Averages of first Order

Introduction and Definition

A measure of central tendency is a typical value around which other figures
congregate or which divides their number in half. Thus an average can be used
to describe or represent a whole series of figures involves magnitudes of the
same variable.

“Averages are derived figures but not the original data”.

Central Tendency is a statistical measure that identifies a single score as

representative of the entire distribution. The goal of central tendency is to find
the single score that is most typical or most representative of the entire group
Definitions & Objectives

A measure of central tendency is a typical value around which other values congregate
Simpson and Kafka

The average is a typical value in the sense that it is sometimes employed to represent
all the individual values in a series or a variable Ya-Lun Chou

The objective of averaging are;

1. To get a single value that represents the entire data set

2. To facilitate comparison
 Kinds of
Averages

Arithmetic Positional
Averages Averages

Arithmetic Geometric Harmonic

Median Mode
Mean Mean Mean

Quartile Decile Percentile

Besides these averages there are other averages such as Quadratic mean, Moving
averages and progressive averages. These averages are calculated by modifying the
formula of Arithmetic Mean.
In commercial statistics these averages play a very vital role and used by
professionals a lot.
Further the applicability of these averages is very high in time-series analysis.
Characteristics of a Good Average

An average should be
a. Rigorously defined.
b. Easy to compute.
c. Capable of simple interpretation.
d. Dependent on all values of observation.
e. Not unduly affected by one or two extremely large or small values.
f. Should fluctuate relatively little from one random sample to another.
g. Be capable of mathematical manipulation
Arithmetic Mean

Arithmetic mean is one of the most commonly used arithmetic average. It is also
known as “Mean” and symbolically represented by or
Arithmetic Mean

Arithmetic mean for a set of numbers (values) can be given by;

Mathematically it can be defined as;

Mathematical Calculations & Interpretations
Raw or Ungrouped Data
Marks of Students
x
(x)

x1 5 As ‘n =6’ is number of observations

x2 7

x3 1

x4 3

x5 4

x6 10
Mathematical Calculations & Interpretations
Discrete Frequency Distribution Number of
Marks of
Students Students or
x Frequency
(x)
(f)
x1 1 1 Number of Students = ?
x2 3 3 = 14 =
Sum of Marks = ?
x3 4 3
= 66 =
x4 5 4

x5 7 2

x6 10 1
Mathematical Calculations & Interpretations
Continuous or Grouped Frequency Distribution
Number of
Students Total Marks
Marks of Students x fx
(f)

0 10 5 4 20
10 20 15 12 180
20 30 25 21 525
30 40 35 10 350
40 50 45 3 135

50
Combined Arithmetic Mean of Groups

If there are two groups with following details;

Number of Items Arithmetic Mean Sum of Values

Group A n1
Group B n2

There A.M.’s are given by;

Using (1)

The combined A.M. is given by;

Combined Arithmetic Mean of Groups

Now, if the number of items in both the groups are equal i.e.

Using (3) in (2)

Similarly for p groups;

Weightage Arithmetic Mean

Suppose a man purchases mangoes @ Rs 20 per kg, apples @ Rs 30 per kg and

oranges @ Rs 16 per kg, then the average rate of purchase will be:

But what if man purchases 5 kgs of mangoes, 2 kgs of apples and 6 kgs of
oranges? Then;
Properties of Arithmetic Mean

o If a constant amount is added, subtracted, multiplied or divided from each value in the series,
mean is also added, subtracted, multiplied or divided by the same constant amount.

o The algebraic sum of the deviations of all values from their mean = 0.

o If the mean and number of values are given but one value is missing in the series,

Missing value = (Number of values × Mean) – (Sum of known values)

o If one or two values have been taken wrongly while calculating the mean then,
Weighted Arithmetic Average

When to use weighted arithmetic average:

1. When the importance of all items in the series are not equal.
2. When the class of same group contains widely varying frequencies.
Examples of weightage arithmetic mean

An examination was held to decide the award of scholarship, the weights of

various subjects were different. The marks obtained by 3 candidates in each
subject are given below;
Subjects Weight Marks A Marks B Marks C

Statistics 4 63 60 65

Mathematics 3 65 64 70

Economics 2 58 56 63

Hindi 1 70 80 52
 Mean
20

2 2 4 5 8 11 13 17 17 18 19 20 26 28 30 33 38 43 46

Mean is the central figure of any data

How?
10 Kg
5 Kg 5 Kg

Centre Point
 Value Deviation Value Deviation Value Deviation Value Deviation Value Deviation

2 -18 8 -12 17 -3 26 +6 33 +13

2 -18 11 -9 18 -2 28 +2 38 +18

4 -16 13 -7 19 -1 28 +8 43 +23

5 -15 17 -3 20 0 30 +10 46 +26

20

2 2 4 5 8 11 13 17 17 18 19 20 26 28 30 33 38 43 46

-18
Sum of the deviations ; hence the arithmetic mean is a central figure
Geometric Mean

Its an arithmetic average that uses product of values instead of addition. It can be said
that the average of multiplicative effect is geometric mean.
Geometric Mean an Introduction

Sometimes when we are deal with quantities that change over a period of time, we need to know
an average rate of change, such as average growth rate over a period of several years. In such
cases, the simple arithmetic mean is inappropriate, because it gives the wrong answers. We need
to know ‘Geometric Mean’ simply called G.M.

G.M. is generally used in situations where small items are assigned large weights and vice versa.
The following are the some uses of geometric mean

G.M. is useful to calculate average percentage increase or decrease. In the construction of Index
numbers, geometric mean is considered to be best average tool.
Mathematical Formulation

The Geometric mean for certain number of observations can be given by;

i.e. if are observations then the, Geometric Mean is given by;

Or symbolically it can be rewritten as;

Mathematical Formulation

Further if are the frequencies associated with then the, Geometric Mean is given by;

Or symbolically it can be rewritten as;

Numerical Illustration

Find Geometric Mean of 4, 6, 2.

Here, n=3
Numerical Illustration

Find Geometric Mean of following discrete series;

x f

4 3 1
1

( )
4

( )
4 1 1 1 1
3 2 ∑𝑓𝑖 3+2+ 1+4
𝐺 . 𝑀 .= ∏ 𝑥
𝑓𝑖 3 2 1 4
5 1 𝑖
𝑖=1
= 4 × 3 ×5 ×6 =4.54
𝑖=1
6 4
Application of Geometric Mean

Suppose and investment gives you a return of 100% in first years and gives a
return of – 50% when reinvested. What is the average rate of return?

What will he
Get?

1 year return
st 2nd year return
100% - 50%
Application of Geometric Mean

Average rate of return; when calculated by Arithmetic Mean:

1 − 0.5
𝑥= = 0.25= 25 %
2

Average rate of return; when calculated by Geometric Mean:

Application of Geometric Mean

Using Arithmetic Mean

Rs. 100 Rs. 125

Investment Investment

Rs. 131.25

1 year return
st 2nd year return
25% = Rs 25 25% = Rs 31.25
Application of Geometric Mean

Using Geometric Mean

Rs. 100 Rs. 100

Investment Investment

Rs. 100.00

1 year return
st 2nd year return
0% = Rs 0 0% = Rs 0
Application of Geometric Mean

Using Logical Mathematics

Rs. 100 Rs. 200

Investment Investment

Rs. 100.00

1 year return
st 2nd year return
100% = Rs 100 -50% = -Rs 100
Application of Geometric Mean
Year Inv A Inv B Which is a better Investment?
1 12 % 50%

2 -3% -40%

3 8% 30%

4 15% 70%

5 0% 10%

6 4% -50%
Application of Geometric Mean

Whichever gives me a higher average return.

A.M. for Inv A = 6%

A.M. for Inv B = 11.67%

G.M. for Inv A = 5.81%

G.M. for Inv B = 1.51%

Portfolio A Portfolio B

Time Average Return Return on Rs. Time Average Return Return on Rs.
Period (A.M.) 100 Period (A.M.) 100

1 6% 106
1 12.00 112

2 6% 112.36 2 12.00 125.44

3 6% 119.1016 3 12.00 140.4928

4 6% 126.2477 4 12.00 157.3519

5 6% 133.8226 5 12.00 176.2342

6 6% 141.8519 6 12.00 197.3823

Portfolio A Portfolio B

Time Average Return on Rs. Time Average Return on Rs.

Period Return (G.M.) 100 Period Return (G.M.) 100

1 5.81 105.81 1 1.50 101.5

2 5.81 111.9576 2 1.50 103.0225

3 5.81 118.4623 3 1.50 104.5678

4 5.81 125.345 4 1.50 106.1364

5 5.81 132.6275 5 1.50 107.7284

6 5.81 140.3332 6 1.50 109.3443

Harmonic Mean
Reciprocal of Arithmetic Mean
Harmonic Mean Explained

▪ A fellow travels from city A to ▪ A fellow travels from city A to

city B. For the first hour, he city B. The first half of the way,
drove at the constant speed of he drove at the constant speed
20 miles per hour. Then he of 20 miles per hour. Then he
(instantaneously) increased his (instantaneously) increased his
speed and, for the next hour, speed and travelled the
kept it at 30 miles per hour. Find remaining distance at 30 miles
the average speed of the per hour. Find the average speed
motion. of the motion
Harmonic Mean Explained

Average Speed is given by;

Harmonic Mean Explained

▪ Let d be half the distance between the two cities. The first leg of the journey took d/20 hours, the
second d/30. Therefore, on the whole, the fellow was on the road T = d/20 + d/30 hours.

▪ During that time he covered D = 2d miles. It follows that his average speed is given by S = 2d/(d/20 +
d/30) or, after cancelling out the common factor d, S = 2/(1/20 + 1/30) = 24 mph. If the distance
between the cities were, as in the first problem, 50 miles, then the journey would take T = 50/24 hours
or 2 hours and 5 minutes, from which 1 hour and 15 minutes (= 25/20 hours) were spent on the first 25
miles and 50 minutes (= 25/30 hours) on the second 25 mile stretch.

▪ What we found is that, depending on the circumstances, to determine the average speed of motion,
computations based on the same basic formula (S = D/T) may have to follow different routes.
Mathematical Formulation of Harmonic Mean

The formula for Harmonic Mean is given by;

Or
Empirical Relationship

𝐺𝑀 = √ 𝐻𝑀 × 𝐴 𝑀
Median
Median is the central figure of the data that divides the data in to two halves.
Introduction and Mathematical Formulation

The median of discrete series is given by;

a. In case of odd items

b. In case of even items

Solved Examples

Find out the median of the following data

5, 7, 9, 12, 10, 8, 7, 15, 21

Step 1: Arrange the data in ascending or descending order

5, 7, 7, 8, 9, 10, 12, 15, 21
Step 2: n = 9 (Odd)

=9
Step 3:
Solved Examples

Find out the median of the following data

10, 18, 9, 17, 15, 24, 30, 11

Step 1: Arrange the data in ascending or descending order

9, 10, 11, 15, 17, 18, 24, 30
Step 2: n = 8 (Even)

{ (( ) ( ) ) }
Step 3: 8 𝑡h
8 𝑡h
+ +1
2 2 4 𝑡h +5𝑡h 15+17
𝑀𝑒= = = =16
2 2 2
Solved Examples

Find out the value of Median From the following data;

Daily Wages Number of Workers

10 15
5 20
7 15
11 18
8 12
Solved Examples

Daily Wages Number of Cumulative

(x) Workers Frequency
(f) (c.f.)
10 15 15

5 20 35

7 15 50

11 18 68

8 12 80
Quartile, Decile & Percentile
Serial No Marks Serial No Marks Serial No Marks
1 12 11 33 21 47
2 17 12 35 22 48
3 21 13 37 23 48
4 24 14 38 24 49
5 26 15 38 25 50
6 27 16 40 26 52
7 30 17 42 27 55
8 32 18 44 28 58
9 33 19 44 29 62
10 33 20 45 30 68
Quartile, Decile & Percentile

The first quartile is given by;

Quartile, Decile & Percentile

The third quartile is given by;

Quartile, Decile & Percentile

The sixth decile (D6) is given by;

Quartile, Decile & Percentile

The 70th percentile (P70) is given by;

Introduction and Mathematical Formulation

The median of continuous series or grouped data is given by;

Where;
lower limit of median class
Number of items
Cumulative frequency previous to median class
Class interval of median class
Frequency of median class
Introduction and Mathematical Formulation

The median of continuous series or grouped data is given by;

Where;
lower limit of median class
Number of items
Cumulative frequency previous to median class
Class interval of median class
Frequency of median class
Introduction and Mathematical Formulation

The quartile of continuous series or grouped data is given by;

Where;
lower limit of quartile class
Number of items
Cumulative frequency previous to quartile class
Class interval of quartile class
Frequency of quartile class
Introduction and Mathematical Formulation

The Decile of continuous series or grouped data is given by;

Where;
lower limit of decile class
Number of items
Cumulative frequency previous to decile class
Class interval of decile class
Frequency of decile class
Introduction and Mathematical Formulation

The percentile of continuous series or grouped data is given by;

Where;
lower limit of percentile class
Number of items
Cumulative frequency previous to percentile class
Class interval of percentile class
Frequency of percentile class
Practice Problem
From the following data, calculate the values of the upper and lower quartiles, D 2, P30.
Marks Below 10 10 – 20 20 – 40 40 – 60 60 – 80 Above 80
No. of Students 8 10 22 25 10 5

No of Students Cumulative Frequency

Marks (f ) (c.f.)
00 – 10 8 8
10 – 20 10 18
20 – 40 22 40
40 – 60 25 65
60 – 80 10 75
80 – 100 5 80
Total N =  f = 80
Solution

For Q1 :

N = 80  N/4 = 20
l1 = 20
f = 22
c.f-1 = 18

Therefore,
Solution

For Q3 :

N = 80  3N/4 = 60
l1 = 40
f = 25
c.f-1 = 40

Therefore,
Solution

For D2:

N = 80  2N/10 = 16
l1 = 10
f = 10
c.f-1 = 8

Therefore,
Solution

For P30 :

N = 80  30N/100 = 24
l1 = 20
f = 22
c.f-1 = 18

Therefore,
Solution
Mode

Mode is the most common value, i.e., the value having maximum frequency in the
series. For example

The retail price paid for a commodity by most of the customers in the model price.

In a factory the wage being paid to most of the workers in modal wage.

In grouped frequency distribution the class having the highest frequency is the model
class.

According to Zizek, Mode is “the value occurring most frequently in a series of items
and around which the other items are distributed most densely”.
Calculation of Mode
Find the mode of the following data :
41, 42, 45, 44, 45, 48, 50, 45, 47, 51, 56.
Arranging the distribution as frequency distribution, we get
Value Frequency
41 1
42 1
45 3
44 1
48 1
50 1
47 1
51 1
56 1
Mode by Grouping Method
For this method a grouping table has to be maintained:
▪ Column 1: Contains the original frequencies arranged in ascending order and the
maximum frequency is marked by putting a mark or a circle.
▪ Column 2: The frequencies are grouped twos, the total remaining frequencies are grouped
in tows and the highest total is marked.
▪ Column 3: Leaving the first frequency, the remaining frequencies are grouped in twos and
the highest total is marked.
▪ Column 4: The frequencies are grouped in threes. The highest total is marked.
▪ Column 5: Leaving the first frequency, the remaining frequencies grouped in threes and
the highest total is marked.
▪ Column 6: Leaving the first two frequencies, the remaining frequencies are grouped in
threes and the highest total is marked.
After completing the group table analysis table is formed for finding the value or the observation
which is repeated the highest number of times
Illustration

The following table gives the measurement of collar size of 230 students in a
university. Determine the model size of the collar.

Collar Size
(cms) 32 33 34 35 36 37 38 39 40 41

No. of
Students 7 14 30 28 35 34 16 14 36 16
Solution : Determining the Mode by Grouping Method

Frequency
Collar Size
Col (1) Col (2) Col (3) Col (4) Col (5) Col (6)

32 7
33 14 21
34 30 44 51
35 28 72
58 93
36 35 63
37 34 97
38 16 69
50 85
39 14 64
40 36 30
41 16 50 66
52 66

68
 Analysis Table
Collar Size values contributing to the highest Frequency
Column No.
32 33 34 35 36 37 38 39 40 41
1 
2  
3  
4   
5   
6   
No. of - - 1 3 5 3 1 - 1 -
Times

From analysis table we observe that size 36 is repeated the highest number of times. Therefore,
Model size is 36 cms.
69
Determination of Mode in Continuous Series

In this method the class having the maximum frequency is known as the
modal class. In case nearly equal concentration of frequencies is observed in
two or more classes, the grouping method can be used to determine the
model class. Afterwards following formula is applied to define mode:
𝑓 𝑚 − 𝑓 𝑚− 1
𝑀𝑜𝑑𝑒=𝑙1 + ×𝑖
2 𝑓 𝑚 − 𝑓 𝑚 − 1 − 𝑓 𝑚+1
Illustration

Compute the mode for following data;

Class 0–3 3–6 6 – 10 10 – 12 12 – 15 15 – 18

Frequency 4 8 10 14 16 20
Class 18 – 20 20 – 24 24 – 25 25 – 28 28 – 30 30 – 36
Frequency 24 14 16 11 10 6

In this example the class intervals are unequal. For finding the mode class intervals has to be
equal. So converting the class intervals in to equal lengths i.e.,
0 – 6, 6 – 12, 12 – 18, ……………………………
We have the following arrangement
 Analysis Table
Collar Size values contributing to the highest Frequency
Column No.
6 - 12 12 - 18 18 - 24 24 – 30 30 - 36
1 
2  
3  
4   
5   
6   
No. of Times 1 3 6 3 1

Now the Mode lies in the class 18 – 24. Whose frequency is 38.
 𝑓 𝑚 − 𝑓 𝑚− 1
𝑀𝑜𝑑𝑒=𝑙1 + ×𝑖
2 𝑓 𝑚 − 𝑓 𝑚 − 1 − 𝑓 𝑚+1

38 −36
𝑀𝑜𝑑𝑒=18 + × 6=22
2× 38 −36 − 37
Selection of Appropriate Average
▪ No single average is sufficient to serve each and every purpose. To find a suitable average, the situation
has to be analyzed thoroughly and carefully. Mean takes in to account all values of distribution. If we
wish to make total value estimations, Mean is the most appropriate average e.g., per capita income of
the country.

▪ In case of open ended class intervals mean can not be found, hence in such a case we have to depend
on Median and Mode. If the data is qualitative, e.g., beauty, honesty, intelligence, etc, then Median
will be the most appropriate average. Regarding agricultural land holdings, psyche and social problems
Median is used.

▪ In case of business situations, where selection of ‘most common’, e.g., most common size of shoes for
certain age group, most common size of garments, etc., is to be made, the Mode is most common
average in use.
Thank You