Subject Name: Quantitative

Techniques
Unit 5: Measures of Central Tendency
Measures of central Tendency - Introduction

• Summarization of the data is a necessary function

of any statistical analysis.
• As a first step in this direction, the huge mass of
unwieldy data is summarized in the form of tables
and frequency distributions.
• In order to bring the characteristics of the data into
sharp focus, these tables and frequency
distributions need to be summarized further.
• A measure of central tendency or an average is
very essential and an important summary measure
in any statistical analysis.

2 Measures of Central Tendency - Introduction

Average Definitions

• “An Average is an attempt to find one single figure to describe the whole of
figures”
- Clark and Sekkade

• “Average is a value which is typical or representation of a set of data”

-Murray R. Spiegal

3 Average Definations
Functions of Average

• To present huge mass of data in a summarised form: It is very difficult for human mind to grasp a

large body of numerical figures. A measure of average is used to summarise such data into a single

figure which makes it easier to understand and remember.

• To facilitate comparison: Different sets of data can be compared by comparing their averages. For

example, the level of wages of workers in two factories can be compared by mean (or average) wages

of workers in each of them.

• To help in decision making: Most of the decisions to be taken in research, planning, etc., are based

on the average value of certain variables. For example, if the average monthly sales of a company are

falling, the sales manager may have to take certain decisions to improve it.

4 Functions of Average
Characteristics of a Good Average

A good measure of average must possess the following characteristics:

1. It should be rigidly defined, preferably by an algebraic formula, so that different persons

obtain the same value for a given set of data.
2. It should be easy to compute.
3. It should be easy to understand.
4. It should be based on all the observations.
5. It should be capable of further algebraic treatment.
6. It should not be unduly affected by extreme observations.
7. It should not be much affected by the fluctuations of sampling.

5 Characteristics of a Good Average

Various Measures of an Average

Various measures of average can be classified into the following three categories:

1. Mathematical Averages
(a) Arithmetic Mean or Mean 3. Commercial Average
(b) Geometric Mean (a) Moving Average
(c) Harmonic Mean (b) Progressive Average
(d) Quadratic Mean (c) Composite Average
Out of above mentioned, we will discuss here only
2. Positional Averages mathematical averages and positional averages.
(a) Median
(b) Mode

6 Various Measures of an Average

 Arithmetic Mean

• Before the discussion of arithmetic mean, we shall introduce certain notations. It will be assumed that there are
n observations whose values are denoted by X1,X2, ..... Xn respectively. The sum of these observations X1 +
X2 + ..... + Xn will be denoted in abbreviated form as, where (called sigma) denotes summation sign.

• The subscript of X, i.e., ‘i’ is a positive integer, which indicates the serial number of the observation. Since there
are n observations, variation in i will be from 1 to n. This is indicated by writing it below and above , as written
earlier. When there is no ambiguity in range of summation, this indication can be skipped, and we may simply
write X1 + X2 + ..... + Xn = Xi.

• Arithmetic Mean is defined as the sum of observations divided by the number of observations. It can be
computed in two ways: (i) Simple arithmetic mean and (ii) weighted arithmetic mean. In case of simple arithmetic
mean, equal importance is given to all the observations while in weighted arithmetic mean, the importance given
to various observations is not same.

7 Arithmetic Mean
Calculation of Simple Arithmetic Mean

• When Individual observations are given

Let there be n observations X1, X2 ..... Xn. Their arithmetic mean can be calculated either by direct method or by
short cut method. The arithmetic mean of these observations will be denoted by.

Direct Method

8 Calculation of Simple Arithmetic Mean

 Calculation of Simple Arithmetic Mean

Short Cut Method

This method is used when the magnitude of individual observations is large. The use of shortcut method
is helpful in the simplification of calculation work. Let A be any assumed mean. We subtract A from every
observation. The difference between an observation and A, i.e., Xi – A is called the deviation of ith
observation from A and is denoted by d i. Thus, we can write ; d1 = X1 – A, d2 = X2 – A, ..... dn = Xn – A.
On adding these deviations and dividing by n we get

9 Calculation of Simple Arithmetic Mean

Calculation of Simple Arithmetic Mean

• When data is in the form of Grouped Frequency Distribution

In a grouped frequency distribution, there are classes along with their respective frequencies. Let l i be
the lower limit and ui be the upper limit of ith class. Further, let the number of classes be n, so that i = 1,
2,.....n. Also let fi be the frequency of ith class. This distribution can be written in tabular form, as shown.

Lets Look at a worked example in the following slide

10 Calculation of Simple Arithmetic Mean

Calculation of Simple Arithmetic Mean

11 Calculation of Simple Arithmetic Mean

Weighted Arithmetic Mean

• In the computation of simple arithmetic mean, equal importance is given to all the items. But this may not
be so in all situations. If all the items are not of equal importance, then simple arithmetic mean will not be
a good representative of the given data.

• Hence, weighing of different items becomes necessary. The weights are assigned to different items
depending upon their importance, i.e., more important items are assigned more weight. For example, to
calculate mean wage of the workers of a factory, it would be wrong to compute simple arithmetic mean if
there are a few workers (say managers) with very high wages while majority of the workers are at low
level of wages.

• The simple arithmetic mean, in such a situation, will give a higher value that cannot be regarded as
representative wage for the group. In order that the mean wage gives a realistic picture of the distribution,
the wages of managers should be given less importance in its computation. The mean calculated in this
manner is called weighted arithmetic mean.

• The computation of weighted arithmetic is useful in many situations where different items are of unequal
importance, e.g., the construction index numbers, computation of standardised death and birth rates, etc.

12 Weighted Arithmetic Mean

Weighted Arithmetic Mean

Formula For Weighted Arithmetic Mean

Let X1, X2 ....., Xn be n values with their respective weights w1, w2 ....., wn. Their weighted arithmetic mean denoted as
Xw is given by,

For Direct Method Short-cut Method Step-Deviation Method

13 Weighted Arithmetic Mean

 Properties of Arithmetic Mean

1. The sum of deviations of the observations from their arithmetic mean is always zero. According to this
property, the arithmetic mean serves as a point of balance or a centre of gravity of the distribution; since sum of
positive deviations (i.e., deviations of observations which are greater than X ) is equal to the sum of negative
deviations (i.e., deviations of observations which are less than X ).

2. The sum of squares of deviations of observations is minimum when taken from their arithmetic mean.
Because of this, the mean is sometimes termed as 'least square' measure of central tendency.

3. Arithmetic mean is capable of being treated algebrically. This property of arithmetic mean highlights the
relationship between X , fiXi and N. According to this property, if any two of the three values are known, the third
can be easily computed.

14 Properties of Arithmetic Mean

 Properties of Arithmetic Mean

4. If X1 and N1 are the mean and number of observations of a series and X2 and N2 are the corresponding
magnitudes of another series, then the mean X of the combined series of N1 + N2 observations is given by

5. If a constant B is added (subtracted) from every observation, the mean of these observations also gets added
(subtracted) by it.

6. If every observation is multiplied (divided) by a constant b, the mean of these observations also gets
multiplied (divided) by it.

7. If some observations of a series are replaced by some other observations, then the mean of original
observations will change by the average change in magnitude of the changed observations.

15 Properties of Arithmetic Mean

 Merits and Demerits of Arithmetic Mean

Merits

Out of all averages arithmetic mean is the most popular average in statistics because of its merits given below:

1. Arithmetic mean is rigidly defined by an algebraic formula.

2. Calculation of arithmetic mean requires simple knowledge of addition, multiplication and division of numbers and hence, is easy to
calculate. It is also simple to understand the meaning of arithmetic mean, e.g., the value per item or per unit, etc.

3. Calculation of arithmetic mean is based on all the observations and hence, it can be regarded as representative of the given data.

4. It is capable of being treated mathematically and hence, is widely used in statistical analysis.

5. Arithmetic mean can be computed even if the detailed distribution is not known but sum of observations and number of observations are
known.

6. It is least affected by the fluctuations of sampling.

7. It represents the centre of gravity of the distribution because it balances the magnitudes of observations which are greater and less than it.

8. It provides a good basis for the comparison of two or more distributions.

16 Merits and Demerits of Arithmetic Mean

 Merits and Demerits of Arithmetic Mean

Demerits

Although, arithmetic mean satisfies most of the properties of an ideal average, it has certain drawbacks and should
be used with care. Some demerits of arithmetic mean are:
1. It can neither be determined by inspection nor by graphical location.
2. Arithmetic mean cannot be computed for a qualitative data; like data on intelligence, honesty, smoking habit, etc.
3. It is too much affected by extreme observations and hence, it does not adequately represent data consisting of
some extreme observations.
4. The value of mean obtained for a data may not be an observation of the data and as such it is called a fictitious
average.
5. Arithmetic mean cannot be computed when class intervals have open ends. To compute mean, some assumption
regarding the width of class intervals is to be made.
6. In the absence of a complete distribution of observations the arithmetic mean may lead to fallacious conclusions.
For example, there may be two entirely different distributions with same value of arithmetic mean.
7. Simple arithmetic mean gives greater importance to larger values and lesser importance to smaller values.

17 Merits and Demerits of Arithmetic Mean

 Median - Determination

Median of distribution is that value of the variate which divides it into two equal parts. In terms of frequency curve,
the ordinate drawn at median divides the area under the curve into two equal parts. Median is a positional average
because its value depends upon the position of an item and not on its magnitude.

• When Individual Observations are given

18 Median - Determination
 Median - Determination

Worked Example

19 Median - Determination
 Median - Determination

• When ungrouped frequency is given

20 Median - Determination
 Median - Determination

• When ungrouped frequency is given ( Alternative Method)

21 Median - Determination
 Median - Determination

• When grouped frequency distribution is given ( Interpolation Formula)

Lets work through a example to understand our way through this method.

Question:

22 Median - Determination
 Median - Determination

• When grouped frequency distribution is given ( Interpolation Formula)

Lets work through a example to understand our way through this method.

Solution:

23 Median - Determination
 Median - Determination

• When grouped frequency distribution is given ( Interpolation Formula)

Lets work through a example to understand our way through this method.

Solution:

24 Median - Determination
 Median - Determination

• When grouped frequency distribution is given ( Interpolation Formula)

Lets work through a example to understand our way through this method.

Solution:

25 Median - Determination
 Properties of a Median

The two main properties of a Median are:

1. It is a positional average.

2. It can be shown that the sum of absolute deviations is minimum when taken from median. This
property implies that median is centrally located.

26 Properties of a Median
 Merits Demerits and Uses of Median

Merits

1. It is easy to understand and easy to calculate, especially in series of individual observations and ungrouped
frequency distributions. In such cases it can even be located by inspection.
2. Median can be determined even when class intervals have open ends or not of equal width.
3. It is not much affected by extreme observations. It is also independent of range or dispersion of the data.
4. Median can also be located graphically.
5. It is centrally located measure of average since the sum of absolute deviation is minimum when taken from
median.
6. It is the only suitable average when data are qualitative and it is possible to rank various items according to
qualitative characteristics.
7. Median conveys the idea of a typical observation.

27 Merits Demerits and Uses of Median

 Merits Demerits and Uses of Median

Demerits

1. In case of individual observations, the process of location of median requires their arrangement in the order
of magnitude which may be a cumbersome task, particularly when the number of observations is very large.
2. It, being a positional average, is not capable of being treated algebraically.
3. In case of individual observations, when the number of observations is even, the median is estimated by
taking mean of the two middle-most observations, which is not an actual observation of the given data.
4. It is not based on the magnitudes of all the observations. There may be a situation where different sets of
observations give same value of median. For example, the following two different sets of observations, have
median equal to 30.
Set I : 10, 20, 30, 40, 50 and Set II : 15, 25, 30, 60, 90.
5. In comparison to arithmetic mean, it is much affected by the fluctuations of sampling.

28 Merits Demerits and Uses of Median

 Merits Demerits and Uses of Median

Uses

1. It is an appropriate measure of central tendency when the characteristics are not measurable but different
items are capable of being ranked.
2. Median is used to convey the idea of a typical observation of the given data.
3. Median is the most suitable measure of central tendency when the frequency distribution is skewed. For
example, income distribution of the people is generally positively skewed, and median is the most suitable
measure of average in this case.
4. Median is often computed when quick estimates of average are desired.
5. When the given data has class intervals with open ends, median is preferred as a measure of central
tendency since it is not possible to calculate mean in this case.

29 Merits Demerits and Uses of Median

 Introduction to Mode

• Mode is that value of the variate which occurs maximum number of times in a distribution and around which other items
are densely distributed
• If the frequency distribution is regular, then mode is determined by the value corresponding to maximum frequency.
There may be a situation where concentration of observations around a value having maximum frequency is less than
the concentration of observations around some other value.
• In such a situation, mode cannot be determined by the use of maximum frequency criterion. Further, there may be
concentration of observations around more than one value of the variable and, accordingly, the distribution is said to be
bi-model or multi-model depending upon whether it is around two or more than two values.
• The concept of mode, as a measure of central tendency, is preferable to mean and median when it is desired to know
the most typical value, e.g., the most common size of shoes, the most common size of a ready-made garment, the most
common size of income, the most common size of pocket expenditure of a college student, the most common size of a
family in a locality, the most common duration of cure of viral-fever, the most popular candidate in an election, etc.

30 Introduction to Mode
 Determination of Mode

When data are either in the form of individual observations or in the form of ungrouped frequency distribution:

Given individual observations, these are first transformed into an ungrouped frequency distribution. The mode

of an ungrouped frequency distribution can be determined in two ways, as given below:

1. By inspection or

2. By method of Grouping

31 Determination of Mode
 Determination of Mode

• By Inspection

When a frequency distribution is fairly regular, then mode is often determined by inspection. It is that value of the
variate for which frequency is maximum. By a fairly regular frequency distribution we mean that as the values of the
variable increase the corresponding frequencies of these values first increase in a gradual manner and reach a peak at
certain value and, finally, start declining gradually in, approximately, the same manner as in case of increase.

32 Determination of Mode
 Merits and Demerits of Mode

Merits

1. It is easy to understand and easy to calculate. In many cases it can be located just by inspection.
2. It can be located in situations where the variable is not measurable but categorisation or ranking of
observations is possible.
3. Like mean or median, it is not affected by extreme observations. It can be calculated even if these
extreme observations are not known.
4. It can be determined even if the distribution has open end classes.
5. It can be located even when the class intervals are of unequal width provided that the width of
modal and that of its preceding and following classes are equal.
6. It is a value around which there is more concentration of observations and hence the best
representative of the data.

33 Merits and Demerits of Mode

 Merits and Demerits of Mode

Demerits:

1. It is not based on all the observations.

2. It is not capable of further mathematical treatment.
3. In certain cases mode is not rigidly defined and hence, the important requisite of a good
measure of central tendency is not satisfied.
4. It is much affected by the fluctuations of sampling.
5. It is not easy to calculate unless the number of observations is sufficiently large and reveal a
marked tendency of concentration around a particular value.
6. It is not suitable when different items of the data are of unequal importance.
7. It is an unstable average because, mode of a distribution, depends upon the choice of width
of class intervals.

34 Merits and Demerits of Mode

 Relation Between Mean Median and Mode

• The relationship between the above measures of central tendency will be interpreted in terms

of a continuous frequency curve.

• If the number of observations of a frequency distribution are increased gradually, then

accordingly, we need to have a greater number of classes, for approximately the same range of

values of the variable, and simultaneously, the width of the corresponding classes would

decrease. Consequently, the histogram of the frequency distribution will get transformed into a

smooth frequency curve, as shown in Figure 6.2.

35 Relation Between Mean Median and Mode

 Relation Between Mean Median and Mode

For a given distribution, the mean is the value of the variable which is the point of balance or centre of gravity
of the distribution. The median is the value such that half of the observations are below it and remaining half
are above it. In terms of the frequency curve, the total area under the curve is divided into two equal parts by
the ordinate at median. Mode of a distribution is a value around which there is maximum concentration of
observations and is given by the point at which peak of the curve occurs.

36 Relation Between Mean Median and Mode

 Relation Between Mean Median and Mode

For a symmetrical distribution, all the three measures of central tendency are equal i.e. = Md = Mo, as
shown in Figure 6.3.

37 Relation Between Mean Median and Mode

Relation Between Mean Median and Mode

38 Relation Between Mean Median and Mode

 Thank You

39