Mean deviation is a measure that removes several shortcomings of other measures i.e. it does not ignore extreme terms or values which play a significant role in average or Mean. according to some Economists, mean Deviation is very useful for the forecasting of Business Cycles. Its merits and demerits can be discussed as below.
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Merits or Uses
- As in case of X, every term is taken in account hence, it is certainly a better measure than other measures of dispersion i.e. Range, Percentile Range or Quartile Range.
- Mean deviation is extensively used in other fields such as Economics, Business, Commerce or any other field of such type.
- It has least sampling fluctuations as compared to Range, Percentile Range and Quartile Deviation.
- When comparison is needed this is perhaps the best measure between two or more series.
- This calculation has its base upon measurement than an estimate.
- Mean Deviation is rigidly defined; one of the main focus point of any measure used for statistical Analysis.
- It we calculate it from median it is less affected by extreme terms.
- As it is based on the deviations about an average, it gives us better measure for comparison.
Demerits or Limitations or Drawbacks
- If average is in fractions, it is difficult to compile M.D.
- Main property is absent, It is not capable of further Algebraic Treatment.
- Not so easy to calculate to calculate X, M or Z first and then to go for other measures.
- If it is calculated from Z it is not much reliable as Mode (Z) is not the true representative of the series.
- M.D. and its co-efficient taken from X, M and Z often differ.
- As +- signs are ignored which is not possible mathematically. Algebraically we have to proceed for Standard Deviation; or another measure of dispersion.
- As for mean, open and series cannot be taken for the true result.
- If Range increases in case the sample increases, Average deviation also increases but not in the same ratio.
- For Sociological studies, it is almost not used.