Measurements of Trends: Method of Moving Averages

Method of Moving Averages

Moving Averages Method gives a trend with a fair degree of accuracy. In this method, we take arithmetic mean of the values for a certain time span. The time span can be three-years, four -years, five- years and so on depending on the data set and our interest. We will see the working procedure of this method.

Procedure:

(i) Decide the period of moving averages (three- years, four -years).

(ii) In case of odd years, averages can be obtained by calculating,

(iii) If the moving average is an odd number, there is no problem of centering it, the average value will be centered besides the second year for every three years.

(iv) In case of even years, averages can be obtained by calculating,

(v) If the moving average is an even number, the average of first four values will  be placed between 2 nd and 3rd year, similarly the average of the second four values will be placed between 3rd and 4th year. These two averages will be again averaged and placed in the 3rd year. This continues for rest of the values in the problem. This process is called as centering of the averages.

Example 9.4

Calculate three-yearly moving averages of number of students studying in a higher secondary school in a particular village from the following data.

Solution:

Computation of three- yearly moving averages.

Example 9.5

Calculate four-yearly moving averages of number of students studying in a higher secondary school in a particular city from the following data.

Solution:

Computation of four- yearly moving averages.

Note

The calculated 4-yearly centered moving average belongs to the particular year present in that row eg; 132.37 belongs to the year 2003.