The danger of working with averages

We all have heard and used this term a lot. I heard it is used in every meeting. We sometimes made decision using this term. That term is ‘average’. Calculating average is easy. You divide a total sum of terms with a number of terms.

The problem with averages is that outliers can completely throw off an entire data set, rendering the average figure entirely meaningless.

This phenomenon is known as “the power law” – a situation where a handful of extremes control the distribution, making the term average entirely useless.

If you have the data with skewed distribution, it’s better to use “median”. The Median is the number found at the exact middle of the set of values.


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