Wouldnt mean salary be a better representation of the public then median?
In: Other
As my later father used to say about averages. If you put one foot in freezing water and the other in boiling water of average you are comfortable.
Mean is a more representative value because it better represents the populations living experience and not the math.
They show different things. Average salary is one thing, but many people want to know what is a “typical” salary, and median is much better answer to that question. Pretty much everywhere in the world mean salary is significantly higher than median salary because of the few exceptionally high earners.
Because in general when talking about salary you’re making an argument about the purchasing power of the average person. Let’s say the commodity in question costs X dollars, and let’s assume the commodity is something expensive but you don’t need to buy one very often, like, say, a car. Then, if the median income is greater than X dollars multipled by some multiple which accounts for other expenses, taxes, etc, you can make an argument like “this commodity is affordable”, given that 50% of people can afford it (the upper 50%). Conversely, you can also make the argument that “most people” (50% or greater) are living “comfortably”, since they can afford such commodities, which gives you a bit of a picture of the financial health of your society.
You can also use median to make the inverse argument; if there is some life necessity, like housing, whose price is prohibitively high relative to the (multiple of choice of) the median salary, then you can say something like “there exists a housing crisis because housing is unaffordable for 50% of people”.
If you use mean, you can’t make such an argument. As others have said, if 1 person makes a million dollars and 1000 people make 10 dollars and your commodity X is 1000 dollars, then your mean might suggest that the average person can afford that commodity but really only the top guy can.
Take a million people, and pay each of them $1000/month. Mean and median are both $1000, and you have a grand total of $1B/month in salary. Now choose imagine you double that number to $2B/month, according to one of two scenarios:
* Scenario 1: Everybody earns $2000/month. Mean and median are now both $2000.
* Scenario 2: Almost everybody still earns $1000/month, but one single person now earns $1,000,001,000 per month. Mean is $2000, but median is still $1000.
In fact, as long as you have 1M people and $2B, you always have $2000 of mean salary, because that’s how you calculate the mean. Instead, the median gives you some sort of perspective for what the “shape” of the numbers looks like.
The mean salary is determined by adding all the salaries up and then dividing by the number of salaries. Because of this the mean is very susceptible to extremely high and extremely low salaries. Let’s have an example. Imagine one hundred people. 99 of those people make nothing. One person makes a million dollars a year. The mean income would then be 10k a year, but the median would be zero. The median in this case is a lot closer to what a typical person in this scenario is making. Statistics can be misleading!
When the mean is vastly different from the median, it is a good indication that there is some significant inequity in the data set.
Mean averages everything, median **sorta** is an average that excludes the extremes.
The mean number of legs people have is less than two. The median value is two.
The reason is some people have lost one or both legs, putting the average of the population below two. Median is more representative.
Why does no one ever use the mode?
The mean is much simpler to calculate: You just need to know the total economic output of a country and devide it by the number of people (for GDP per capita) or number of workers (for salary). To calculate the median, you need individual data for each person. As the latter is not known in many cases, particularly for countries without strong statistical offices, the median is given for international comparison, even if the median would hold more relevant information in. most cases.
If a billionaire walks into McDonalds their average wealth makes them all millionaires. That’s mean average, but median would be a bit closer to what most people would think of as average
Latest Answers