Do you ever wonder what the term “Average” means when you hear things like “… the average home value,”… the average cost of a new vehicle”, or, my favorite,“… the average income?” You should because, as a statistics professor in a former like, they can mean very different things.

There are three different types of averages: mean, median, and mode. With the ‘mean,’ you add up the value of all the items being considered: homes, cars, income, and divide by the number of items. This is what most people think of when they hear the term average. And they may be right, but then again, they might not be. The problem with this measure is outliers. If you have a costly home in a modest neighborhood, which occurs during the early stages of gentrification, the average would be skewed high if the ‘mean’ average is used. The average is best suited for like-valued items. Any ‘mean’ income compilation that includes Elon Musk is going to be very skewed to the high side.

Next is the ‘median’ value. As the name implies, it is the value in the middle. Every list of items, regardless of size, has a mid-point, the 50th percentile. This method tends to ignore the outliers. Even if there are really big or very small valued items in the collection, the ‘median’ says that most of the items gather around this mid-point number. It does not allow outliers to skew the result in either direction.

The ‘mode’ is the final type of average. In a given data set, it is the value that occurs most frequently. You often see lists of popular baby names for a given year. The winners are the modal value for boys and girls, e.g., Brad and Amy, the most frequently occurring names.

The reason for this brief discussion is so you will know which average the politician or economist is speaking about. They are all called averages, but they mean very different things. When you see or hear the word average, you should immediately determine which type.