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2. Average, Median and Mode
These are three of the most popular descriptive statistics. Learn how to calculate and interpret them in this lesson.
Calculating the Average (01:00)
The average, or arithmetic mean, is one of the most common descriptive statistics. Here we calculate the average daily revenue for a sports bar. We can do this in Excel using the function AVERAGE.
This function takes an array of cells as its argument and returns the average value of those cells.
Calculating the Median (01:35)
To find the median daily revenue, we sort the revenue amounts from smallest to largest and select the middle value. Excel can find the median with the MEDIAN function. This takes an array of cells as its argument and returns the median value from those cells.
Comparing Average and Median (02:11)
We can obtain interesting insights by comparing the average and median for a dataset. If the average is larger than the median, it suggests there are some very large values skewing the data. For instance, a typical set of personal income figures may contain a small number of people with very large incomes. These values drag the average higher, but have no effect on the median.
Similarly, if the average is considerably lower than the median, it would suggest a small number of very low numbers were dragging the average down.
Calculating the Mode (03:28)
The mode is the most frequently occurring value in the data set. In Excel, we calculate the mode using the MODE.SNGL function. This takes an array of cells as its argument, and returns the mode of that array.
For our sports bar, this function returns an NA error. This is because each day has a different revenue amount, with no revenue value occurring more than once. The mode is only useful if your data has a small number of possible values, for example a list of products.