Median
Definition
The middle value of a dataset sorted in ascending or descending order. For an even number of values, it is the average of the two middle values. Resistant to the influence of outliers, making it a useful complement to the mean.
- Definition
- Middle value of a sorted dataset
- Even-count case
- Average of the two middle values
- Outlier resistance
- Resistant to outliers
Common questions
Why is the median often preferred over the mean for loss or cost data?+
Financial figures such as fraud losses are typically right-skewed, with a small number of very large cases, so the mean is pulled upward and no longer reflects a typical case, whereas the median stays anchored to the bulk of the distribution.
Does the median use all the values in a dataset?+
The median depends only on the rank order of values and the identity of the middle one or two, so it ignores how far the other values are from the centre, which is exactly why extreme values do not distort it.
Related terms
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- Standard Deviation
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- Variance
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