Question

1. Why do we prefer the median as a better measure of central tendency when the data are positively/negatively skewed? Are there times in which mean or mode should be used instead? Explain your answer.

2. Find an article about the misuse of statistics and share what you have learned from the article. Then, find an example of when statistics were misused/skewed and state the reason why you think the statistics were reported that way.

3. Maybe you have considered buying a term life insurance policy. The expected value of any term life insurance product yields a positive expected value for the insurance company and a negative expected value for you, meaning the insurance company will make profits by selling their insurance products. Would you still buy the term life insurance? Why or why not? Are there other examples other than insurance that uses this same concept?

Answer 1

1) The median is considered a good measure of central tendency when the data is skewed. Median is unaffected by the skewness and not sensitive to outliers.

The median is the central most value of the dataset and is unaffected by skewness and outliers.

Mean is used to calculate the average of the observation.

Mode is used to find out the most occuring observation.

2)

3) If the insurance company makes profits by selling insurance policy and the individuals are negatively impacted by the same, they will still buy the insurance policy as the future risk is an unsure event.

The same applies to the deposits in bank. The deposits are given by banks as loans and still a higher interest rate is charged on loan amount as compared to the deposit amount.