Society of Actuaries (SOA) PA Practice Exam

Which of the following best summarizes the visualization technique for comparing means of the target variable across factor levels?

1. Box plots

2. Histograms

3. Scatter plots

4. Pie charts

The correct answer is: Box plots

Box plots are particularly effective for summarizing the means of a target variable across different levels of a categorical factor. They provide a visual representation that displays the median, quartiles, and potential outliers in the data. Box plots allow for easy comparison of the distribution of the target variable among the different levels of the factor, making it straightforward to see differences in central tendency and variability. Other visualization techniques mentioned do not serve this purpose as effectively. For instance, histograms display the distribution of a single variable and are not ideal for comparing multiple group means simultaneously. Scatter plots are mainly used for showing relationships between two continuous variables and do not directly summarize means across categorical factors. Pie charts represent parts of a whole but lack the capability to show central tendencies or distributions across multiple groups, making them ineffective for this type of comparison. Thus, box plots stand out as the best choice for visualizing and comparing the means of a target variable across different levels of a factor.