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Measures of Dispersion — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMeasures of Dispersion6 Marks
Question
What are the objectives of measuring dispersion?
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Answer

Some of the major objectives of dispersion are discussed below:
  1. Control of Variability: One of the important objective of measures of dispersion is to control the variability existing in the data. With control in variability, the quality of the data is enhanced. For example, in order to study the distribution of income and wealth, the measures of dispersion are used by the government of the country.
  2. Comparison of two or more Series: With the help of measures of dispersion, it becomes easier to compare the variability existing between two or more series. This facilitates the information regarding the consistency present in the two or more sets of data. The higher the degree of variability the lesser is the consistency or uniformity in the values of the variable. Conversely, the lower the degree of variability the higher is the degree of consistency or uniformity in the series. Comparative studies of variability are very useful in many fields like profit of companies, share values, performance of individuals and studies relating to demand, supply and prices, etc.
  3. Reliability of Measure of Central Tendency: Measures of dispersion helps in deciding the extent to which the measures of average are reliable in describing the nature of the data. If the dispersion is large in the data, then the average is a good representative of the data and vice-versa.
  4. Helpful in the Use of Further Statistical Analysis: Another important use of measures of dispersion is that it facilitates the use of other statistical measures such as regression, correlation etc. All these statistical measures are based on the measures of variation.
  5. To judge the reliability of measures of central tendency: Measures of Dispersion enable us to know whether an average is really representative of the series. If the dispersion or variability in the values of various items in a series is large, the average may be unrepresentative of the series. If on the other the variability is small, the average would be a representative value.
  6. To identify the causes of variability with a view to control it: A study of dispersion helps in identifying the causes of variability and in taking remedial measures. Spurr and Biminis have very rightly observed that, "In matters of health, variations in body temperature, pulse beats and blood pressure arc basic guides to diagnosis. Prescribed treatment is designed to control their variation. In industrial production, efficient operation requires control of quality variation, the causes of which are sought through inspection and quality control programmers". In Social Sciences where we have to study problems relating to inequality in income and wealth, measures of dispersion are of immense help.

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