The standard deviation measures how concentrated the data are around the mean; the more concentrated, the smaller the standard deviation.
A small standard deviation can be a goal in certain situations where the results are restricted, for example, in product manufacturing and quality control. A particular type of car part that has to be 2 centimeters in diameter to fit properly had better not have a very big standard deviation during the manufacturing process. A big standard deviation in this case would mean that lots of parts end up in the trash because they don’t fit right; either that or the cars will have problems down the road.
But in situations where you just observe and record data, a large standard deviation isn’t necessarily a bad thing; it just reflects a large amount of variation in the group that is being studied. For example, if you look at salaries for everyone in a certain company, including everyone from the student intern to the CEO, the standard deviation may be very large. On the other hand, if you narrow the group down by looking only at the student interns, the standard deviation is smaller, because the individuals within this group have salaries that are less variable. The second data set isn’t better, it’s just less variable.
Similar to the mean, outliers affect the standard deviation (after all, the formula for standard deviation includes the mean). Here’s an example: the salaries of the L.A. Lakers in the 2009–2010 season range from the highest, $23,034,375 (Kobe Bryant) down to $959,111 (Didier Ilunga-Mbenga and Josh Powell). Lots of variation, to be sure! The standard deviation of the salaries for this team