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More than half of adults in U.S. say they lack basic statistical understanding

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Re: More than half of adults in U.S. say they lack basic statistical understanding

#161
post #146
post #128

Earlier quoted context omitted.

I’ve heard this phrased as “the average person has an above average number of legs”.

Wouldn't "the typical person has above average number of legs" or some such be better?

Yes, but less pithy. Placing the "average person" next to the "average number of legs" makes it clear that the idiomatic and intuitive sense of "average" that most people have is wrong. The more precise "typical person" doesn't make that same point as well, though an intelligent reader would certainly be expected to be able to read the same from it.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#162
post #122

Earlier quoted context omitted.

Being aware of Simpsons' paradox doesn't even help. There's no way of knowing what the right level of aggregation is without a theory.

speaking of theory, what exactly is the solution to this paradox? what happens when data just russian-dolls in both directions the deeper you look?

When I have seen instances of this, it's usually because there is another variable. Example from wikipedia:

>A common example of Simpson's paradox involves the batting averages of players in professional baseball. It is possible for one player to have a higher batting average than another player each year for a number of years, but to have a lower batting average across all of those years. This phenomenon can occur when there are large differences in the number of at bats between the years.

The per-year values aren't weighted in the combined total average.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#163

Earlier quoted context omitted.

Well, if we're telling stats jokes... A statistician is a man who with his head in the freezer and his feet in the oven can say "On the whole I feel perfectly normal." Recommended reading: 'How to lie with statistics' - Huff, 1954 :)

Bill Gates walked into a bar. Everyone was, on average, a multi millionaire.

Large bar.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#164
post #92

Earlier quoted context omitted.

I’d recommend reading “How to make the world count” instead of a work of a morally bankrupt guy who used the very same tricks he criticized to discredit the cancer studies of tobacco usage.

I suppose you mean the book "How to Make the World Add Up" of Tim Harford?! :-)

Everyone should just read everything by Tim Harford and then the world would be a better place.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#165
post #63

>> found that 62% of respondents reported no or limited statistical knowledge The other 38% didn't understand the question...(my extrapolation) I did a couple semesters of statistics at uni. And I can confidently say that the number of people who can answer 3 simple questions on statistics (like say mean versus medians, confidence levels or margins of error) is, well, a rounding error from 0. Indeed, statistically, n…

I wish people had an intuitive understanding of probabilities. It seems the average person can only think in terms of "basically never happens", "fifty fifty" and "sure thing".

They do have an intuitive understanding! You just outlined it, and it works well enough for most things. Statistics is generally very useful, but for individuals it's not really important or useful to understand, because the data is rarely ever clear or trustworthy enough to use for making decisions about specific situations.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#166
post #63

Earlier quoted context omitted.

I wish people had an intuitive understanding of probabilities. It seems the average person can only think in terms of "basically never happens", "fifty fifty" and "sure thing".

XCOM should be added to the curriculum.

XCOM probabilities are lies, just like Fire Emblem. Pretty much 0% of games that show you a "percent-to-hit" chance ever give an accurate number.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#167
post #63

>> found that 62% of respondents reported no or limited statistical knowledge The other 38% didn't understand the question...(my extrapolation) I did a couple semesters of statistics at uni. And I can confidently say that the number of people who can answer 3 simple questions on statistics (like say mean versus medians, confidence levels or margins of error) is, well, a rounding error from 0. Indeed, statistically, n…

I wish people had an intuitive understanding of probabilities. It seems the average person can only think in terms of "basically never happens", "fifty fifty" and "sure thing".

And how people don’t get how probabilities work when run over repeated instances. Like it is only 0,1% risk that X happens everytime Y is done which sounds low but then it turns out Y is done Z number of times per day…

Re: More than half of adults in U.S. say they lack basic statistical understanding

#168
One of the simplest ways to measure risk in stocks, bonds, crypto, mfs etc for ordinary people is Maximum Drawdown. Once you understand how it works, it takes the stress out of making and managing your own portfolio P — espexially your non retirement account. The question you have to ask your self is: "Given some portfolio with returns of X%, am I ok with this asset being down by Z% over T years — i.e the _computed/inferred_ drawdown?" If the answer on one end is no I cannot afford P to have any drawdown at all, then just put your money in a cash/MMF and call it a day. Generally people are ok with some risk on some percent of P and stash the rest in cash, and you _risk adjust_ for Z and T. The portfolio choices are surprisingly simple.

No other question matters. There are some risks but the key element is the understanding of the statistical variance because that allows me to say that "ok 50% of P can afford to be down for 3 years and I won't be homeless".

Most people don't know this but most money managers(managing money for ordinary Americans) that you hire compute this number _once_ and make tiny adjustments to your portfolio(I am talking once a year maybe) and take 1-2%.

I follow this guy called Dave Stein who has a B2C product called money for the rest of us that taught me this. I am not affiliated with them in any way.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#169
post #129

Earlier quoted context omitted.

Fully agree. For example, I wish managers would be capable to handle the difference between a 40% and a 70% chance to meet the deadline.

A probability that isn't computed (or reasonably computable) is just a personal feeling. Your 40% or 70% aren't probabilities if you didn't compute the probability of at least the key events involved to arrive at the number. People say a number as their confidence to meet the deadline on a scale from 0-100.

They're credences: https://en.wikipedia.org/wiki/Credence_(statistics)

Everybody has them, and they're not useless. Usually they're regularly updated when new information comes in.

Re: More than half of adults in U.S. say they lack basic statistical understanding

#170
post #165
post #63

Earlier quoted context omitted.

I wish people had an intuitive understanding of probabilities. It seems the average person can only think in terms of "basically never happens", "fifty fifty" and "sure thing".

They do have an intuitive understanding! You just outlined it, and it works well enough for most things. Statistics is generally very useful, but for individuals it's not really important or useful to understand, because the data is rarely ever clear or trustworthy enough to use for making decisions about specific situations.

Probabilities might be more intuitive, statistics are intuitive only for the most straight forward topics. That's why it's so easy to present entirely correct but very misleading statistics.
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