as first moment of dispersion.
Individual series
Steps to calculate:
1. Calculate Mean, Median or mode of the series.
2. Take deviations |D| from either mean, median or mode ignoring +(-) signs. |D| is
difference between value of the variable (x) and mean, median or mode.


3. Calculate the total of these deviations i.e. |D|.
4. Calculate Mean deviation by dividing the sum of deviations by total no. of observations.
5. Calculate Coefficient of Mean Deviation by applying formula given below.

Discrete series
Steps to calculate:
difference between value of the variable (x) and mean, median or mode.
4. Multiply each deviation by its corresponding frequency and obtain the total of these
products i.e. f|D|.
5. Calculate mean deviation by dividing the total of deviations by total no. of observations.

Continuous series
Steps to calculate:
1. Convert the class series into exclusive series if given in any other series.
2. Calculate mid-values and denote them by x.
difference between value of the variable or mid-values (x) and mean, median or mode.
6. Multiply each deviation by its corresponding frequency and obtain the total of these
products i.e. f|D|.
7. Calculate mean deviation by dividing the total of deviations by total no. of observations.

Measures of Mean Deviations Formula
1. Absolute Measure of Mean Deviations
(i) For Individual Observations

M.D. =
N
D

Where, M.D. = Mean Deviation
D = Deviations of items from
Mean or Median
Ignoring signs
N = No. of Observations
(ii) For Discrete Series (i.e., when
frequencies are given)
M.D. =
N
D f

M.D. = Mean Deviation
D = Deviations of Items from
Mean or Median
ignoring signs
N = No. of Observations
where, D f =Product of Deviations
and respective frequency
N = No. of Total Frequencies


(iii) For Continuous Series (i.e.,
when both classes and
frequencies are given)
M.D. =
N
D f

Where M.D. = Mean Deviation
D = Deviation of Mid-Points of
Classes from Mean or
Median
D f = Product of Deviations and
respective frequency
N = No. of Total Frequencies
2. Relative Measure of Mean
Deviation
(i) Coefficient of M.D. about Mean
(ii) Coefficient of M.D. about
Median
(iii) Coefficient of M.D. about Mode
=
Mean
Mean about M.D.

=
Median
Median about M.D.

=
Mode
Mode about M.D.

Interpretation of mean Deviation

Nature of Distribution Range of Mean Mean Deviation
1. Normal Distribution

2. Moderately Skewed Distribution
Approximately 57.7% of the items expected
to fall in this range
Approximately 57.5% of the items expected
to fall in this range
Amount of mean Deviation Interpretation
I. Small Mean Deviation

II. High Mean Deviation
Distribution is highly uniform since more
than 50% of the items fall within small
range around the mean
Distribution is not uniform since more than
50% of the items do not fall within small
range around the mean

Merits of Mean deviation:
1. It is simple to understand.
2. It is easy to calculate as compared to standard deviation.
3. It is based on all items of the series and gives weight according to their size.
4. It is less affected by extreme values than the standard deviation.
5. It is rigidly defined.
6. It is flexible, because it can be calculated from any measurer of central tendency.
7. It is useful for small samples when no detailed analysis is required.

Demerits of mean Deviation:
1. It lacks algebraic properties such as (+) and (-) signs which are not taken into
consideration. All the deviations are treated as positive.
2. Algebraic positive and negative signs are completely ignored. In mean deviation
measure +5 and 5 have the same meaning. It is mathematically unsound and illogical.
3. It is not a very accurate measure of dispersion.
4. It is not suitable for further mathematical calculation.


5. It is rarely used it is not as popular as standard deviation.
6. It is much affected by sampling fluctuations.
7. It is not capable of further algebraic treatment.
8. It may not give accurate result when the degree of variability in a series is very high.

Uses of mean deviation:
It will help to understand the standard deviation. It is useful in marketing problems. It is
useful while using small samples. It is used in statistical analysis of economic business and
social phenomena. It is useful in calculating the distribution of wealth in a community or a
nation. It is useful in forecasting business cycles.

Properties of mean deviation
1. If all the observations assumed by a variable are constant, say k, then the mean deviation
is zero.
2. Mean Deviation about median is the least. In other words, the sum of the deviations
taken from median is the minimum.
3. Mean Deviation remains unaffected due to a change of origin but is affected in the same
ratio due to a change in scale, if for any two constants a and b, the two variables x and y
are related by Y= a+bx, then the Mean Deviation of y is given by M.D. of y=|b|x M.D of x.

Standard deviation
Meaning of standard deviation or root mean square deviation
Standard Deviation is the positive square root of the arithmetic mean of the squares of
deviations of all items of the distribution from arithmetic mean. The standard deviation is
denoted by . The square of the standard deviation is called variance.

Measures of standard deviation
Measures of Standard Deviation may be absolute or relative.

Individual series
A. When the deviations are taken from the actual mean.
Steps involved.
1. Calculate the Actual Mean (X) of the series.
2. Take deviations from the actual mean by taking out the difference (x-x).
3. Square these deviations and obtain the total. (x-x).
4. Calculate Standard Devotion () by applying the formula given below.
5. Calculate Coefficient of Variation (C.V) by dividing the standard deviation by actual
mean.

B. When actual values are taken:
Steps involved.
2. Square the values and find summation of x and x
2
.
4. Calculate Coefficient of Variation (C.V) by dividing Standard Deviation by Actual
Mean.

C. When deviations are taken from the assumed mean.
Steps involved.


2. Take any value of the variable as Assumed Mean i.e. A.
3. Take deviations from the Assumed Mean by taking out the difference (X-A) between the value
of the variable (X) and the assumed mean (A) and denote the deviations byd and obtain the
total of these deviations i.e. d.
4. Square these deviations and obtain the total. d.
Mean.

Discrete series
Steps involved.
1. Calculate the Actual Mean (x) of the series.
2. Calculate Deviations from the actual mean by taking out the difference (x-x) between the
value of item (x) and the actual mean (x).
3. Square these deviations (x-x).
4. Multiply the squared deviation of each row with the respective frequency and obtain
the total of these products i.e. f(x-x).
5. Calculate the Standard Deviation () by applying the formula given below.
6. Calculate Coefficient of Variation (C.V.) by dividing standard deviation by actual mean.

Steps involved.
2. Square the values of x.
3. Multiply each value of x with the respective frequency and each value of x
2
with
respective frequency.
4. Find the summation of fx and fx
2
.
Mean.

Steps involved.
3. Take deviations from the Assumed Mean by taking out the difference (x-A) between the value
of the variable (x) and the assumed mean (A) and denote the deviations byd and obtain the
4. Square these deviations.
5. Multiply the deviation (d) of each row by the respective frequency and obtain the total
of these products i.e. fd.
6. Multiply the squared deviation (d) of each row the respective frequency and obtain the
total of these products i.e. fd2.
Mean.



Continuous series
Steps involved.
2. Take the mid-value of each of the class group and denote it by x.
3. Calculate the Actual Mean (x) of the series.
4. Calculate Deviations from the actual mean by taking out the difference (x-x) between the
value of item (x) and the actual mean (x).
7. Square these deviations (x-x).
8. Multiply the squared deviation of each row with the respective frequency and obtain
the total of these products i.e. f(x-x).
9. Calculate the Standard Deviation () by applying the formula given below.
10. Calculate Coefficient of Variation (C.V.) by dividing standard deviation by actual mean.

Steps involved.
3. Square the values of x.
4. Multiply each value of x with the respective frequency and each value of x
2
with
respective frequency.
5. Find the summation of fx and fx
2
.
7. Calculate Coefficient of Variation (C.V) by dividing Standard Deviation by Actual Mean.

Steps involved.
5. Take deviations from the Assumed Mean by taking out the difference (x-A) between the value
of the variable (x) and the assumed mean (A) and denote the deviations byd and obtain the
6. Square these deviations.
7. Multiply the deviation (d) of each row by the respective frequency and obtain the total
of these products i.e. fd.
8. Multiply the squared deviation (d) of each row the respective frequency and obtain the
total of these products i.e. fd2.
Mean.


Steps involved in the calculation of combined standard deviation.
1. Calculate mean and standard deviation of each group.
2. Calculate combined mean of given groups as follows.
3. Calculate deviations of each group from combined mean and ignore signs.
4. Calculate combined standard deviation by applying formula given below.

Measure of Standard Deviation Formula
1. Absolute Measure of Mean Deviation
(i) For Individual Observations
(a) Actual Mean Method

N
x
2
=
Where, = standard Deviation
x = (X - X ) i.e., deviations
taken from Actual Mean
x
2
= Squares of Deviations
N = Total No. of observations
(b) Assumed Mean Method

2
2
|
\
|
=
N
d
N
d

Where, = Standard Deviations,
d = (X-A) i.e., deviations taken
from Assumed Mean
d2 = Squares of Deviations
N = Total No. of observations
(iii) For Discrete Series

N
fx
2
=
Where, = standard Deviation
x = (X - X ) i.e., Deviations
taken from Actual Mean
x
2
fx2 = Product of square of
deviation and respective
frequency
N = Total No. of frequencies
(b) Assumed Mean Method

2
2
|
\
|
=
N
fd
N
fd

Where, = Standard Deviation
d = (X A) i.e., deviations taken
from
Assumed Mean
d
2
fd
2
= Product of square of
frequency

(c) Step Deviation Method
(When a common factor is taken from
the given data)
C
N
fd
N
fd
|
\
|
=
2
2

d =
C
A X
i.e., deviations taken from
Assumed Mean and divided by
Common factor (c)
d
2
fd
2
= Product of square of
frequency
N = total No. of frequencies
(iii) Continuous Series (i.e., when both the
class-intervals and frequencies are given)

N
fx
2
=
x = (m - X ) i.e., deviations taken
from Actual Mean
x
2
fx
2
= Product of square of deviation
and
respective frequency

III S.D. of any two values = (Largest Value Smallest value)/2
or = Range/2

Similarity between Mean deviation and standard deviation
Both the Mean Deviation and Standard Deviation measures of dispersion are based on each
and every item of the distribution.

Properties of Standard Deviation:
1. Independent of change of origin:
Standard Deviation is independent of change of origin. In other words, the value of
standard deviation remains the same if each of the observations in a series is increased or
decreased by a constant value. Thus, if Y = X + K where K is a constant quantity, then
standard deviation of Y is equal to standard deviation of X.
2. Not Independent of change of scale:
Standard Deviation is not independent of change of scale. In other words, the value of
standard deviation is also affected if each of the observations in a series is multiplied or
divided by a constant value. Thus, if Y = Y x K or Y = Y/K where K is a constant quantity,
then standard deviation of Y is not equal to standard deviation of X.
3. If all the observations assumed by a variable are constant, say k, then the standard
deviation is zero.


4. If for any two constants a and b, the two variables x and y are related by Y= a+bx, then
the Standard Deviation of y is given by S.D. of y=|b|x S.D of x.
5. Fixed Relationship among Measures of Dispersion:
In a normal distribution there is fixed relationship between Quartile Deviation, Mean
Deviation and Standard Deviation as follows;
Quartile Deviation (Q.D) = 2/3 , Mean Deviation (M.D.) = 4/5
Thus, standard deviation is never less than Quartile Deviation and Mean Deviation.
6. Fixed Area Relationship for a symmetrical distribution:
In a symmetrical distribution there is fixed area relationship as follows:
Mean 1 covers 68.27% of the items,
7. Minimum sum of squares:
The sum of squares of deviations of items in the series from their arithmetic mean is
minimum. In other words, the sum of squares of the deviations of items of any series from a
value other than the arithmetic mean will always be greater than standard deviation.
8. Standard Deviation of n natural numbers:
The standard deviation of n natural numbers can be computed by using the following
formula:
Standard Deviation of n natural numbers = ( ) 1
12
1
2
N
9. Combined Standard Deviation ( )
12
- Combined Standard Deviation ( )
12
of two
groups can be computed by using the following formula:
2 1
2
2 2
2
1 1
2
2 2
2
1 1
12
N N
d N d N N N
+
+ + +
=

Where,
12
= Combined Standard deviation of two groups (1, 2)

1
= Standard Deviation of First group (1)

2
= Standard Deviation of Second group (2)
1
N = No. of Items in First Group
2
N = No. of Items in Second Group
1
d = 12 1 X X
12 2
2
X X d =
= 1 X Actual Mean of First Group
= 2 X Actual Mean of Second Group
= 12 X Actual Mean of Two Groups

Distinction between mean deviation and standard Deviation
Mean Deviation differs from Standard Deviation in the following respects:
Basis of Distinction Mean Deviation Standard deviation
1. Algebraic Signs Actual Signs are ignored
and all deviations are taken
as positive
Actual signs are not
ignored
2. Use of Measure of Mean Deviations can be Standard Deviation is



Central Tendency computed from arithmetic
mean, median or mode
computed from arithmetic
mean since the sum of
squares of the deviation of
items from arithmetic mean
is minimum
3. Formula
n
d f
D M
) (
. .

=
n
fx
D S
2
) .( .

=

Merits of standard deviation:
1. It is rigidly defined and its value is always definite and based on all the observations
and the actual signs of deviations are used.
2. As it is based on arithmetic mean, it has all the merits of arithmetic mean.
3. It is the most important and widely used measures of dispersion.
4. It is possible for further algebraic treatment.
5. It is less affected by the fluctuations of sampling, and hence stable.
6. Squaring the deviations make all of them positive; as such there is no need to ignore the
signs (as in mean deviation)
7. It is the basis for measuring the coefficient of correlation sampling and statistical
inferences.
8. The standard deviation provides the unit of measurement for the normal distribution.
9. It can be used to calculate the combined standard deviation of two or more groups.
10. The coefficient of variation is considered to be the most appropriate method for the
purpose of comparing the variability of two or more distributions, and this is based on men
and standard deviation.

Limitations of Standard Deviation
1. It cannot be used for comparing the variability of two or more series of observations
given in different units. A Coefficient of standard deviation is to be calculated for this
purpose.
2. It is difficult to compute as compared to other measures.
3. It is very much affected by the extreme values. The process of squaring deviations gives
undue importance to large deviations from arithmetic mean which is obtained only
from extreme items and it gives less importance to items which are nearer to mean.
4. The standard deviation cannot be computed for a distribution with open-end classes.
5. As it is an absolute measure of variability, it cannot be used for the purpose of
comparison.
6. It has not found favour with the economists and businessmen.

Interpretation of coefficient of variation
% of Coefficient of Variation Interpretation
I. Lower Group is more
consistent/uniform/stable/homogeneous
II. Higher Group is less
consistent/uniform/stable/homogeneous



Variance
Meaning of Variance
Variance is the arithmetic mean of the squares of deviations of all items of the distributions
form arithmetic mean. In other words, variance is the square of the standard deviation or
standard deviation is the square root of the variance.
Thus, Variance =
2

Or, = Variance

Interpretation of Variance
Value of Variance ( )
2

Interpretation
Smaller the value of
2

Lesser the variability or greater the
uniformity in the population
Larger the value of
2
Greater the variability or lesser the
uniformity in the population

Lorenz Curve
Lorenz curve is a graphic method of studying dispersion. Basically, Lorenz curve is a
cumulative percentage curve in which the percentage of items is combined with the
percentage of other things as wealth, income, sales, profits etc.

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Spellbound Centre for Professional Studies, Hyderabad

Quantitative Aptitude 2.1 Measures of Central Tendency

Spellbound Centre for Professional Studies, Hyderabad

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