Shown below is a histogram representing the income of the employees of a local f

Question

Shown below is a histogram representing the income of the employees of a local fortune 500 company. A representative of this company then released the following statement: It is a great day for our company when we can finally say that more than half of our workforce is making over $100,000.00 per year. When the average salary is this high we can without reservation claim to be the greatest company to work for in this great nation." Do you believe this statement to be an accurate representation of the statistics shown above? Explain your conclusions. How could you change this statement to accurately portray this information?

Explanation / Answer

a) No, the statement above is not accurate representation of the statistics shown above. We can see from the histogram that the distribution of annual salary is right skewed. In these cases, mean is not a good measure of central tendency as it is heavily affected by outliers, which in this case are the employees sitting at top having very high income. In these cases, Median is a better representation of central tendency, which in this case is 68,734 dollars.

b) Instead of average salary being quoted in the statement, median salary should be quoted.

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