What is the formula for calculating the Coefficient of Dispersion?

The Coefficient of Dispersion (COD) is a measure used in appraisal and mass appraisal to assess how uniform the assessments are compared to market values. The correct formula for calculating the Coefficient of Dispersion is the average deviation of the assessed values from the median ratio, divided by the median ratio itself.

Using the average deviation provides insight into the distribution of assessment ratios around the median, which is crucial because the median is less affected by outliers. Thus, option A correctly represents the relationship between average deviation and median ratio, which effectively captures the level of dispersion in property assessments.

In contrast, the other options do not accurately describe how the Coefficient of Dispersion is defined:

• The second option incorrectly suggests a division between median ratio and average assessment, which does not relate to the fundamental calculation of COD.

• The third option refers to total property values divided by the total number of properties, which would yield an average value rather than a measure of statistical dispersion.

• The fourth option suggests dividing total deviations by assessed values, which does not align with the standard methodology for calculating the Coefficient of Dispersion either.

Thus, the first choice's formula aligns with the established definition and usage of the Coefficient of Dispersion in appraisal practices.