If you read that the average cost of a home in Fancy City costs $3 000 000, you might think that you could never afford to buy a house there. If you knew that most houses cost less than $200 000, but a few houses were multimillion-dollar mansions, you would have a different impression. What leads to these different impressions of the same data?

Question

Quizplus · Accepted Answer

The different impressions are likely due to different measures of central tendency. The average cost of a home ($3 million) is higher than the majority of actual house prices ($200,000), which could lead to the impression that homes in Fancy City are generally unaffordable. However, knowing that most houses cost less than $200,000 suggests that the average may be skewed by a small number of very high-priced homes.

If You Read That the Average Cost of a Home