HN user
I don't think that the arithmetic mean is appropriate here (see my replies to two sibling comments) but rather the median.
Your second point is a good one - clearly, funniness is subjective. On the other hand, I don't think my argument relies on the precise quantitative definition of funniness!
You can meaningfully count up the total number of fingers that five people have between them, and divide it by five.
You cannot meaningfully add together how funny five people are and divide it by five. However, you can put five people in order of how funny they are, and point to the middle one.
The only appropriate concept of average for ordinal data (e.g. how funny someone is) is the median, from which it follows by definition that 50% of people are less funny than average.
PS - if it is true that it "cracks you up" every time you hear "the 50% of people are above/below average fallacy", I suggest that you might be one of the 50% of people who have a below-average sense of humour ;)
I know what the distinction between the mean and the median is, and I know which one is appropriate to use with quantity like "how funny someone is" (hint: you can take three people and point to the one who is in the middle on the funniness scale, but you can't add together how funny they are and divide it by three).
Given that most people are not very funny[0] but that most people like to believe that they are funny, it is probably a very profitable enterprise to sell someone an experience that lets them believe (even if just for an hour) that they are much funnier than they actually are.
[0] consider that 50% of people are less funny than average, and then reflect on how funny the average person is.