The etymology of the word: Dispensation. Medieval Latin dispensatio, dispensation, from the Latin distribution, to distribute.
It is simply God’s act of dispensing His divine order in the Salvation History of man, or humanity. In theology it is the divine ordering of the affairs of God in the world. An appointment, arrangement, by God. In the divine appointed order or ages of God: O.T. / N.T., etc.
But the Greek word Oikonomia, in the N.T. is used as an active administration of God, stewardship, economy by and of God in a disposition or arrangement of things; a scheme or “dispensation” – 1 Cor. 9:17 / Eph. 1:10 ; 3:2 / Col. 1:25. See also, Luke 16: 2;3-4. Here we see also the responsibility of man. God’s calls “man” to a certain divine order or arrangement, i.e. “dispensation”. God has or deals at distinct time periods and with distinct groups of people “on distinct principles.” And we must measure those principles & arrangements! (1 Cor. 10:32 / Phil.1:10 / 2 Tim. 2:15) This is the Salvation History of God in His “progressive” dispensations and revelation, of Himself and His divine purpose! (Fr. R.)
PS.. Most of the ad hoc and attacks on Dispensationalism have now become basically old verbiage. With the now basic PD and Progressive Dispensationalism, which is still a central dispensational system. With of course adjustments to the older classic form of Dispensationalism. Which btw to my mind can no longer be sustained, i.e. Pre-Tribulationalism, and forms of hyper Dispensational ideas, etc. But the essence of Dispensationalism is of course National Israel, and the Commonwealth of Israel.. and her Covenant/covenants, which are always her’s first! (Eph. 2: 12 / Rom. 1: 16 ; 9: 3-5 ; chap.’s 9-11)… 1 Cor. 10: 32!
“The Christian Church is formed through the change in the economy or dispensation of the Covenant and is thus to be distinguished from the Church in the old Israel, but the Covenant remains the same, and the “economic” purpose (the dispensation, “oikonomia”, and stewardship, “oikonomia”, of the mysteries of God) remains the same, the Covenant of Grace with creation. The “economic” purpose of the old Covenant was the election of one people [the Jews] in place of all for the blessing of God upon all. That was wholly fulfilled in the “economic” condescension of the Son in the Incarnation, and now that fulfilled “economy” is communicated to the world through the “economic” purpose of the Church, the election of one community in place of all for the blessing of God upon all. Within this Church we are given to share in “the fulfilled economy” or “dispensation” of the ages may be fulfilled among all men and in the whole creation of things visible and invisible.” (Introduction, T.F. Torrance). Again, see Romans 15: 8 & 9, etc.
*Indeed Torrance comes close here, but still NOT all the way to see and understand that National Israel will have a Living Remnant-Messianic Jewish Christians that will press the Eschatological End! (Zech. 13: 8-9 ; chap. 14)