Mean and median are both "measures of central tendency". They are ways of summarizing a large set of data in a quick way that simplifies the data and removes noise.
If you know that the average rent for office space is $4 a square foot, and you need 1000 square feet per person, then you can quickly judge whether you can afford an office for your staff, without having to go through hundreds of real-estate listings. Of course, you also need to know something about the variance, and not just the mean, as there may be a few not-so-nice places that are much cheaper than average.
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Sunday, August 29, 2010
gasstationwithoutpumps on mean, median, & mode
re: what is an average, anyway?
Both the mean and median are special cases of the "trimmed mean", obtained by removing the largest M and smallest M observations and computing the average of the remainder.
ReplyDeleteIf observations are normally distributed, the sample mean is the best estimator of the mean, but if they have heavier tails, "trimmed mean" estimators, including the median, can be more accurate estimators of the true mean of the distribution.