The Drunkard’s Walk

In one speech Charlie Munger told that, if you do not understand elementary probability then you go through a long life like a one-legged man in an ass kicking contest. I recently finished reading the book The Drunkard’s Walk: How Randomness Rules Our Lives by Leonard Mlodinow. The author teaches elementary probability and statistics using real life…

How to lie with statistics

There are three kinds of lies: lies, damned lies, and, statistics – Disraeli. I recently finished reading the book – How to lie with statistics by Darrel Huff. This book was first published in 1954. Even today it is very relevant and it explains how an uncritical reader can be fooled by media, politicians, and,…

Regression Analysis

Given below are the Math and Statistics scores of five randomly selected tenth grade students in 2012. You are the Math teacher in the school. In 2013 the school principal asks you the following question. If a student scores 90 in math how much would he score in statistics? How would you solve this problem.…

Regression to the mean

Consider the following statement made up by Daniel Kahneman author of Thinking Fast and Slow Depressed children treated with an energy drink improve significantly over a three-month period. What do you infer from this? Most likely you will think that the energy drink improved the depression among children. But it could also be that children…

Central Limit Theorem

The core concept of Central Limit Theorem is that a large, properly drawn sample will resemble the population from which it is drawn. This is a powerful concept in statistics. In the book Naked Statistics At times, statistics seems like magic. We are able to draw sweeping and powerful conclusions from relatively little data. Somehow we…

Correlation and Causation

Correlation measures the degree to which two phenomena are related to one another. For example, there is a correlation between summer temperatures and ice cream sales. When one goes up, so does the other. Two variables are said to be Positively correlated – When a change in one is associated with the change in another in the same direction.…

Bayes Theorem

I came across the problem given below in Thinking Fast and Slow. A cab was involved in a hit-and-run accident at night. Two cab companies, the Green and the Blue, operate in the city. You are given the following data 85% of the cabs in the city are Green and 15% are Blue. A witness…