Suppose you are representing the employees at a large corporation during contrac

Question

Suppose you are representing the employees at a large corporation during contract negotiations. You have a list of the salaries of all the employees at the corporation (The salaries include the many lower level employees and the few high paid management employees) and you plan to find a measure of center (e.g. mean, median, or mode).

a. Which measure or center would you use to represent the employees in an effort to support your claim that the average salary of lower level employees is much lower than the national average (for lower level employees) and thus should be increased?

1.median

2.mean

3.mode

b. Why is this the better choice?

Explanation / Answer

a) Here we should use median. (Ans).

b) We know mean gets affected in presence outliers. So a very high salary can drag the mean towards itself. So we may get a higher average salary than expected. Similarly the other way round.

A mode is the most frequent value in the dataset. So it may happen that we have mostly unique values. And say corresponding to a high or very low salary the frequency is more than 1 (though not many). Then mode will capture that value only, which will give biased result.

On the other hand, median is that value below which 50% and above which 50% observations lie. In presence of outliers or very scattered dataset, median gives the best estimate. Since, the salaries include the many lower level employees and the few high paid management employees, the median will be able to capture the average salary of lower level employees. (Ans).

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