What is Variance? | Definition, Examples & Formulas
The variance is a measure of variability. It is calculated by taking the average of squared deviations from the mean.
Variance tells you the degree of spread in your data set. The more spread the data, the larger the variance is in relation to the mean.
Variance vs standard deviation
The standard deviation is derived from variance and tells you, on average, how far each value lies from the mean. It’s the square root of variance.
Both measures reflect variability in a distribution, but their units differ:
- Standard deviation is expressed in the same units as the original values (e.g., meters).
- Variance is expressed in much larger units (e.g., meters squared)
Since the units of variance are much larger than those of a typical value of a data set, it’s harder to interpret the variance number intuitively. That’s why standard deviation is often preferred as a main measure of variability.
However, the variance is more informative about variability than the standard deviation, and it’s used in making statistical inferences.
Population vs sample variance
Different formulas are used for calculating variance depending on whether you have data from a whole population or a sample.
When you have collected data from every member of the population that you’re interested in, you can get an exact value for population variance.
The population variance formula looks like this:
When you collect data from a sample, the sample variance is used to make estimates or inferences about the population variance.
The sample variance formula looks like this:
With samples, we use n – 1 in the formula because using n would give us a biased estimate that consistently underestimates variability. The sample variance would tend to be lower than the real variance of the population.
Reducing the sample n to n – 1 makes the variance artificially large, giving you an unbiased estimate of variability: it is better to overestimate rather than underestimate variability in samples.
It’s important to note that doing the same thing with the standard deviation formulas doesn’t lead to completely unbiased estimates. Since a square root isn’t a linear operation, like addition or subtraction, the unbiasedness of the sample variance formula doesn’t carry over the sample standard deviation formula.
Steps for calculating the variance
The variance is usually calculated automatically by whichever software you use for your statistical analysis. But you can also calculate it by hand to better understand how the formula works.
There are five main steps for finding the variance by hand. We’ll use a small data set of 6 scores to walk through the steps.
Step 1: Find the mean
To find the mean, add up all the scores, then divide them by the number of scores.
|x̅ = (46 + 69 + 32 + 60 + 52 + 41) ÷ 6 = 50|
Step 2: Find each score’s deviation from the mean
Subtract the mean from each score to get the deviations from the mean.
Since x̅ = 50, take away 50 from each score.
|Score||Deviation from the mean|
|46||46 – 50 = -4|
|69||69 – 50 = 19|
|32||32 – 50 = -18|
|60||60 – 50 = 10|
|52||52 – 50 = 2|
|41||41 – 50 = -9|
Step 3: Square each deviation from the mean
Multiply each deviation from the mean by itself. This will result in positive numbers.
|Squared deviations from the mean|
|(-4)2 = 4 × 4 = 16|
|192 = 19 × 19 = 361|
|(-18)2 = -18 × -18 = 324|
|102 = 10 × 10 = 100|
|22 = 2 × 2 = 4|
|(-9)2 = -9 × -9 = 81|
Step 4: Find the sum of squares
Add up all of the squared deviations. This is called the sum of squares.
|Sum of squares|
|16 + 361 + 324 + 100 + 4 + 81 = 886|
Step 5: Divide the sum of squares by n – 1 or N
Divide the sum of the squares by n – 1 (for a sample) or N (for a population).
Since we’re working with a sample, we’ll use n – 1, where n = 6.
|886 ÷ (6 – 1) = 886 ÷ 5 = 177.2|
Why does variance matter?
Variance matters for two main reasons:
- Parametric statistical tests are sensitive to variance.
- Comparing the variance of samples helps you assess group differences.
Homogeneity of variance in statistical tests
Variance is important to consider before performing parametric tests. These tests require equal or similar variances, also called homogeneity of variance or homoscedasticity, when comparing different samples.
Uneven variances between samples result in biased and skewed test results. If you have uneven variances across samples, non-parametric tests are more appropriate.
Using variance to assess group differences
Statistical tests like variance tests or the analysis of variance (ANOVA) use sample variance to assess group differences. They use the variances of the samples to assess whether the populations they come from differ from each other.
The main idea behind an ANOVA is to compare the variances between groups and variances within groups to see whether the results are best explained by the group differences or by individual differences.
If there’s higher between-group variance relative to within-group variance, then the groups are likely to be different as a result of your treatment. If not, then the results may come from individual differences of sample members instead.
Frequently asked questions about variance
- What are the 4 main measures of variability?
- What’s the difference between standard deviation and variance?
- Standard deviation is expressed in the same units as the original values (e.g., minutes or meters).
- Variance is expressed in much larger units (e.g., meters squared).
Although the units of variance are harder to intuitively understand, variance is important in statistical tests.
- What is variance used for in statistics?
- What is homoscedasticity?
Homoscedasticity, or homogeneity of variances, is an assumption of equal or similar variances in different groups being compared.
This is an important assumption of parametric statistical tests because they are sensitive to any dissimilarities. Uneven variances in samples result in biased and skewed test results.