Session-2: Measures of Central Tendency:

Mean, Median, Mode, Percentiles and

Quartiles

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 Characteristics of Frequency Distribution
• The frequency curves of a large variety of distributions are found to be bell shaped.
They start from the X-axis, or points very near to X-axis, slowly rise, reach a
maximum point and slowly fall and terminate on the X-axis or at points very near to
X-axis.
• For distributions possessing this property, the following four characteristics will give
a sufficiently detailed description of the distribution.
1) Central tendency : The tendency of the observations to cluster round some central
value is known as central tendency.
2) Dispersion : The scatter of the observations about the central value is called
dispersion.
3) Skewness : Degree of symmetry of the distribution is measured by skewness.
4) Kurtosis : Degree of peakedness or flatness is measured by kurtosis.

• The following are the common averages: Arithmetic mean, median, mode, partition
values, geometric mean and harmonic mean.
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The Bell-Shaped (Symmetric/Normal)Curve

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 Arithmetic Mean (AM) or Average
• This is the commonly used average or measure of location.
• Let 𝑥1 , 𝑥2 , … , 𝑥𝑛 be a set of n observations of the sample and 𝑓1 , 𝑓2 , … , 𝑓𝑛 be their
corresponding frequencies. Then the sample AM is defined as:
σ𝑛
𝑖=1 𝑥𝑖
𝑥=ҧ 𝑛
for ungrouped data
σ𝑛
𝑖=1 𝑓𝑖 𝑥𝑖
𝑥=
ҧ for grouped data
𝑁
where n is the number of observations and N is the sum of frequencies.

• Well-defined measure of location and easy to compute.

• Affected by extreme observations (outliers). Interpretation could be difficult in
such cases.

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 Median and Mode
• The median is the value in the middle when the data are arranged in ascending
order.
• Clearly median is a positional average. Let there be n observations. Arrange the
data in ascending order. Then
𝑀𝑒𝑑𝑖𝑎𝑛 = 𝑚𝑖𝑑𝑑𝑙𝑒 𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛 𝑖𝑓 𝑛 𝑖𝑠 𝑜𝑑𝑑.
𝑀𝑒𝑑𝑖𝑎𝑛 = 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑜𝑓 𝑚𝑖𝑑𝑑𝑙𝑒 𝑡𝑤𝑜 𝑜𝑏𝑠𝑒𝑟𝑣𝑎𝑡𝑖𝑜𝑛𝑠 𝑖𝑓 𝑛 𝑖𝑠 𝑒𝑣𝑒𝑛.
• Not affected by outliers.

• Mode is that value which occurs more frequently than any other value in the
data set.
• Considered as an unstable average as this measure is not unique.

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 Percentiles and Quartiles
• A percentile provides information about how the data are spread over the interval
from smallest to the largest value.
• The 𝑝𝑡ℎ percentile is a value such that at least p percent of the observations are less
than or equal to this value and at least (100-p) percent of the observations are greater
than or equal to this value.
Calculation of percentiles
1) Arrange the data in ascending order
𝑝
2) Compute the index 𝑖 = × 𝑛 where p is the percentile of interest and
100
n is the number of observations.
3) a) If i is not an integer, round up. The next integer greater than i denotes
the position of the 𝑝𝑡ℎ percentile.
b) If i is an integer, the 𝑝𝑡ℎ percentile is the average of the values in
positions i and i+1
The 25th percentile, 50th percentile and 75th percentile are respectively called first
quartile (Q1), second quartile (Q2 or median) and third quartile (Q3).
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Example
Q1. A northwestern distribution company surveyed 53 of its mid level managers. The
survey obtained the ages of these managers, which later were organized into the
frequency distribution as shown below. Determine the average age of the midlevel
managers.
Age 20-25 25-30 30-35 35-40 40-45 45-50
Frequency 8 6 5 12 15 7

Q2. Millions of Americans work for offices from their homes. Following is a sample of age
data for individuals who work at homes.
18 54 20 46 25 48 53 27 26 37
40 36 42 25 27 33 28 40 45 25

1) Compute the mean and mode.

2) The median age of the population of all adults is 36 years. Use the median age from
the data to comment on whether the at-home workers tend to younger or older than
the population of all adults.
3) Compute first and third quartiles and 32nd percentile.
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• Solution to Q1.
Class 𝒇𝒊 𝒙𝒊 (midpoints) 𝒇𝒊 ∗ 𝒙𝒊 𝒙𝒊 − ഥ
𝒙 𝟐
𝒇𝒊 𝒙𝒊 − ഥ
𝒙 𝟐

Interval
20-25 8 22.5 180 192.32 1538.55
25-30 6 27.5 165 78.64 471.84
30-35 5 32.5 162.5 14.96 74.80
35-40 12 37.5 450 1.28 15.38
40-45 15 42.5 637.5 37.60 564.04
45-50 7 47.5 332.5 123.92 867.46
Total 53 1927.5 3532.08

σ 𝑓𝑖 𝑥 𝑖 1927.5
• 𝑥ҧ = 𝑁
= 53
= 36.36
𝒙 𝟐
σ 𝒇𝒊 𝒙𝒊 −ഥ 3532.08
• 𝜎2 = = = 66.64, 𝜎 = 66.64 = 8.16
𝑁 53

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Percentile and Quartiles Q2
• Arrange the data in ascending order.
18 20 25 25 25 26 27 27 28 33
36 37 40 40 42 45 46 48 53 54

• First quartile (Q1): 𝑖 = 0.25 ∗ 20 = 5. Since 𝑖 is an integer, Q1 will be the average

25+26
of values in the 5th and 6th positions in the arranged data. Hence, 𝑄1 = 2 = 25.5.
• Third Quartile (Q3): 𝑖 = 0.75 ∗ 20 = 15. Since 𝑖 is an integer, Q3 will be the
average of values in the 15th and 16th positions in the arranged data. Hence, 𝑄3 =
42+45
= 43.5.
2
• 32nd percentile: 𝑖 = 0.32 ∗ 20 = 6.4. Since 𝑖 is not an integer, we round-up. Thus,
𝑖 = 7. Hence, 32nd percentile will be the value in the 7th position in the arranged
data. Hence, 32𝑛𝑑 𝑝𝑒𝑟𝑐𝑒𝑛𝑡𝑖𝑙𝑒 = 27.

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 Reference (s)

• Anderson, D.R, Sweeney, D.J, Williams, T.A, Camm, J.D & Cochran, J.J (2014),
Statistics for Business and Economics, 12 ed., Cengage Learning.
• Black, K (2013), Applied Business Statistics, 7th ed., Wiley India.

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