Statistics Archives

Sampling Distribution: Explained in Simple Terms

The Millionaire Next Door Formula for Net Worth

What is sampling distribution? What are some of the pitfalls in working with mathematical averages in math? A sampling distribution is one of the complex math concepts many people don’t instinctively understand. The sampling distribution (or the distribution of the average) is important because averages are misleading: Your brain focuses on the average and doesn’t consider possible outliers in the distribution. Keep reading to understand sampling distribution, explained in simple terms.

The Dangers of the Sample Selection Bias

What is self-selection bias? How does self-selection bias influence research findings? Sample selection bias is a common issue in psychological studies that involve statistical analysis. Specifically, people only join studies they’re comfortable responding to, which alters your data. Those who might provide embarrassing or somehow “undesirable” responses simply won’t take part, narrowing your study’s scope and skewing the results. Here’s how sample selection bias skews research results and how to work around it.

False Causality: Correlation Doesn’t Equal Causation

What is false causality? Why do we assume causality where there is none? Humans struggle to interpret cause and effect because they confuse correlation with causation, assuming causality where there is none. For example, if a person gets the flu after they start taking vitamins, they might assume a causal relationship—taking vitamins gave them the flu—simply because the timing coincides. Let’s consider some ways the assumption of causality (where there’s none) impairs logic.

Coincidence and the Law of Very Large Numbers

What is the law of very large numbers? How does the law of very large numbers help explain coincidences? The law of very large numbers is one of the key concepts in probability and statistics. The concept is quite simple: with a sample that’s large enough, even the most improbable events could happen. Keep reading to learn about the law of very large numbers and how it explains coincidences and improbable events.

The 37% Rule: How to Know When to Settle

What is the 37% rule? How can employing the 37% rule help you make better decisions? The 37% rule is designed to solve something mathematicians call an “optimal stopping problem”—something we often encounter in daily life when faced with a series of options. The 37% can help you settle down and commit to the opportunity in front of you if you don’t know what opportunities will be available in the future. Here is how the 37% rule settle on a decision and signal when to stop searching for something better.

Game Theory: The Nash Equilibrium Explained

What is the “Nash equilibrium”? How do you calculate the Nash equilibrium? One of the most important concepts in game theory is the “Nash equilibrium”—a theoretical game state in which every player is fully aware of their opponents’ strategies yet sees no need to change their own. The game becomes stable and unchanging because everyone has settled into the best possible strategy available to them. If you can calculate an equilibrium, you can predict the inevitable stable outcome of any game’s rules and incentives. Keep reading to learn about the concept of the “Nash equilibrium” and how it is used in

How to Make Good Decisions in the Face of Uncertainty

How do you make a decision when everything is uncertain? Is there a way to predict the most likely outcome of a decision? One of the biggest obstacles preventing us from making good decisions is our inability to reliably predict the future. For example, it’s easy to decide whether or not to quit your job if you know you’ll get a raise within the next three months. As it is, the uncertain world prevents us from making decisions with confidence. Here is how to make good decisions in the face of uncertainty.

Algorithms to Live By: Book Overview

What is Brian Christian’s and Tom Griffith’s book Algorithms to Live By about? What is the key message to take away from the book? Algorithms to Live By is an instruction manual for life: a collection of unconventional wisdom drawn from the field of computer science. Computers and humans share many of the same problems, and the same solutions that have allowed us to optimize the field of computing may be the ticket to optimizing our own lives. Below is a brief overview of Algorithms to Live By: The Computer Science of Human Decisions.

Random Decision-Making: Appeal to Chance

What do you do when faced with a difficult choice in life? Do you ever just make decisions at random? Sometimes, the best way to make a difficult choice in life is to appeal to chance. By making a few random, intentionally suboptimal decisions, you can discover opportunities you couldn’t see before and get unstuck. Here is why random decision-making is sometimes the best way to go.

Simple Rules for Making Complex Decisions

How do you make an informed decision when there are just too many variables to consider? What about variables that are yet unknown? Whenever you make a decision, you’re using all the existing data of your life so far to predict what choice will result in the best outcome. But as statistics tell us, taking too many variables into account results in faulty predictions. That’s why, sometimes, the best way to make a complex decision is to make a less informed decision. Here is why you should make less informed decisions.