How is the Coefficient of Dispersion calculated?

The Coefficient of Dispersion (COD) is a statistical measure that assesses the accuracy and uniformity of assessed property values compared to actual sales prices. It is particularly useful in the field of property assessment to evaluate how clustered the assessment values are around the median.

The correct method for calculating the COD involves determining how much the assessed values deviate from their median value. By dividing the average deviation from the assessed values by the median rather than the mean, the calculation takes into account the central tendency of the assessed values in a way that is less affected by extreme values. This is especially important in property assessments, where the data can sometimes include outlier properties that could skew the mean significantly.

The median is chosen as it is more representative of the data's central tendency in a skewed distribution, which is often the case with real estate values. Therefore, using the median in this calculation provides a more reliable assessment of overall assessment uniformity across a given area.

In summary, the COD is calculated by dividing the average deviation by the median, making it a crucial tool for understanding and ensuring equitable assessment practices within the property assessment field.