American Institute of Certified Planners (AICP) Practice Exam

Which statistical measure is best for understanding the variability of a dataset?

1. Mean

2. Median

3. Variance

4. Mode

The correct answer is: Variance

The variance is the statistical measure that best captures the variability of a dataset. It quantifies how much the values in a dataset differ from the mean, providing a detailed understanding of the data's spread. Variance is calculated by taking the differences between each data point and the mean, squaring those differences, and then averaging them. This method ensures that all deviations from the mean are accounted for, highlighting the degree of variability present. In contrast, the mean provides an average value but does not indicate how spread out the data points are around that average. The median is the middle value of a dataset when it's ordered, and while it is useful for understanding the central tendency, it does not reflect variability. The mode, which identifies the most frequently occurring value in the dataset, also does not provide information on variability, as it only highlights the most common observation without taking into account how spread out the other values may be. Therefore, variance stands out as the most effective measure for assessing how much variability exists within a dataset.