Timber Prices: 10 Year Trends Methodology

This article describes the methodology used to create the Timber Prices: 10 Year Trends graphs.
Timber Prices: 10 Year Trends Methodology - Articles
Timber Prices: 10 Year Trends Methodology

Trend Chart Methodology

Determining Standard Deviation

Standard deviation describes how varied the distribution of reported values for a given quarter are, with respect to the mean (average.) One (1) standard deviation accounts for roughly 68% of all the data within the set. To encompass more data, two (2) standard deviations can account for nearly 95% of the dataset, and three (3) standard deviations would account for approximately 99%. For the timber market report, we only use one (1) standard deviation. What we're trying to show is how varied the prices we report for each quarter are.

In a simple example, we have 5 values reported in a given quarter for a specific species. $100, $125, $150, $175, $200. The average would be:

Standard deviation will examine a specific amount of data (68%) and how far from the average (mean) the data needs to cover in order to encompass that amount of data.

If we were to take the standard deviation of a more widely separated set of values, we have to include a larger spread to still encompass 68% of the set. We'll find that even though the average is the same as the previous example, the dataset varies more widely, and therefore the standard deviation will be larger.

Authors

Water Energy Food Nexus Bioenergy Agroforestry Forest Economics and Finance International Forestry Forest Extension Non Timber Forest Products

More by Michael Jacobson, Ph.D.