QUANTUM LEAPS
Back to Quantum Leaps6. Median -v- Average
Is there a better way of estimating an expected value than with an average?
The average can be described as a measure of central tendency. It is a single value that is meant to provide a fair estimate of a particular set of values. However, an average value may in some circumstances be flawed.
Extreme values in the population can shift or skew an average. As there are more extremely large (or extremely small) values, the average tends to move towards the extreme values. In considering average income, average weekly ordinary time earnings (AWOTE) may be skewed if there are very high-income earners in the population. The conclusion that an "average" person would earn AWOTE may be flawed. In this case, it is likely that an average person would earn somewhat less than AWOTE.
A variety of statistical techniques (eg standard deviation) provide indicators of the reliability (as a representative measure) of an average. A simple alternative measure is the median. The median is the middle value in a set of data. It is not influenced by extreme values, and as a result is considered by some to be a fairer representation of a set of numbers than an average.
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A powerful way of examining business trends. - Median -v- Average
Is there a better way of estimating an expected value than with an average? - Husher-v-Husher (1999) HCA 47
Substance over form
