How Do You Use Geometric And Harmonic Means In Statistical Analysis?
The average, or mean, is one of the most popular descriptive measures in statistics. When most people use the term “mean,” they are referring to the arithmetic mean, in which we add the numbers in a set and then divide the sum by the number of values or observations in the set. Some analytical situations, such as average rate of return or average speed, may require greater precision than the arithmetic mean allows. For these situations, the geometric and harmonic means are available for our use. Suppose you have a set of data that cannot best be summarized by the regular arithmetic mean. Let’s first decide whether you should use the geometric or harmonic mean. In contrast to adding the numbers in a set, n, and dividing by n to get an arithmetic mean, the geometric mean multiplies the values in n, then takes the nth root. In situations involving rates of growth or rates of return, such as interest rates, use the geometric mean. Application of the geometric mean is similar to the princip
