Statistics Archives

Survivorship Bias: What It Is and How to Overcome It

What is survivorship bias? How does this bias cause us to overestimate the likelihood of success? Survivorship bias is the tendency to mistake the “surviving ” or successful sample as representative of the entire group. This bias causes people to see examples of enormous success as representative of the kind of success any person can expect in that venture or endeavor. For example, people see a fabulously wealthy stockbroker and think, “Trading is very profitable.” Or they see a bestselling author and think, “Writing is a great way to get rich.” In this article, we’ll look at how survivorship bias

Nassem Taleb: Don’t Underestimate Randomness

How much weight do you give to randomness or uncertainty when making decisions? Do you think success is pure luck? According to Nassim Taleb, randomness is a hugely underestimated factor when it comes to decision-making, especially in fields that are greatly affected by randomness (e.g. trading, economics, and politics). He cites three reasons for our difficulty in appreciating the power of randomness: 1) we’re guided by our primitive brain, 2) we don’t understand probability, and 3) we see meaning when there’s none. Keep reading to learn why we have such trouble comprehending randomness, and how our brain’s wiring makes it

How to Track Your Weight Loss With EWMA Formula

What is the EWMA formula? Why shouldn’t you rely on raw, weight loss measurements to track your progress? EWMA stands for the Exponentially Weighted Moving Average. In The Hacker’s Diet, John Walker suggests using this formula for tracking your weight loss progress rather than focusing on the daily weight fluctuations which can be caused by a number of variables. The EWMA formula, on the other hand, tracks the trend of your weight loss. Here is how to use the EWMA formula to track your weight loss.

Luck and Success: Succeeding by a Roll of the Dice

What role does luck play in success? Do you tend to attribute your own successes to luck or effort? People often overestimate the influence of effort in success. Though hard work, skill, and intelligence are often necessary first steps toward success, they rarely account for runaway success, which is far more often due to luck—a positive rare event plus a lack of negative rare events. In today’s article, we’ll talk about luck and success—how huge of a role luck plays in bestowing success and why we often mistake it for skill.

How to Solve a Fermi Estimation Problem

What’s a Fermi estimation problem? What kinds of information does the Fermi problem probe for? A Fermi problem is a problem that involves making a justified estimation about quantities, degrees, probabilities, or variances. Fermi problems are solved by breaking down seemingly impossible questions into smaller and smaller questions. The idea is that eventually, you’ll be able to separate questions that are truly unknown from questions for which you can at least make an educated guess. Below is an example of a Fermi problem.

Superforecasting: Review, Context & Critical Reception

Budgeting and Planning: Why Is It So Important?

Is Phillip Tetlock’s Superforcasting worth reading? What was Tetlock’s inspiration in writing the book? The idea for Superforecasting came from Tetlock’s experiences with the Expert Political Judgment and Good Judgment Project forecasting experiments, during which Tetlock and his team discovered that some people are significantly better at predicting the future than others. Tetlock and Gardner set out to explore exactly what sets “superforecasters” apart from regular people; Superforecasting is the result. This Superforecasting review takes a look at the book’s intellectual context, background, impact, and discusses its key strengths and weaknesses.

Calculate Your Net Worth and Lifetime Earnings

Do you know how to calculate your net worth? How much money have you earned over your lifetime? Calculating your net worth and lifetime earnings is part of the process of improving your relationship with money and living a life you love. When you have a clear picture of where you stand, it’s easier to make wise decisions with your money. Read more to learn how to calculate your net worth and lifetime earnings.

Project Estimation Techniques in Software Engineering

What are the different project estimation techniques in software engineering? What are some things you should take into account when estimating the completion deadline of a software development project? When you’re programming something for someone, they always want to know when it will be done. Most of the time, you won’t know exactly how long something will take, so you’ll provide an estimate instead of a guarantee. There are many methods you can use to give your managers and clients an estimation, and we’ll cover three of the options.

Analyze Expenses With This Alternative to Budgeting

Do you have an effective system to analyze expenses? Did you know that there is a budget alternative for managing your spending? In Your Money or Your Life, Vicki Robin and Joe Dominguez show how to use a tabulation system to analyze expenses. It serves as a budget alternative, avoiding two pitfalls of budgets. Ultimately, it provides a more holistic view of your spending. Read more to understand this effective way to analyze expenses.

The Millionaire Next Door Formula for Net Worth

What is The Millionaire Next Door formula? What net worth is considered wealthy? The Millionaire Next Door formula multiplies your age times your pretax annual income divided by 10 to get your expected net worth—this excludes inheritances. You are wealthy if your net worth is twice as large as your expected net worth. Discover more on how to calculate your net worth using The Millionaire Next Door formula.