As asked
A colleague says you cannot use a t-test because your revenue metric is heavily right-skewed. How do you respond, and what sample size would make you comfortable proceeding?
Sample answer outline
The Central Limit Theorem guarantees that the sampling distribution of the mean approaches normality as sample size grows, regardless of the underlying distribution. For moderately skewed distributions, n=30 is often cited as a rule of thumb, but for heavy-tailed metrics like revenue, n=200 or more may be needed. The candidate should mention that they would check with a bootstrap distribution of the mean to verify normality, and consider log-transforming or using a non-parametric test like Mann-Whitney U as an alternative.
Expect these follow-ups
- When would you use a Mann-Whitney U test instead of a t-test, and what does it actually test?