Economics
Class - XI
Measures of Central Tendency - Notes
A measure of central tendency is a single value that is used to represent an entire set of data.
Measure of central tendency is also known as an ‘Average’.
The three most commonly used measures of central tendency or ‘averages’ are:
• Arithmetic Mean
• Median
• Mode
Objectives and functions of averages
1. To present huge data in a summarised form: It is difficult to grasp a large amount of data or
numerical figures. Averages summarise such data into a single figure which makes it easier to
understand and remember.
2. To facilitate comparison: Averages are very helpful for making comparative studies as they
reduce the mass of statistical data to a single figure or estimate.
3. To facilitate further statistical analysis: Various tools of statistical analysis like standard
deviation, correlation etc. are based on averages.
4. To trace precise relationship: Averages are helpful and even essential when it comes to
establishing relationships between different groups of data or variables.
5. To help in decision-making: Averages provide values which act as a guideline for decision
makers. Most of the decisions to be taken in research or planning are based on the average value
of certain variables.
Essentials of a good average / measure of central tendency
1. It should be rigidly defined:
➢ An average should be clear and there should be only one form of interpretation.
➢ It should have a definite and fixed value irrespective of method of calculations or formulae
used.
2. It should be based on all observations:
➢ Average should be calculated by taking into consideration each and every item of the series.
➢ If it is not based on all observations, it will not be representative of the whole group.
3. It should not be affected much by extreme values:
➢ The value of an average should not be affected much by extreme values.
➢ One or two very small or very large values should not unduly affect the value of the average
significantly.
4. It should be least affected by fluctuations of sampling:
➢ An average should possess sampling stability i.e. If we take two or more samples from a
given population and compute averages for each, then the values thus obtained from different
samples should not differ much from each other.
5. It should be easy to understand and compute:
➢ The value of an average should be computed by using a simple method without reducing its
accuracy and other advantages.
6. It should be capable of further algebraic treatment:
➢ It should be capable of further mathematical and statistical analysis to expand its utility such
as to be further used in calculation of measures of dispersion, correlation etc.
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Measures of Central Tendency
Arithmetic Mean Median Mode
Simple Weighted
Arithmetic Mean
It is defined as the sum of the values of all observations divided by the number of observations.
In general, if there are N observations as X1, X2, X3, ..., XN, then the Arithmetic Mean is given by:
For convenience, this will be written in simpler form:
where, ΣX = sum of all observations and N = Total number of observations.
Calculation of Mean for different series using different methods
• INDIVIDUAL SERIES
1) Direct Method
where, ΣX = Sum of all observations and N = Total number of observations.
For example:
2) Assumed Mean/ Shortcut Method
where, d = (X – A) ; A = Assumed mean and N = Total number of observations.
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For example:
(Take A = 250)
3) Step Deviation Method
where, d’ = (X – A) ; C is the common factor in d ;
C
A = Assumed mean and N = Total number of observations.
For example:
(Take A = 850)
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• DISCRETE SERIES
1) Direct Method
where, ΣfX = Sum of all observations multiplied by their respective frequency
and Σf = N = Total number of observations.
For example:
2) Assumed Mean / Shortcut Method
where, d = (X – A) ; A = Assumed mean and Σf = N = Total number of observations.
For example:
(Take A = 200)
3) Step Deviation Method
where, d’ = (X – A) ; and C is the common factor in d.
C
A = Assumed mean and Σf = N = Total number of observations.
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For example:
(Take A = 200)
• CONTINUOUS SERIES
1) Direct Method
where, Σfm = Sum of midpoints of classes multiplied by their respective class frequency
Σf = N = Total number of observations.
For example:
2) Assumed Mean / Shortcut Method
where, d = (m – A) and m is the midpoint of the respective class.
A = Assumed mean and Σf = N = Total number of observations.
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For example:
(Take A = 35)
3) Step Deviation Method
where, d’ = (m – A) ; m is the midpoint of the respective class and C is the common factor
C
in d. A = Assumed mean and Σf = N = Total number of observations.
For example:
(Take A = 35)
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Properties of Arithmetic Mean
1. The sum of deviations of observations from their arithmetic mean is always equal to zero.
Symbolically Σ(X – X ) = 0
When we calculate the deviations of all the items from their arithmetic mean ( X = 30), we find
that the sum of the deviations from the arithmetic mean, i.e. Σ(X – X) comes out to be zero.
2. Arithmetic mean is NOT independent of change of origin
If each observation of a series is increased (or decreased) by a constant, then the mean of these
observations is also increased (or decreased) by that constant.
3. Arithmetic mean is NOT independent of change of scale
If each observation of a series is multiplied (or divided) by a constant, then the mean of these
observations is also multiplied (or divided) by that constant.
4. The sum of squares of deviations of observations from their arithmetic mean is minimum.
Σ(X-X)2 is always minimum.
5. If arithmetic mean and number of items of two or more related groups are given, then we
can compute the combined mean using the formula given below.
Combined Mean
If we have the arithmetic mean and number of items of two groups, we can compute combined mean
of these two groups by applying the following formula:
For example:
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Weighted Mean
It refers to the average when different items of a series are given different weights according to
their relative importance.
In case of simple arithmetic mean all items of a series are given equal importance. The Weighted
Mean is given by:
For example:
Corrected Mean
To find the correct mean when incorrect and correct entries are given:
Arithmetic Mean at a Glance
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Arithmetic mean in special cases
1) Cumulative Series (Less-than or More-than series): Cumulative frequency series is first
converted into simple frequency series and then mean is calculated in the usual manner.
2) Mid-Value series: There is no need to convert the mid-value series into classes since only the
midpoint is required for calculation of mean.
3) Inclusive series: There is no need to convert inclusive series into exclusive series as the midpoint
remains the same in both types of series for calculation of mean.
4) Open-ended series: The missing class limits are assumed according to the pattern of class
intervals of other classes and then the mean is calculated in the usual manner.
5) Unequal class series: Mean can be calculated in the usual manner by first calculating the
midpoints of each class even if it is of unequal size.
Merits of Arithmetic Mean
➢ It is based on all observations i.e it takes into consideration all the values in a given series. It is
considered to be more representative of the distribution.
➢ Its value is always definite and it is rigidly defined.
➢ It is capable of further algebraic treatment. It is widely used in the computation of various
statistical measures such as standard deviation, correlation etc.
➢ Arithmetic mean is the least affected by fluctuations of sampling.
Demerits of Arithmetic Mean
➢ It is affected by extreme values : Since arithmetic mean is calculated using all the items of a
series, it can be unduly affected by extreme values i.e. very small or very large items.
➢ It may give absurd results: For example, if a teacher says that average number of students in a
class is 28.75, it sounds illogical.
➢ It cannot be obtained graphically like median or mode.
➢ Arithmetic mean cannot be computed for qualitative data such as honesty, intelligence etc.
➢ It gives more stress on items of higher value: Arithmetic mean gives more importance to higher
items of a series as compared to smaller items or has an upward bias. If out of five, four values
are small but one is of a bigger value, the bigger value item will push up the average
considerably.
Median
Median is defined as the middle value in the data set when its elements are arranged in a
sequential order, that is, in either ascending or descending order.
It is a positional value. Positional average determines the position of variables in the series.
• INDIVIDUAL SERIES
Steps for calculating median
Step1: First arrange the data in ascending order.
Step2: Use the given formula to calculate the median.
where N = Total number of observations
For example:
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When the number of observations is an even number
For example:
• DISCRETE SERIES
Steps for calculating median
For example:
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• CONTINUOUS SERIES
Steps for calculating median
Step1: Locate the median class where (N/2)th item lies ; N= Σf.
Step2 : Using the formula given below, calculate the median.
For example:
Median = 350 + (80-75) X 50 = 350 + 8.33 = `358.33
30
The median daily wage is `358.33.
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Median Formulae at a Glance
Properties of Median
1) The sum of absolute deviations of items from the median (ignoring the signs) is the minimum. i.e
Σ|X-Median| is minimum.
2) Median is a positional average so is not affected by change in extreme values.
Median in special cases
1) Cumulative Series (Less-than or More-than series): Cumulative frequency series is first
converted into simple frequency series and then median is calculated in the usual manner.
2) Mid-Value series: Mid- values are first converted into classes and then median is calculated in
the usual manner
3) Inclusive series: The inclusive series is first converted into exclusive series and then median is
calculated in the usual manner.
4) Open-ended series: There is no need to complete the class intervals to calculate the median.
5) Unequal class series: Median can be calculated in the usual manner and there is no need to make
the class intervals equal.
Merits of Median
➢ Its value is always definite and it is rigidly defined.
➢ It is not affected by extreme values.
➢ It can be obtained graphically using ogives.
➢ It is appropriate for qualitative data.
➢ It can be calculated even in case of open-ended distributions.
Demerits of Median
➢ It is not based on all observations.
➢ It is not capable of further algebraic treatment.
➢ It is affected by fluctuations of sampling.
➢ It requires arrangement of data in ascending or descending order of magnitude.
MODE
Mode is defined as the value occurring most frequently in a given series and around which other
items of the set cluster most densely.
The word mode has been derived from the French word ‘la Mode’ which signifies the most
fashionable values of a distribution, because it is repeated the highest number of times in the series.
• INDIVIDUAL SERIES
The value which occurs maximum number of times is the mode.
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For example:
Since the value 27 occurs the maximum number of times (thrice) in the series, hence the modal
marks = 27
• DISCRETE SERIES
There are two methods of calculating mode using grouped data:
a) Inspection or Observation method b) Grouping method
a) Inspection or observation method :The value of the variable against the highest frequency
will give the mode.
For example:
Since the maximum frequency is 20 in the given series, hence the value of mode is 30.
b) Grouping method
The highest frequency total in each of the six columns is identified and analysed in the Analysis
Column to determine mode. The last column will be the analysis column and the mode will be the
value against the highest tally in the analysis column.
For example: Calculate the mode from the following data using grouping method.
Grouping Table
Column 1
Age in Column 2 Column 3 Column 4 Column 5 Column 6 Analysis Column
yrs. Frequency
10 2 -- -- -- I
10
20 8 30 -- III
28
30 20 38 IIII I
30
40 10 35 III
15
50 5 I
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The value 30 occurs maximum number of times (6 times) in the analysis column. Therefore, the
value of mode is 30.
• CONTINUOUS SERIES
Step1: Find the modal class using either inspection or grouping method.
a) Inspection/ observation method : The modal class is the class with highest frequency.
For example:
By inspection method, the modal class is 15-20 since it has the highest frequency of 30.
b) Grouping method (Steps same as in discrete series)
Grouping Table
Column 1 Analysis
Column 2 Column 3 Column 4 Column 5 Column 6
Column
Marks Frequency
--
0-5 7 -- -- I
25
50 --
5 - 10 18 II
43
73
10 - 15 25 55 IIII
15 - 20 30 75 IIII
50
20 - 25 20 II
By grouping method, the modal class is 15-20 since it has the highest frequency (tally) in the
analysis column.
Step2: Using the modal class, mode can be calculated by using the formula:
Mo = L + |f1 – f0| X h
|f1 – f0| + |f1 – f2|
Where L = Lower limit of the modal class ; h = width of the modal class
f1 = frequency of the modal class
f0 = frequency of the class preceding modal class.
f2 = frequency of the class succeeding modal class.
Now, L = 15, f1 = 30 ; f0 = 25 ; f2 = 20 ; h = 5
|f1 – f0| = |30 – 25| = 5; |f1 – f2| = |30 – 20| = 10
Mo = L + |f1 – f0| X h
|f1 – f0| + |f1 – f2|
Thus, the mode is 16.67 marks.
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Mode in special cases
1) Cumulative Series (Less-than or More-than series) Cumulative frequency series is first converted
into simple frequency series and then mode is calculated in the usual manner.
2) Mid-Value series: Mid- values are first converted into class intervals and then mode is calculated
in the usual manner
3) Inclusive series: The inclusive series is first converted into exclusive series and then mode is
calculated in the usual manner.
4) Open-ended series: There is no need to complete the class intervals to calculate the mode.
5) Unequal class series: The unequal classes need to be first converted into equal width classes and
frequencies are adjusted before calculating the mode in the usual manner.
Merits of Mode
➢ It is not affected by values of extreme items.
➢ It can be obtained graphically using histogram.
➢ It can be used to describe quantitative as well as qualitative data.
➢ It can be calculated even in case of open-ended distributions without finding class limits.
Demerits of Mode
➢ It is not rigidly defined.
➢ It is not based on all observations.
➢ It is not capable of further algebraic treatment.
➢ It is affected by fluctuations of sampling.
Relationship between Mean, Median and Mode
In a symmetrical distribution: Mean = Median = Mode
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In an asymmetrical distribution: Mode = 3 Median – 2 Mean
Recap
➢ The measure of central tendency summarises the data with a single value, which can represent
the entire data.
➢ Arithmetic mean is defined as the sum of the values of all observations divided by the number of
observations.
➢ The sum of deviations of items from the arithmetic mean is always equal to zero.
➢ Sometimes, it is important to assign weights to various items according to their importance.
➢ Median is the central value of a distribution that divides it into two equal parts with 50% items
placed above it and the other 50% items placed below it.
➢ Mode is the value which occurs most frequently in a given series.
Click on the following links for further explanation of the topics discussed above:
https://www.youtube.com/watch?v=dzX5khpoSaI (Problems Arithmetic Mean)
https://diksha.gov.in/play/content/do_3130390985989652481498 (Mean)
https://diksha.gov.in/play/content/do_3130390986496000001499 (Median)
https://diksha.gov.in/play/content/do_3130390987014062081543 (Mode)
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