The Fallacy of the ‘Law of Small Numbers’

“In June 1944, Germany flew several raids on London.

War experts plotted the position of each bomb as it fell and noticed one cluster near Regent’s Park, and another along the banks of the Thames.

This clustering concerned them because it implied that the German military had designed a new bomb that was more accurate than any existing bomb.

In fact, the Luftwaffe was dropping bombs randomly, aiming generally at the heart of London. What the experts had seen were clusters that occur naturally through random processes—misleading noise masquerading as a useful signal”

FS Blog uses this example to explain a concept we tend to miss oft – The Law of small numbers – Bias creeping in from insensitivity to small numbers

“This bias comes in many forms.

In a telephone poll of 300 seniors, 60% support the president.

If you had to summarize the message of this sentence in exactly three words, what would they be? Almost certainly you would choose “elderly support president.”

Before drawing conclusions from information about a limited number of events (a sample) selected from a much larger number of events (the population) it is important to understand something about the statistics of samples.”

Why is cognition relevant?

“It explains the rise of stereotypes (concluding that all people with a particular trait behave the same way);

Or the tendency to see short-term patterns in financial stock charts when in fact short-term stock movements almost never follow predictable patterns.

The solution is to pay attention not just to the pattern of data, but also to how much data you have. “

The bottom line is simple, understand the data for what it is

Not to corroborate the stories we want to hear (or tell)

Other Scientific concepts you should know:

https://www.edge.org/contributors/what-scientific-term-or%C2%A0concept-ought-to-be-more-widely-known

 

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Scientific Concepts We All Ought To Know

 

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Ranjani Mani

#reviewswithranjani

#Technology | #Books | #BeingBetter

 

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