Statistically Speaking

Coincidences seem to happen in threes. Last week I was talking to an intern and we were discussing his last semester in college. He was disappointed because the course load he originally planned for was disrupted. For some reason, perhaps there was a lack of enrollment, a class was dropped. And it fulfilled a requirement. There are several options for him to pick up to meet the requirement, but they are less desirable – most of them are Statistics.

As we spoke I tried to encourage him about the math based class. I highlighted its alignment to six sigma and how it could potentially lead to some certification or something. I provided a business strategy to him. I said, take a look at the six sigma tools and see when and where statistics helps, then when you have class make sure you get those answers. Make sure you can apply it. When the conversation ended I know I felt better about it

The next day the NY Times ran an article called For Today’s Graduate, Just One Word: Statistics by Steve Lohr. The point of the writing is to show that data and analysis is so valuable these days. Especially as the rate of its availability is increasing. The story follows a few people (an anthropologist for example) that use the math field to improve their understanding and execution of their jobs. Each narrative explains how without the data evidence their findings wouldn’t happen or would lack credibility or the real benefit wouldn’t be known.

Speaking of benefits, my wife and I got a little free time this past weekend and went to the movies. We saw The Hangover. There is a scene in the movie where the main characters imitate Dustin Hoffman in Rain Man. They make $80,000 at blackjack by counting cards. Well, counting cards is only useful because of the statistics. When you count cards you are adjusting the probabilities of certain results off of the baseline. Normally Casinos operate at favorable percentage and just let time play out to the profits. But Black Jack is one of the few games that has a very small house advantage. Its almost 0 when played perfectly. However, counting cards correctly tilts the scales in favor of the card counter and not the casino. But the funny thing is, card counting isn’t against the law. And here is another reason why the casinos are smart. Most people aren’t good enough at statistics to really make money off of the potential advantage. They end up making errors anyway and paying the house. Movies like The Hangover do make it seem easy though.

The problem with statistics is that its fairly joyless. As Dan Pinkwould say its left brain. Its charts and graphs. Your right brain likes music and art. Getting over the education hump of statistics is tough,but once you do, well, you have a high probability of financial success.

Working Thoughts 8/12/08
Individualism versus Collectivism


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