Do you think the price of a house like this is an outlier? What about the one below it?

“How do these outliers trick us in statistics?”

Well…..

According to the National Institute of Standards of Technology, “An outlier is an observation that lies an abnormal distance from other values in a random sample from a population. In a way, this definition leaves it up to the analyst (or a consensus process) to decide what will be considered abnormal. Before abnormal observations can be singled out, it is necessary to characterize normal observations.”

In layman’s terms, an outlier is a data set that is far larger or far smaller than the other data sets. In math, these outliers ruin the average (mean) because it is skewed and misleading.

So how do these outliers trick us in statistics? So think of a graph representing the average pay of the world. The average pay per year for Monaco is $186,080. The average pay per year in Afghanistan is $390. Both are outliers. Even though these numbers will skew the result of the mean, it is still essential to the statistical analysis.