Measures of central tendency are the most basic and, often, the most informative description of a population’s characteristics. They describe the “average” member of the population of interest. There are three measures of central tendency:
Mean — the sum of a variable’s values divided by the total number of values
Median — the middle value of a variable
Mode — the value that occurs most often
The incomes of five randomly selected people in the United States are $10,000, $10,000, $45,000, $60,000, and $1,000,000.
Mean Income = (10,000 + 10,000 + 45,000 + 60,000 + 1,000,000) / 5 = $225,000
Median Income = $45,000
Modal Income = $10,000
The mean is the most commonly used measure of central tendency. Medians are generally used when a few values are extremely different from the rest of the values (this is called a skewed distribution). For example, the median income is often the best measure of the average income because, while most individuals earn between $0 and \$200,000, a handful of individuals earn millions.