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LAGUNA UNIVERSITY
College of Entrepreneurship, Management and Accountancy
Bachelor of Science in Accountancy

Module 5

Lesson 1
Measures of Variability

I. Learning Outcomes

At the end of this chapter, the students should be able to

1. Solve for range, quartile deviation, mean absolute deviation, and standard deviation for
grouped and ungrouped data.
2. Solve for quartile, decile and percentile for grouped and ungrouped data.
3. Use calculator and MS Excel to facilitate faster and easier computation.

II. Introduction

Descriptive measures that are used to indicate the amount of variation in a data set
are called measures of variability, dispersion, or spread. When descriptive statistics are
presented, there is usually at least one measure of central tendency and at least one
measure of variability reported. The measures of dispersion to be discussed are the range,
mean absolute deviation, quartile deviation, interquartile range, variance, and standard
deviation.

III. Content and Discussion

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Definition of Variability

A measure of variability is a summary statistic that represents the amount of dispersion in a

dataset. How spread out are the values? While a measure of central tendency describes the
typical value, measures of variability define how far away the data points tend to fall from the
center. We talk about variability in the context of a distribution of values. A low dispersion
indicates that the data points tend to be clustered tightly around the center. High dispersion
signifies that they tend to fall further away.

- Variability refers to how "spread out" a group of scores is.

- It is described as the extent of “scattering” of individual items about the average on
point of central location i.e. range, quartile deviation, mean absolute deviation and
standard deviation.

The Most Common Measures of Dispersion or Variability of scores are the following:

1. The Range
- The range is the simplest and the easiest of the measures of dispersion.
- It simply measures the distance given by the highest score and the lowest score.
- It is considered as the least satisfactory measure of dispersion because it does not
tell anything about the scores between these two extremes.

2. The Quartile Deviation/Semi-Interquartile Range

- It is half the difference between P75 and P25 in the distribution.

3. The Mean Absolute Deviation

- This is referred to as the Average Deviation. This measures the absolute dispersion
that is affected by every individual score. It is the mean of the absolute deviation of
the individual scores from the mean of all the scores. It gives equal weight to the
deviation of every observation.

4. The Standard Deviation

- It is considered a special form of measure of dispersion that involves all the
individual values of the items in the distribution rather than through extreme
scores.
- It is important as a measure of heterogeneity or unevenness within a set of
observations. Increasing in value as the distribution of scores becomes more
heterogehoues.

5. The Variance-
- It is the square of the deviation from the mean.

Guiding Principle for Measures of Variability in the Interpretation of Data

- The lesser the value of the measure, the more consistent, the more homogeneous
and the less scattered are the observations in the set of data.

- If there is a large amount of variation, then on average, the data values will be far
from the mean. Hence, the SD will be large.

- If there is only a small amount of variation, then on average, the data values will be
close to the mean. Hence, the SD will be small.
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Computation of Range, Quartile Deviation, Mean Absolute Deviation, And Standard Deviation
from Ungrouped Data

Range (Ungrouped Data)

Steps in determining the range from raw scores:

1. Look for the highest score and the lowest score.
2. Subtract the lowest score from the highest score. The difference in the range.

The range of a dataset is the difference between the largest and smallest values in that
dataset. For example, in the two datasets below, dataset 1 has a range of 20 – 38 = 18 while
dataset 2 has a range of 11 – 52 = 41. Dataset 2 has a broader range and, hence, more
variability than dataset 1.
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The Quartile Deviation/Semi-Interquartile Range

(Ungrouped Data)

Interquartile range is defined as the difference between the upper and lower
quartile values in a set of data. It is commonly referred to as IQR and is used as a measure of
spread and variability in a data set.

The interquartile range is a measure of where the “middle fifty” is in a data set.

Where a range is a measure of where the beginning and end are in a set, an
interquartile range is a measure of where the bulk of the values lie. That’s why it’s
preferred over many other measures of spread when reporting things like school
performance or SAT score.

The interquartile range formula is the first quartile subtracted from the third quartile:

IQR = Q3 – Q1.

(Q1 = N/4)
(Q3 = 3N/4)

Steps in determining the interquartile range from raw scores:

1. Determine Q1 and Q3 from raw scores.

2. Subtract the Q1 from Q3. The difference is the interquartile range.

Youtube tutorial https://www.youtube.com/watch?v=dNHGVLXBTgI

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Mean Absolute Deviation (MAD)

(Ungrouped Data)

Steps in determining the mean absolute deviation from raw scores:

1.Compute the mean.
2.Subtract the mean from the individual scores to get the deviation.
3.Get the summation of the absolute value of data obtained in #2.
4.The data obtained in #3 is divided by the n. the result is the MAD.
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Youtube tutorial https://www.youtube.com/watch?v=PwsXncM2pas

The Standard Deviation (Ungrouped Data)

The standard deviation is a statistic that measures the dispersion of a

dataset relative to its mean and is calculated as the square root of
the variance. It is calculated as the square root of variance by determining
the variation between each data point relative to the mean. If the data points
are further from the mean, there is a higher deviation within the data set;
thus, the more spread out the data, the higher the standard deviation.
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Steps in determining the standard deviation from ungrouped data:

1. Compute the mean.
2. Get the deviation from the mean.
3. Square the deviations from the mean.
4. Get the sum of the squared deviations.
5. Divide the sum by the total frequency minus 1.
6. Extract the square root of the quotient obtained in #5. The result is the
standard deviation.

Example Problem

You grow 20 crystals from a solution and measure the length of each crystal in millimeters.
Here is your data:

9, 2, 5, 4, 12, 7, 8, 11, 9, 3, 7, 4, 12, 5, 4, 10, 9, 6, 9, 4

Calculate the sample standard deviation of the length of the crystals.

1. Calculate the mean of the data. Add up all the numbers and divide by the total number
of data points.(9+2+5+4+12+7+8+11+9+3+7+4+12+5+4+10+9+6+9+4) / 20 = 140/20 = 7
2. Subtract the mean from each data point (or the other way around, if you prefer... you
will be squaring this number, so it does not matter if it is positive or negative).(9 - 7) 2 =
(2)2 = 4
(2 - 7)2 = (-5)2 = 25
(5 - 7)2 = (-2)2 = 4
(4 - 7)2 = (-3)2 = 9
(12 - 7)2 = (5)2 = 25
(7 - 7)2 = (0)2 = 0
(8 - 7)2 = (1)2 = 1
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(11 - 7)2 = (4)22 = 16

(9 - 7)2 = (2)2 = 4
(3 - 7)2 = (-4)22 = 16
(7 - 7)2 = (0)2 = 0
(4 - 7)2 = (-3)2 = 9
(12 - 7)2 = (5)2 = 25
(5 - 7)2 = (-2)2 = 4
(4 - 7)2 = (-3)2 = 9
(10 - 7)2 = (3)2 = 9
(9 - 7)2 = (2)2 = 4
(6 - 7)2 = (-1)2 = 1
(9 - 7)2 = (2)2 = 4
(4 - 7)2 = (-3)22 = 9
3. Calculate the mean of the squared differences.
(4+25+4+9+25+0+1+16+4+16+0+9+25+4+9+9+4+1+4+9) / 19 = 178/19 = 9.368
This value is the sample variance. The sample variance is 9.368
4. The population standard deviation is the square root of the variance. Use a calculator to
obtain this number.(9.368)1/2 = 3.061The population standard deviation is 3.061

Youtube tutorial https://www.youtube.com/watch?v=tXv1KVoQrWA

The Variance (Ungrouped Data)

Youtube tutorials https://www.youtube.com/watch?v=sOb9b_AtwDg

COMPUTATION OF RANGE, SEMI-INTERQUARTILE RANGE, MEAN ABSOLUTE DEVIATION AND

STANDARD DEVIATION FROM GROUPED DATA

RANGE (Grouped Data)

In a frequency distribution table, the range is the difference between the upper limit of
the highest class interval and the lower limit of the lowest class interval.
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The Quartile Deviation/Semi-Interquartile Range

(Grouped Data)
The interquartile range formula for grouped data is the same as with non-grouped
data, with IQR being equal to the value of the first quartile subtracted from the value of the
third quartile.
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The quartiles may be determined from grouped data in the same way as the median except
that in place of n/2 we will use n/4. For calculating quartiles from grouped data we will form
cumulative frequency column. Quartiles for grouped data will be calculated from the following
formulae;

 = Median.

Where,
l = lower class boundary of the class containing the  , i.e. the class corresponding to the
cumulative frequency in which n/4 or 3n/4 lies
h = class interval size of the class containing .
f = frequency of the class containing  .
n = number of values, or the total frequency.
C.F = cumulative frequency of the class preceding the class containing  .
For Example:
We will calculate the quartiles from the frequency distribution for the weight of 120 students as
given in the following Table 18;
Table 18

Weight (lb) Frequency (f) Class Boundaries Cumulative Frequency

110 – 119 1 109.5 – 119.5 0

120 – 129 4 119.5 – 129.5 5

130 – 139 17 129.5 – 139.5 22

140 – 149 28 139.5 – 149.5 50

150 – 159 25 149.5 – 159.5 75

160 – 169 18 159.5 – 169.5 93

170 – 179 13 169.5 – 179.5 106

180 – 189 6 179.5 – 189.5 112

190 – 199 5 189.5 – 199.5 117

200 – 209 2 195.5 – 209.5 119

210 – 219 1 209.5 – 219.5 120

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∑f = n = 120

i. The first quartile  is the value of  or the 30th item from the lower end. From
Table 18 we see that cumulative frequency of the third class is 22 and that of the fourth class is
50. Thus  lies in the fourth class i.e. 140 – 149.

ii. The thirds quartile   is the value of   or 90th item from the lower end. The
cumulative frequency of the fifth class is 75 and that of the sixth class is 93. Thus,   lies in the
sixth class i.e. 160 – 169.

Conclusion
From   we conclude that 25% of the students weigh 142.36 pounds or less and 75% of
the students weigh 167.83 pounds or less.

Mean Absolute Deviation (Grouped Data)

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Steps in determining the mean absolute deviation from grouped data.

1. Compute the mean.

2. Get the absolute deviation from the mean of each of the class marks.
3. Multiply these absolute deviations by each of the corresponding class
frequencies.
4. Get the sum of results in #3.
5. Divide the sum by the total frequency. The quotient is the mean
absolute deviation.

Standard Deviation (Grouped Data)

When working with data that are grouped into categories or intervals, the variance and
standard deviation are again obtained using the deviations about the mean and the squared
value of these. But in this case, the sum of squares of differences1 about the mean are weighted
by the number of times each occurs.
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The computation is essentially the same as that for ungrouped data, except that the X is
not the value of the item, but rather, the class marks for each of the class intervals.

The sample standard deviation formula is:

where,
s = sample standard deviation
 = sum of...
 = sample mean
f = frequency
n = number of scores in sample.

The population standard deviation formula is:

where,
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= population standard deviation

 = sum of...
 = population mean
n = number of scores in sample.

f = frequency

When to use the sample or population standard deviation

Use the population standard deviation if:

(1) you have the entire population or
(2) you have a sample of a larger population, but you are only interested in this sample
and do not wish to generalize your findings to the population.

However, in statistics, we are usually presented with a sample from which we wish to
estimate (generalize to) a population, and the standard deviation is no exception to this.
Therefore, if all you have is a sample, but you wish to make a statement about the population
standard deviation from which the sample is drawn, you need to use the sample standard
deviation.

Examples of when to use the sample or population standard deviation

Q. A teacher sets an exam for their pupils. The teacher wants to summarize the results
the pupils attained as a mean and standard deviation. Which standard deviation should
be used?

A. Population standard deviation. Why? Because the teacher is only interested in this
class of pupils' scores and nobody else.

Q. A researcher has recruited males aged 45 to 65 years old for an exercise training
study to investigate risk markers for heart disease (e.g., cholesterol). Which standard
deviation would most likely be used?

A. Sample standard deviation. Although not explicitly stated, a researcher investigating

health related issues will not simply be concerned with just the participants of their
study; they will want to show how their sample results can be generalised to the whole
population (in this case, males aged 45 to 65 years old). Hence, the use of the sample
standard deviation.
Q. One of the questions on a national consensus survey asks for respondents' age. Which
standard deviation would be used to describe the variation in all ages received from the
consensus?

A. Population standard deviation. A national consensus is used to find out information

about the nation's citizens. By definition, it includes the whole population. Therefore, a
population standard deviation would be used.

Steps in determining the standard deviation from grouped data:

1. Compute the mean.

2. Get the deviations from the mean of the class marks.
3. Square the deviation from the mean.
4. Multiply the squared deviations by their corresponding class frequencies.
5. Get the sum of the squared deviations.
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6. Divide the sum of the squared deviations by n-1.

7. Extract the square root of the quotient of step #6.

(Note: Mean ˉx=∑fxn)

Variance for Ungrouped and Grouped Data

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https://statistics.laerd.com/statistical-guides/measures-of-spread-standard-deviation.php
Youtube tutorial https://www.youtube.com/watch?v=9i2gNbvA0dQ

COEFFICIENT OF VARIATION (GROUPED DATA)

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For comparison on the variability between different sets of scores or data,

coefficient of variation would be very useful measure for interval scale of data. This is
used to express the standard deviation as a percentage of the mean.

- Measure of relative variation

- Always in %
- Shows variation relative to the Mean
- Used to compare two or more groups

Sample problem: