Understanding the Three Averages
People say "average" casually, but in statistics, there are three types of central tendency:
| Measure | Formula | Best For |
|---|---|---|
| Mean | Sum ÷ Count | Symmetric data without outliers |
| Median | Middle value when sorted | Skewed data, income, home prices |
| Mode | Most frequent value | Categorical data, finding peaks |
Why Median Beats Mean for Income Data
The median US household income is about $75,000. The mean is about $105,000. Why the gap? Because high earners pull the mean up. If you put Bill Gates in a room of 50 average people, the mean income skyrockets but the median barely moves. When your data has outliers, the median is a better representation of "typical."
Real-World Examples
Grade Average
Scores: 85, 92, 78, 95, 88. Mean = (85+92+78+95+88) ÷ 5 = 87.6. Use our GPA calculator to convert letter grades to GPA.
Home Prices
Prices: $200K, $220K, $250K, $280K, $1.2M. Mean = $430K, but median = $250K. Median is clearly more useful here since the $1.2M outlier distorts the mean.
For more detailed spread analysis, try our standard deviation calculator.