# Variance

A measure of central tendency like mean, median or mode give a single value as the representative of the whole data set. A single central value is not sufficient to describe the data set clearly. Suppose we find the average annual income of two localities to be equal. From this, we cannot conclude that the individual incomes in the two localities are distributed in a similar manner around the mean. In one locality the disparities between the incomes of the families may be large and in another all the families may earn more or less the same amount. Hence to understand how the data values are spread around the central value we need a measure of dispersion or variation. Variance is one such measure which convey the spread of data set. Variance is calculated using all the observations in the data set and indeed the most meaningful measure of dispersion used both in descriptive and inferential statistics.