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Mean, Median, Mode and More

Populations & Samples, Parameters & Statistics


Summarizing the Data with a Metric
Discrepancy and Error
Estimating the Summary Metrics: Minimizing the Error
Arithmetic Mean, Median, and Mode
Geometric Mean, Harmonic Mean and Mid-Range
Breakdown Points of the Arithmetic Mean and the Median

-- Mandar Gadre
(July 2013)

Mandar Gadre, July 2013.

Data Summary Metrics

The Whole Population

A Sample Dataset

Parameter: is a certain property of the population as a whole.


e.g. the median age of all Indian citizens.

Statistic: is an estimate of that property, drawn from the sample dataset.


e.g. estimated median, calculated from the ages of, say 1 million citizens.

Mandar Gadre, July 2013.

Population and Sample

If a certain property of every individual in the population has


only one value, no need to summarize!
For non-identical values of the property (almost everywhere in
the real world), we look for a Summary Statistic such as a
mean.
But how do we choose the summary statistic, S?

Xi,

S
i = 1 to N

Mandar Gadre, July 2013.

Summarizing the Data

Discrepancy ei is the deviation of an individual data-point xi


from this Summary Statistic.
We take s as the candidate summary statistic.
You could define your own way of calculating discrepancy!
Three common ways
1. Comparison
Is the individual reading same as the candidate?
ei = 1, xi s
ei = 0, xi = s
2. Absolute difference from the candidate
ei = |xi s|
3. Square of the difference from the candidate
ei = (xi s)2

Mandar Gadre, July 2013.

Discrepancy

Error E is the aggregate of individual discrepancies ei of all the


individual data-points xi from the Candidate Summary Statistic s.
E for the three types of discrepancies would be
1. Comparison with the Candidate
E = i ei, where
ei = 1, xi s; ei = 0, xi = s
2. Absolute difference from the Candidate
E = i |xi s|
3. Square of the difference from the Candidate
E = i (xi s)2

Mandar Gadre, July 2013.

Error

We define S, Summary Statistic, as the value of s for which E is


minimized.
We have given special names for the three types of Summary Statistics
arising from the three types of discrepancies:

Arising from Comparison:


S, such that the error
E = i ei, (where ei = 1, xi s; ei = 0, xi = s) is minimized.
It turns out that the value of s that occurs the most frequently will
minimize this error. There may be one or more such values.
We call this the Mode.
e.g. if we want to sell single size mens t-shirts, we can get them made
with size equal to the mode.

Mandar Gadre, July 2013.

Calculating S

S, such that the error E = i |xi s| is minimized.


This is similar to the absolute value function and the derivative is the
signum function!

To find the minimum, we make the derivative (signum function) zero


which happens at the middle reading when all the data-points are
arranged in increasing order.
We call this the Median.
If we want to summarize income-per-household in a huge country like
India (data-set with severe outliers which do not require higher
weightage) we will use the median.

Mandar Gadre, July 2013.

Arising from Absolute Difference:

We call this the Arithmetic Mean.


If we want to summarize the height of children in a kindergarten class,
we may use the mean: the data is normally distributed and most likely
there arent any extreme outliers (though in such cases the median
and the mode are not any worse summary statistics to use).
+++
Mode is used while capturing categorical/nominal data.
Mean is used to capture the effect of extreme outliers.
Median is used for datasets with extreme outliers which need not be
given any higher weightage.
The outliers sway the arithmetic mean much more than they sway the
median, because of the square-of-the-distance.

Mandar Gadre, July 2013.

Arising from Square of Absolute Difference:


S, such that the error E = i (xi s)2 is minimized.
Making the derivative zero gives us
i 2(xi S) = 0 or N*S = i xi
or
S = (i xi) / N

Geometric Mean:
Defined only for dataset with all positive numbers, it is the Nth
root of the product of all N data-points.

G = ( (xi) ) 1/N
It is used while summarizing/aggregating data with different
categories and scales involved. E.g. rating companies on various
metrics taken together.
Or where the data-points show compounding behavior e.g.
summarizing performance of a stock over the past N years.

Mandar Gadre, July 2013.

Other Summary Statistics

Harmonic Mean:
Defined only for dataset with all non-zero numbers, it is the
reciprocal of the arithmetic mean of reciprocals of xi.

H = 1 / (1/N(i (1/xi)) )
It is used while summarizing rates. e.g. the average speed of
aircraft between numerous Mumbai-London trips; or the
average rate (in ml/min) at which a blood donor fills a bag over
multiple visits.

Mandar Gadre, July 2013.

Other Summary Statistics

Mid-Range
Defined as the arithmetic mean of the maximum and minimum
data-points

Mid-Range = (xmax + xmin)


This is one of the least efficient (since it ignores all the datapoints except for min and max) and the least robust (since it
only depends on the extreme data-points and will be swayed if
they are extreme outliers) statistics.
It is used in process control. e.g. where the process is tightly
controlled and the outliers are already handled/trimmed out.

Mandar Gadre, July 2013.

Other Summary Statistics

Robust Statistics are those summary statistics which are insensitive to


which sample we choose from the population; or to the presence of
contaminated/bad/incorrect data in that sample. Breakdown Point
represents the degree of robustness of a statistic.

Breakdown Point is the largest proportion of contaminated datapoints (e.g. an arbitrarily large data-point) a statistic can handle
before yielding an absurd result (e.g. an arbitrarily large statistic).
Since the arithmetic mean depends on all the values and is swayed by
changing even one value among N, its Breakdown Point is 0.
The median is the strongest statistic, with its Breakdown Point at 50%.
(If more than 50% of the data is contaminated, a statistic cannot be defined
anyway since there is no way to distinguish between the actual underlying
distribution and the contaminated one.)

Mandar Gadre, July 2013.

Robust Statistics