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Trimmed Mean

Trimmed mean

Before calculating the average, a trimmed mean subtracts a little specified percentage from the highest and smallest numbers. The influence of outliers or data points on the tails that can unfairly affect the traditional mean is reduced by using a trimmed mean.

In order to smooth the results and present a more accurate image, trimmed means are employed when publishing economic statistics. A baseline for comparison is provided by providing a trimmed mean inflation rate along with other measurements.

A trimmed mean is defined as a mean that has been reduced by x%, where x represents the total number of observations that have been omitted from the upper and lower bounds. The trimming points are frequently arbitrary since they are determined by rules of thumb rather than by an efficient process. For instance, a trimmed mean of 3% would eliminate the lowest and highest 3% of results, leaving 94% of the data to be used to calculate the mean.

A trimmed mean is thought to be a more accurate depiction of a data collection because the few erratic outliers that may otherwise potentially bias the data have been eliminated. A truncated mean is another name for a trimmed mean.

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