Statistics versus anecdotes

When you report on something and you have statistics and anecdotes, which should win? Which should be the basis for your conclusions? If you had data on a large part of the US population and then you talked to your brother-in-law, which would be more important to report?

Check out this NYTimes article about the Exodus from Facebook, and think about how statistics and andecdotes are used. Ouch.

Fun with probabilities

Here's a real life application of probability theory. It is similar to the sports betting company business model:

You get an mailing list (email, it is cheaper), and you pick a big football game. You send half the list an advisory that one of the teams will win, and you send the other half an advisory that the other will win, along with the opportunity to subscribe to your newsletter for a low, low price.

To the half of the people that got the correct prediction, you send another letter, picking another big game, and sending half the prediction that one team will win, half the prediction that the other team will win.

People who get two correct predictions in two weeks will be amazed and will be more likely to subscribe to your newsletter.

But you can split that group in half, and send out a third prediction, then split the people who got three weeks in a row right and send out a fourth letter, and so on. You might recycle some of the losers, too, so that some people see that your accuracy is 5 out of 6 weeks and so on.

Imagine getting a letter where the predictions were right five weeks in a row! What is the probability of that? This newsletter must be really good!

Or the newsletter writer knows some probability...

Dilbert economics and a decision tree

Scott Adams has an interesting blog where he tries to reason his way through some of the issues of the day (a bit more seriously than in his cartoons). He has been blogging about all of the decisions associated with building his new house, and one of the big decisions is whether or not to use solar power.

Here is a post where he recognizes that the usual analysis (decision) about solar is just a choice of yes or no. This sounds okay, because you're in the middle of building the house and have to make a decision, right?

Well, there's another branch that people often overlook - wait and retrofit solar later. Nice observation, especially since that branch may be the best one.

I also can't help but smile when I read the summary:

My new home will have solar power. It was a city requirement. I plan to brag about it to people who are passionate about the environment and bad at math.

Sometimes a really smart person talks about things

Ok, so there's lots of blogging and arguing and anxiety about health care. Most of what I read is relatively unhelpful, and some of it is downright misleading. I don't know whether the mis-leaders are doing it on purpose or not (they might not know either).

Dean Kamen, on the other hand, is a pretty smart guy. I think you'll have a different appreciation for the debate after reading this Popular Mechanics piece.

NYTimes article about statistics

I have to link to this article, For Today's Graduate, Just One Word: Statistics mostly because of this quote:

“I keep saying that the sexy job in the next 10 years will be statisticians,” said Hal Varian, chief economist at Google. “And I’m not kidding.”

Works for me. There's also a nice example at the end of the article about how just finding relationships in data is not always enough:

For example, in the late 1940s, before there was a polio vaccine, public health experts in America noted that polio cases increased in step with the consumption of ice cream and soft drinks, according to David Alan Grier, a historian and statistician at George Washington University. Eliminating such treats was even recommended as part of an anti-polio diet. It turned out that polio outbreaks were most common in the hot months of summer, when people naturally ate more ice cream, showing only an association, Mr. Grier said.

Maybe some economic modeling next time first?

Here's a good quiz. I thought of another, operations version:

You're the gate agent for Delta and the flight is overbooked by two people. You announce in the gate area that anyone who wants to take a later flight should get in line. You'll give everyone who volunteers a $1000 voucher for future travel on Delta. After you've given four vouchers, and you realize there are ten people still in line, do you call you boss to see if you can continue to give out vouchers? Or do you realize you probably should have offered $100 vouchers?

Just wondering.