Home > Statistics Every Writer Should Know > The Stats Board > Discusssion
geometric mean
Message posted by Zoe Martinez on January 30, 2001 at 12:00 AM (ET)
What is the formula for geometric mean and what kind of data is it appropriate for?
READERS RESPOND:
(In chronological order. Most recent at the bottom.)
Re: geometric mean
Message posted by nancy diehl on January 31, 2001 at 12:00 AM (ET)
The geometric mean would be the product of your observations to the power of 1/#observations.
So for example, if you had the values of 2 and 4, the geometric mean would
be the square root(same as 1/2) of 2 x 4; the square root of 8. As opposed to the
arithmetic mean would be (4+2)/2 = 3.Examples of using this? One example I have see is if you are looking at interest rates.
The first year you get a 20% return, second year a 30% return and the third year a 10% return.
The arithmetic mean would be 20%, but it would not accurately reflect the return on the original
amount. Instead, if you used the geometric mean (1.2 x 1.3 x 1.1) to the 1/3 power which equals 1.1972
this would provided a more accurate reflection of your average rate of return ==> 19.72%
Which are the best ??
Message posted by Lurus Ledyati (via 202.134.2.131) on June 25, 2001 at 6:06 AM (ET)
I just want to know :
"which are the best between geometric mean and aritmetic mean ? "
Re: geometric mean
Message posted by JG (via 128.8.22.213) on June 25, 2001 at 10:52 AM (ET)
The word average can be defined in many different ways. Geometric mean is one of these and as explained by Nancy it has it's special uses. The question to ask is - Which average is best to achieve a given purpose ?
Re: geometric mean
Message posted by Paul (via 144.96.160.221) on October 17, 2001 at 10:15 AM (ET)
What do you do with 0 in your data set to calculate geometric mean?
Re: geometric mean
Message posted by Jack Tomsky (via 208.249.113.130) on October 17, 2001 at 6:20 PM (ET)
If one of the data points is zero, then the geometric mean is zero.
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