In probability theory and statistics, the index of dispersion,^{[1]} dispersion index, coefficient of dispersion, or variancetomean ratio (VMR), like the coefficient of variation, is a normalized measure of the dispersion of a probability distribution: it is a measure used to quantify whether a set of observed occurrences are clustered or dispersed compared to a standard statistical model.
It is defined as the ratio of the variance σ^{2} to the mean μ,
It is also known as the Fano factor, though this latter is sometimes reserved for windowed data (the mean and variance are computed over a subpopulation), where the index of dispersion is the special case where the window is infinite. Windowing data is frequently done: the VMR is frequently computed over various intervals in time or small regions in space, which may be called "windows", and the resulting statistic called the Fano factor.
It is only defined when the mean μ is nonzero, and is generally only used for positive statistics, such as count data or time between events, or where the underlying distribution is assumed to be the exponential distribution or Poisson distribution.
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In this context, the observed dataset may consist of the times of occurrence of predefined events, such as earthquakes in a given region over a given magnitude, or of the locations in geographical space of plants of a given species. Details of such occurrences are first converted into counts of the numbers of events or occurrences in each of a set of equalsized time or spaceregions.
The above defines a dispersion index for counts.^{[2]} A different definition applies for a dispersion index for intervals,^{[3]} where the quantities treated are the lengths of the timeintervals between the events, and where the index is equivalent to the square of the coefficient of variation of the interval lengths. Common usage is that "index of dispersion" means the dispersion index for counts.
The Poisson distribution has equal variance and mean, giving it a VMR = 1. The geometric distribution and the negative binomial distribution have VMR > 1, while the binomial distribution has VMR < 1, and the constant random variable has VMR = 0. This yields the following table:
Distribution  VMR  

constant random variable  VMR = 0  not dispersed 
binomial distribution  0 < VMR < 1  underdispersed 
Poisson distribution  VMR = 1  
negative binomial distribution  VMR > 1  overdispersed 
This can be considered analogous to the classification of conic sections by eccentricity; see Cumulants of particular probability distributions for details.
When the coefficient of dispersion is less than 1, a dataset is said to be "underdispersed": this condition can relate to patterns of occurrence that are more regular than the randomness associated with a Poisson process. For instance, points spread uniformly in space or regular, periodic events will be underdispersed.
If the index of dispersion is larger than 1, a dataset is said to be overdispersed: this can correspond to the existence of clusters of occurrences. Clumped, concentrated data is overdispersed.
In terms of the intervalcounts, overdispersion corresponds to there being more intervals with low counts and more intervals with high counts, compared to a Poisson distribution: in contrast, underdispersion is characterised by there being more intervals having counts close to the mean count, compared to a Poisson distribution.
The relevance of the index of dispersion is that it has a value of one when the probability distribution of the number of occurrences in an interval is a Poisson distribution. Thus the measure can be used to assess whether observed data can be modeled using a Poisson process.
A samplebased estimate of the dispersion index can be used to construct a formal statistical hypothesis test for the adequacy of the model that a series of counts follow a Poisson distribution.^{[4]}^{[5]}
The VMR is a good measure of the degree of randomness of a given phenomenon. This technique is also commonly used in currency management.
For randomly diffusing particles (Brownian motion), the distribution of the number of particle inside a given volume is poissonian, i.e. VMR=1. Therefore, to assess if a given spatial pattern (assuming you have a way to measure it) is due purely to diffusion or if some particleparticle interaction is involved : divide the space into patches, Quadrats or Sample Units (SU), count the number of individuals in each patch or SU, and compute the VMR. VMRs significantly higher than 1 denote a clustered distribution, where random walk is not enough to smother the attractive interparticle potential.
