Suppose researchers studying obesity in college students find that engineering majors have a higher average body weight than liberal arts majors. Obviously math and engineering courses aren't more caloric than English and history courses, but it's tempting to start comparing donut consumption in the engineering and liberal arts cafeterias.
Normalizing Mix Variables in Financial Data
Most law firm managers understand the importance that business analysis plays in steering a firm toward success. However, as with so many things in life, a little bit of analysis can be a dangerous thing. Management reporting processes typically collect, organize, and ultimately combine data sets from different practice areas, offices, industries, etc. Superficial reports compare aggregate characteristics (<i>e.g.</i>, top-line results) without identifying the varying components contained within the data sets and normalizing for these variables. This can lead those who examine such reports to draw misleading or even totally wrong conclusions.
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