Following the events of Enron, Tyco, HealthSouth, WorldCom, and other corporate disasters, business students need to understand that these events were based on the misrepresentation of business and financial data. In each case, people within each organization reported financial information to investors that indicated the companies were performing much better than the actual situation. When the true financial information was reported the companies were worth much less than advertised. The result was many investors lost all or nearly all of the money they put into these companies.

The article “Statistics and Ethics: Some Advice for Young Statisticians,” in The American Statistician 57, no. 1 (2003), (www.amstat.org/profession), offers guidance. The authors advise us to practice statistics with integrity and honesty, and urge us to “do the right thing” when collecting, organizing, summarizing, analyzing, and interpreting numerical information. The real contribution of statistics to society is a moral one. Financial analysts need to provide information that truly reflects a company’s performance so as not to mislead individual investors. Information regarding product defects that may be harmful to people must be analyzed and reported with integrity and honesty. The authors of The American Statistician article further indicate that when we practice statistics, we need to maintain “an independent and principled point-of-view.”

As you progress through this text, we will highlight ethical issues in the collection, analysis, presentation, and interpretation of statistical information. We also hope that, as your learn about using statistics, you will become a more informed consumer of information. For example, you will question a report based on data that do not fairly represent the population, a report that does not include all relevant statistics, one that includes an incorrect choice of statistical measures, or a presentation that introduces the writer’s bias in a deliberate attempt to mislead or misrepresent.

Chapter Exercises  11