Measures of Central

Tendency
 Central Tendency

 A central tendency is a single value which is

used to represent an entire set of data.

 It is a typical value around which most of the

other values cluster.

 The tendency of the observations to

concentrate around a central point is known
as central tendency.
 Measures of Central Tendency

1. Mathematical averages
(a) Arithmetic mean or mean
 Simple
 Weighted
(b) Geometric mean
(c) Harmonic mean

2. Positional averages
(a) Median
(b) Mode
(c) Quartiles
(d) Deciles
(e) Percentiles
 Arithmetic Mean
 The arithmetic mean (AM) of a set of observations is
their sum, divided by the number of observations.
 It is generally denoted by x or AM. Population mean
is denoted by μ.

Arithmetic mean is of two types:

 Simple arithmetic mean

 Weighted arithmetic mean
Example 3.1: A rainwear manufacturing company wants to launch
some new products in a new state. The rainfall in the state (in cm) for
the past 10 years is given in Table 3.2. Find the average rainfall of the
state in the past 10 years.

Solution:
 Computation of Arithmetic Mean for Discrete Frequency
Distribution

Example 3.2: The weekly earnings of 187 employees of a

company is given in Table 3.4. Find the mean of the weekly
earnings.
Solution:
Example 3.3: From Table 3.6, find the arithmetic mean

Solution is presented in Table 3.7.

 Weighted Mean

 Example: Construction Wages

Ron Butler, a home builder, is looking over the expenses
he incurred for a house he just built. For the purpose of
pricing future projects, he would like to know the average
wage ($/hour) he paid the workers he employed. Listed
below are the categories of worker he employed, along with
their respective wage and total hours worked.

Worker Wage ($/hr) Total Hours

Carpenter 21.60 520
Electrician 28.72 230
Laborer 11.80 410
Painter 19.75 270
Plumber 24.16 160
Weighted Mean

 Example: Construction Wages

Worker xi wi wi x i
Carpenter 21.60 520 11232.0
Electrician 28.72 230 6605.6
Laborer 11.80 410 4838.0
Painter 19.75 270 5332.5
Plumber 24.16 160 3865.6
1590 31873.7

  wx i i

31873.7
 20.0464  $20.05
w i 1590

FYI, equally-weighted (simple) mean = $21.21

Weighted Arithmetic Mean
 Geometric Mean
In many business and economics problems, we deal with
quantities (variables) that change over a period of time. In
such cases the aim is to know an average percentage
change rather than simple average value to represent the
average growth or decline rate in the variable value over a
period of time. Thus we need to calculate another measure
of central tendency called geometric mean (G.M.). The
specific application of G.M. is found to show
multiplicative effects over time in compound interest and
inflation calculations.
 Geometric Mean

 Geometric mean (GM) is the nth root of the product

of n items of a series.

 If there are three items 4, 6, and 9, then their

geometric mean, which is generally denoted by G,
can be computed as:
Computation of Geometric Mean for Individual Series
Example : The annual rate of growth for a
factory for 5 years is 7%, 8%, 4%, 6% and
10% respectively. What is the average rate of
growth per annum for this period?
The required average growth rate is 106.98 – 100 = 6.98. Therefore,
the average rate of growth per annum is 6.98%.
 Harmonic Mean

Applications
The harmonic mean is particularly useful for
computation of average rates and ratios. Such rates and
ratios are generally used to express relations between
two different types of measuring units that can be
expressed reciprocally. For example, distance (in km),
and time (in hours).
 Harmonic Mean
The harmonic mean of any series is the reciprocal of the
arithmetic mean of the reciprocal of the variate, that is, the
harmonic mean by definition is given by:
Computation of Harmonic Mean for Individual Series
Example : Calculate the harmonic mean of the following items: 2.0,
1.5, 3.0, 10.0, 250.0, 0.5, 0.905, 0.095, 2000, 0.099.

To compute harmonic mean, we have to first compute

the reciprocals of each item as given in below
 Relationship between AM, GM, and HM

There exists a defined relationship between arithmetic mean,

geometric mean, and harmonic mean. This relationship is as below:
 Positional Averages

 Arithmetic mean, geometric mean, and harmonic

mean are all mathematical in nature and are
measures of quantitative characteristics of data.
 To measure the qualitative characteristics of data,
other measures of central tendency, namely
median and mode are used.
 Positional averages, as the name indicates,
mainly focus on the position of the value of an
observation in the data set.
 Median

 The median may be defined as the middle or

central value of the variable when values are
arranged in the order of magnitude.

 In other words, median is defined as that

value of the variable that divides the group
into two equal parts, one part comprising all
values greater and the other all values lesser
than the median.
 Computation of Median for the Individual Series

In this type of distribution, data can be arranged in

ascending or descending order. If there are n terms
(observations) in the data, there can be two cases:
 Example 3.12:The consumption of printing paper reams (in units) for
the first 11 months of a computer operator is given as 10, 11, 12, 15, 18,
22, 8, 10, 12, 15, 25. Find the median.

 By arranging the data in ascending order, we get

the series: 8, 10, 10, 11, 12, 12, 15, 15, 18, 22, 25

 The number of terms in this series is 11, which is

odd.
 Example : Table relates to the monthly salaries of employees (in
thousand rupees). Compute the median salary of the employees.

To compute the median, we first arrange the data in ascending

order. 120, 128, 132, 135, 136, 138, 148, 150, 151, 153
 Mode

 Mode is the variate having the maximum frequency in a data

series.
 In a distribution, there may be one, two, or more than two modes.
A distribution which has a single mode is called unimodal
distribution and a distribution which has two modes is called a
bimodal distribution (Figures 3.20 and 3.21).

Unimodal distribution Bimodal distribution with two

unequal modes
 Computation of Mode for the Individual Series

 In the case of an individual series, data is arranged in

order and mode can be determined by inspection only.
 The value of the variable (in data series) which occurs
the most or the value of the data series with maximum
frequency is the mode of the data series.
 For example, for a series 1, 1, 3, 3, 3, 3, 4, 5, 8, 8, 16, 16
(arranged in the order of magnitude), observation 3
has the maximum frequency 4. Therefore, mode of the
series is 3.
An Empirical Relation Between Mean, Median, and Mode
 Figure 3.23: Comparison between mean, median, and mode for (a)
symmetrical, (b) negatively skewed, and (c) positively skewed distribution
Partition Values: Quartiles, Deciles, and Percentiles

 Partition values are measures that divide the data into

several equal parts. Quartiles divide data into 4 equal
parts, deciles divide data into 10 equal parts, and
percentiles divide data into 100 equal parts.

 For an individual series, the first and third quartiles

can be computed using the following formula:
Example 3.17: From the following data, find the first and third quartiles.

The first and third quartiles can be computed by applying

the formula discussed above. The data is already arranged
in an ordered manner:
 Deciles

In a data series, when the observations are arranged in an ordered

sequence, deciles divide the data into 10 equal parts. In the case of
individual series and discrete frequency distribution, the generalized
formula for computing deciles is given as:
 Percentiles

In a data series, when observations are arranged in an ordered

sequence, percentiles divide the data into 100 equal parts. For an
individual series and a discrete frequency distribution, the
generalized formula for computing percentiles is given as: