Friday, September 5, 2008

Mean or Median?

Sometimes data is so noisy that the mean may vary significantly because of outliers. Although the use of median loses some of the data from mean, if the ratio of mean to median remains relatively stable over time (or within a scaled index) is median a valid metric? Generally a company wants to improve total (and mean) metrics for something like revenue. The danger of moving median solely is that the outliers (which may provide significant upside), are lost or deemphasized.

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