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Arithmetic Mean Average

An average calculated by adding the value of the points in a data set and dividing the sum by the number of data points. For example, suppose one wishes to calculate the average income of a country with exactly five people in it, and their incomes are $25,000, $26,000, $43,000, $70,000, and $72,000. It is calculated as:

($25,000 + $26,000 + $43,000 + $70,000 + $72,000) / 5 = $47,200.

A limitation to the arithmetic mean average is that it can be overly affected by extremes in either direction. For example, if one of the five persons in the country earns $100 billion per year, the arithmetic mean average income would be in the billions and would not accurately count the other four citizens. For this reason, many analysts use the median in conjunction with the arithmetic mean average. The arithmetic mean average is also called simply the mean.


References in periodicals archive ?
Senate Republicans had investments averaging $365,563, with a median of $110,000.
Nearly half the district's June graduates - 946 students - took the test, averaging 535 on the 800-point verbal section and 552 on the math portion.
He added that 135 new listings came on the market averaging $809,401 or $330 per average square foot.