Lies, Damn Lies, and Statistics: When Pretend Problem Sets End up on the News

“Business is a legalized form of gambling.”

This is the first line I heard from the mouth of my professor in my first course at Kellogg.

Welcome to Business School.

For my first class entitled, Decision Making in Uncertainty, we crammed all of introduction to probability into one three hour period. We talked about the Monty Hall Problem, and showed how humans tend to not think through numerical probabilities and trust their natural bias (even in the case of a random problem) when the numbers show otherwise.  Quite interesting to see how our biases can really affect our decisions.

We reviewed some of the statements made by the United States government with regards to the chances of a Class 5 Hurricane hitting New Orleans in 2005, and how the statistics that were used didn’t exactly tell the entire story. Statistical probabilities can indeed tell us somethings that, even myself as a man of faith, need to hear.

So then, our next sample problem, is when we begin calculating the chances that a earthquake would hit the gulf coast.  No kidding. We talk about what the chances are it would happen in the lifetime of a 70-year-old.  I get the right answer in the problem set.

Just 3 days later…the news updates start scrolling and have yet to stop.

Damn statistics.

Here’s another damn statistic: American’s give less than 2% to charities.

Buck the trend and give to the Haiti Relief effort.

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January 2010

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