Which restaurant do you think is better, the Chinese or the Japanese? By asking this question to a fellow student, I wasn’t interested in knowing whether she preferred Chinese or Japanese food, neither which restaurant she thought offered the most bang for your buck, but rather how each of these two restaurants fared among their respective “populations”. To put it more simply, I was interested in knowing which one was further above the average Geneva Chinese (or Japanese) restaurant, and of course, as put forward by another fellow student, controlling for prices.
The question I should have asked was which restaurant you think has the highest Z score, as remarked by a third fellow. Chinese and Japanese restaurants each have their own Normal distribution in one’s mind, as illustrated below. The average restaurant has a Z score of zero and, as it turns out, the Japanese in question has one around 0,8 while the Chinese one around 0,5. The Japanese is the preferred one, while they are both above average. Now it’s clear!
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