CHAPTER THREE

MEASURES OF CENTRAL TENDENCY

Specific Objectives
At the end of this topic the trainee should be able to:
➢ Define the measures of central tendency;
➢ State the properties of the measure of central tendency;
➢ Determine the measures of central tendency.

Introduction
Measures of central tendency show the tendency of some central value
around which data tends to cluster. These are statistical values which tend
to occur at the centre of any well ordered set of data. Whenever these
measures occur they do not indicate the centre of that data

Objectives of averaging
➢ To get one single value that describes the characteristics of the
entire data.
➢ To facilitate comparison.

Properties of Good Measure

➢ It should be easy to understand i.e. since statistical methods are
designed to simplify complexity, it is described that an average be
such that can be readily understood, its use is bound to be very
limited.
➢ Should be simple to compute.
➢ Should be based on all observation.
➢ Should be rigidly defined, i.e. an average should be properly defined
so that it has one and only one interpretation.
➢ Should be capable of further algebraic treatment.
➢ Should have sampling stability.
➢ Should not be unduly affected by the presence of extreme values.

N/B. The following statistical terms are commonly used in statistical

calculations. They must therefore be clearly understood.

i) Class limits
These are numerical values which limits the extend of a given class i.e. all
the observations in a given class are expected to fall within the interval
which is bounded by the class limits e.g. 15 & 19 are class limits as in the
table of the example above.

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ii) Class boundaries
These are statistical boundaries, which separate one class from the other.
They are usually determined by adding the lower class limit to the next
upper class limit and dividing by 2 e.g. in the above table the class
19 + 20
boundary between 19 and 20 is 19.5 which is = .
2

iii) Class mid points

These are very important values which mark the center of a given class.
They are obtained by adding together the two limits of a given class and
dividing the result by 2.

iv) Class interval/width

This is the difference between an upper class boundary and lower class
boundary. The value usually measures the length of a given class.

The following are important measures of central tendency

• Arithmetic mean
• Median
• Mode
• Geometric mean
• Harmonic

Arithmetic Mean
The most popular and widely used measure for representing the entire data
by one value is an average. Its value is contained by adding together all the
observation and dividing this total by the number of observation
These is commonly known as average or mean it is obtained by first of all
summing up the values given and by dividing the total value by the total no.
of observations.
X
I.e. mean =
n
Where x = no. of values
∑ = summation
n = no of observations
Example
The mean of 60, 80, 90, 120

50
 60 + 80 + 90 +120
4

350
=
4

= 87.5

The arithmetic mean is very useful because it represents the values of most
observations in the population.
The mean therefore describes the population quite well in terms of the
magnitudes attained by most of the members of the population

Computation of the mean from grouped Data i.e. in classes.

The following data was obtained from the manufacturers of electronic
cells. A sample of electronic cells was taken and the life spans were
recorded as shown in the following table.

Life span hrs No. of cells Class MP(x) X–A=d fd

(f)
1600 – 1799 25 1699.5 -600 -15000
1800 – 1999 32 1899.5 -400 -12800
2000-2199 46 2099.5 -200 -9200
2200 – 2399 58 2299.5(A) 0 0
2400 – 2599 40 2499.5 200 8000
2600 – 2799 30 2699.5 400 12000
2800 – 2999 7 2899.5 600 4200
A = Assumed mean, this is an arbitrary number selected from the data, MP =
mid point

Arithmetic mean = assumed mean +

 fd 12800
= 2299.5 + −
 f 238
= 2299.5 +-53.78

= 2245.72 hours

Example 2 – (use of the coded method)

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The following data was obtained from students who were registered in a
certain college.
The table shows the age distribution

Age (yrs) No. of Students mid points x-a = d D/c = u fu

(f) (x)
15 – 19 21 17 -15 -3 -63
20 – 24 35 22 -10 -2 -70
25 – 29 38 27 -5 -1 -38
30 – 34 49 32(A) 0 0 0
35 – 39 31 37 +5 + 31
40 – 44 19 42 +10 +2 38
193 -102

Required calculate the mean age of the students using the coded method

Actual mean = A(assumed mean) +

 fu c
f
−102
= 32 + 5
193

= 29.36 years

Merits of arithmetic mean

• It possess first six our seven characteristics of good average and no
other average possess such large number of characteristics
• It is unduly affected by the presence of extreme value.
• It utilizes all the observations given.
• It is a very useful statistic in terms of applications. It has several
applications in business management e.g. hypothesis testing, quality
control e.t.c.
• It is the best representative of a given set of data if such data was
obtained from a normal population.
• The a.m. can be determined accurately using mathematical
formulas.

Limitation
• It is difficult to compute mean without making assumption regarding
the size of the class- interval of the open end classer.

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 • If the data is not drawn from a ‘normal’ population, then the a.m.
may give a wrong impression about the population.
• In some situations, the a.m. may give unrealistic values especially
when dealing with discrete variables e.g. when working out the
average no. of children in a no. of families. It may be found that the
average is 4.4 which is unrealistic in human beings.

The Median
This is a statistical value which is normally located at the center of a given
set of data which has been organized in the order of magnitude or size e.g.
consider the set 14, 17, 9, 8, 20, 32, 18, 14.5, 13. When the data is ordered
it will be 8, 9, 13, 14, 14.5, 17, 18, 20, and 32. The middle number/median
is 14.5. The importance of the median lies in the fact that it divides the
data into 2 equal halves. The no. of observations below and above the
median is equal. In order to determine the value of the median from
grouped data, the data is grouped the median may be determined by using
the following methods
i. Graphical method using the cumulative frequency curve
(ogive).
ii. The formula

Example

Referring to the table in 105, determine the median using the methods
above

The graphical method

IQ No of resid UCB Cumulative Frequency

0 – 20 6 20 6
20 – 40 18 40 24
40 – 60 32 60 56
60 – 80 48 80 104
80 – 100 27 100 131
100 – 120 13 120 144
120 – 140 2 140 146
146

Xv
160
140

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120
100
80
60
40
20
20 40 60 80 100 120 140 160

Value of the median

n+1 146+1
The position of the median = =
2 2
Computation
The formula used is
Media= L +i⁄f{m-c}
Where L = Lower class boundary of the class containing the median
m = (n/2)th or (n+1/2)th
c= Cumulative frequency of the class before that containing the
median.
f = Frequency of the class containing the median

Media= L +i⁄f{m-c}
73.5 - 56
= 60 + × 20
48
= 60 + 7.29
= 67.29

Merits of median
• It is not influenced by the presence extreme values
• The sum of the deviation of observation from median is minimum
• It shows the centre of a given set of data
• Knowledge of the determination of the median may be extended to
determine the quartiles
• The median can easily be defined
• It can be obtained easily from the cumulative frequency curve

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 • It can be used in determining the degrees of skewness

Limitation
• Its value is not determined by each and every observation.
• Median is not capable of algebraic treatment.
• Median is less reliable.
• It is affected by sampling fluctuation.
• In some situations where the no. of observations is even, the value of
the median obtained is usually imaginary.
• The computation of the median using the formulas is not well
understood by most businessmen.
• In business environment the median has got very few applications.

Quartiles, Deciles, Percentiles

The procedure for computing quartiles deciles etc is the same as for median
For grouped data the following formula are used for quartiles, deciles and
percentiles:

Q1 = L + i/f (m–c)

Where, Q1= First or lower quartile.

L= Lower class limit of the lower quartile group.
i = class interval of the lower quartile group.
f = frequency of the lower quartile group.
m = n/4
c = cumulative frequency of the group preceding the lower
quartile group.

Decile:
D2 = L +i/f (m-c)

Where, D2 = second decile

m = 2n/10

Percentile:

P40 = L + i/f (m-c)

Where, P40 = fortieth percentile.

m = 40n/100

Example
The profit earned by 100 companies during 2003-04 are given bellow
Profits (Kshs.) Number of companies
20-30 4
30-40 8
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40-50 18
50-60 30
60-70 15
70-80 10
80-90 8
90-100 7

Calculation Q median, D4 and P80 and interpret the values.

Solution
Calculation of Q1, Q2, Q4, and P80
Profits (Kshs.) f cf
20-30 4 4
30-40 8 12
40-50 18 30
50-60 30 60
60-70 15 75
70-80 10 85
80-90 8 93
90-100 7 100

Q1 =size of N/4th observation = 100/4 =25th observation

Hence q1 lies in the class 40-50
Q1= L+ i/f (m-c)

= 40 +10/18(25-12)
= 40 + 7.22 = 47.22
= 47.22

D4 = L+ i/f (m-c)
= 50 +10/30 (40-30)
= 50 + 3.33
= 53.33

Thus 40 percent of the companies earn an annual profit of kshs.53.33 or

less

P80 = size of 80/100 the observation = 80 the observation

P80 lies in the class 70-80
P80 = L+ i/f (m-c)
= 70 + 10/10(80-75)
= 70 +5

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 = 75
This means that 80 percent of the companies earn an annual profit of
kshs.75 or less
20 percent of the companies earn an annual profit of more than kshs. 75

Mode
This is one of the measures of central tendency. The mode is defined as a
value within a frequency distribution which has the highest frequency.
Sometimes a single value may not exist as such in which case we may refer
to the class with the highest frequency. Such a class is known as a modal
class
The mode is a very important statistical value in business activities quite
often business firms tend to stock specific items which are heavily on
demand e.g. footwear, clothes, construction materials (beams, wires, iron
sheets e.t.c.
The mode can easily be determined form ungrouped data by arranging the
figures given and determining the one with the highest frequency.
When determining the values of the mode from the grouped data we may
use the following methods;-
i. The graphical method which involves use of the histogram
ii. The computation method which involves use of formula

Example
In a social survey in which the main purpose was to establish the
intelligence quotient (IQ) of resident in a given area, the following results
were obtained as tabulated below:

IQ No. of residents Upper class bound CF

1 – 20 6 20 6
21 – 40 18 40 24
41 – 60 32 fo 60 56
61 – 80 48 f1 80 104
81 – 100 27 f2 100 131
101 – 120 13 120 144
121 – 140 2 140 146

Required
Calculate the modal value of the IQ’s tabulated above using
i. The graphical method and
ii. Formula

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 Graphical method

50

40

30

20

10

20 40 60 80 100 120 140

Value of the mode
Computation method
 f1 − f 0 
Mode = L +   ×c
 2f1 − f 0 − f 2 
Where L = Lower class boundary of the class containing the mode
f0 = Frequency of the class below the modal class
f1 = Frequency of the class containing the mode
f2 = frequency of the class above the modal class
c = Class interval
 ( 48 - 32 ) 
Therefore Mode = 60.50 +   × 20
 2 ( 48 ) - 32 - 27 

= 69.14

Merits of mode
• Mode is not affected by extreme values.
• At can be easily used to decide qualitative phenomenon.
• Mode happens to be meaningful as an average.
• It can be determined from incomplete data provided the
observations with the highest frequency are already known.
• The mode has several applications in business.
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 • The mode can be easily defined.
• It can be determined easily from a graph.

Limitation of mode
• Mode cannot always be computed
• If the data is quite large and ungrouped, determination of the mode
can be quite cumbersome
• Use of the formula to calculate the mode is unfamiliar to most
business people
• The mode may sometimes be non existent or there may be two
modes for a given set of data. In such a case therefore a single mode
may not exist

Geometric mean
This is a measure of central tendency normally used to measure industrial
growth rates. It is defined as the nth root of the product of ‘n’ observations
or values
- i.e. GM = n x1 × x 2 ×... × x n

Example
In 1995 five firms registered the following economic growth rates; 26%. 32%
41% 18% and 36%.
Required
Calculate the GM for the above values
GM = 5 26  32  41  18  36

= 15  Log 26 + Log 32 + Log 41 + Log18 + Log 26

No. Log
26 1.4150
32 1.5052
41 1.6128
18 1.2533
36 1.5563
7.3446
Therefore Log of GM = 1/5 x 7.3446 = 1.46892
So GM = Antilog of 1.46892
= 29.43

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Merits
i. It makes use of all the values given (except when x = 0 or
negative)
ii. It is the best measure for industrial growth rates

Demerits
i. The determination of the GM by using logarithms is not familiar
process to all those expected to use it e.g. managers
ii. If the data contains zeros or –ve values, the GM ceases to exist

Harmonic mean
This is a measure of central tendency which is used to determine the
average growth rates for natural economies. It is defined as the reciprocal
of the average of the reciprocals of all the values given by HM.
1
HM =
1 ( 1 + 1 + ... 1 )
n x1 x2 x3

Example
The economic growth rates of five countries were given as 20%, 15%, 25%,
18% and 5%
Calculate the harmonic mean
1
The HM =
1 (1 +1 +1 +1 +1
5 20 15 25 10 5

1
=
0.2(0.05 + 0.07 + 0.04 + 0.10 + 0.2)

1
=
0.092

10.86%

Merits – same as the arithmetic mean

Demerits – same as the arithmetic mean

Weighted mean
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- This is the mean which uses arbitrarily given weights
- It is a useful measure especially where assessment is being done yet the
conditions prevailing are not the same. This is particularly true when
assessment of students is being done given that the subjects being taken
have different levels of difficulties.

Examples
The following table shows that marks scored by a student doing section 3
and 4 of CPA

Subject Scores (x) Weight (w) wx

STAD 65 50 3250
BF 63 40 2520
FA2 62 45 2340
LAW 80 35 2800
QT 69 55 3795
FA3 55 60 3300
w = 285 wx = 18005

Weighted mean
Ewx
Ew

18005
=
285

= 63.17%

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