One held by people to be average (4)
I believe the answer is:
mean
'be average' is the definition.
(type of average)
'one held by people' is the wordplay.
'one' becomes 'a' (a thing is one thing).
'held by' is an insertion indicator.
'people' becomes 'men' (men are people).
'a' placed into 'men' is 'MEAN'.
'to' acts as a link.
(Other definitions for mean that I've seen before include "Stingy; five Dn" , "Petty" , "Intend; unkind" , "Name for being stingy" , "Intend, plan" .)