One disadvantage of the standard deviation as a measure of dispersion is that it is a measure of absolute variability and not of relative variability. Sometimes we may need to compare the variability of two different data sets that have different units of measurement. The coefficient of variation is one such measure. The coefficient of variation, denoted by CV, expresses standard deviation as a percentage of the mean and is computed as follows:

The yearly salaries of all employees who work for a company have a mean of $62,350 and a standard deviation of $6820. The years of experience for the same employees have a mean of 15 years and a standard deviation of 2 years. Is the relative variation in the salaries larger or smaller than that in years of experience for these employees?

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For population data CV ×100% - For sample data: CV= × 100% 5