Monthly Archive for September, 2011

From The Browser

What do you mean by “risk literacy” and why do you think it is so important for people to have it?

I am a statistician and I know that people find probability and statistics quite difficult to understand, and not intuitive. And after years and years of careful research I have finally concluded that it is because probability and statistics really are difficult to understand and unintuitive. I think knowing something about how chance works in the world is a basic skill that people should have, along with reading, writing and basic numeracy. Otherwise you can be subject to all sorts of manipulations, and that will come out in some of my book choices.

Let’s have a look. First up is The Drunkard’s Walk by Leonard Mlodinow, which looks at how the mathematical laws of randomness affect our lives.

This is a general introduction to the history of probability and the way it comes into everyday life. It intersperses the historical development with modern applications, and looks at finance, sport, gambling, lotteries and coincidences.

It starts off with quotes from Cicero feeling that people were being misled by thinking that the gods influenced the throw of a die. Then it carries on through the early development of probability in the 16th century with [Italian Renaissance mathematician Gerolamo] Cardano. He threw two dice and looked at the distribution of the sum of the two faces. There was an incredibly popular game called Hazard where you threw two dice and betted on what the total would be. Amazingly, people had been gambling for centuries and had never realised you could do maths on gambling. Probability – which used to be known by the wonderful term “the doctrine of chances” – grew out of this.

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From Michael Ignatieff, Slate.com

From Discover Magazine

If you ask someone to guess the number of sweets in a jar, the odds that they’ll land upon the right number are low – fairground raffles rely on that inaccuracy. But if you ask many people to take guesses, something odd happens. Even though their individual answers can be wildly off, the average of their varied guesses tends to be surprisingly accurate.

This phenomenon goes by many names – swam intelligence, wisdom of the crowd, vox populi, and more. Whatever it’s called, the principle is the same: a group of people can often arrive at more accurate answers and better decisions than individuals acting alone. There are many examples, from counting beans in a jar, to guessing the weight of an ox, to the Ask The Audience option in Who Wants to be a Millionaire?

But all of these examples are somewhat artificial, because they involve decisions that are made in a social vacuum. Indeed, James Surowiecki,  author of The Wisdom of Crowds, argued that wise crowds are ones where “people’s opinions aren’t determined by the opinions of those around them.” That rarely happens. From votes in elections, to votes on social media sites, people see what others around them are doing or intend to do. We actively seek out what others are saying, and we have a natural tendency to emulate successful and prominent individuals. So what happens to the wisdom of the crowd when the crowd talks to one another?

Andrew King from the Royal Veterinary College found that it falls apart, but only in certain circumstances. At his university open day, he asked 82 people to guess the number of sweets in a jar. If they made their guesses without any extra information, the wisdom of the crowd prevailed. The crowd’s median guess was 751.* The actual number of sweets was… 752.

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