A famous business school case by Harvard Professor Michael Porter on forecasting chainsaw sales dramatically illustrated the limits of statistical models when common business sense and clear-eyed thinking are missing. In the chainsaw case, students were asked to forecast the future U.S. demand for chainsaws,…
In their book, "Mining Your Own Business," Jeff Deal and Gerhard Pilcher, COO and CEO of Elder Research respectively, describe what I'll call “The Case of the Climbing Churn.” Churn is when a subscriber cancels or fails to renew a service or subscription. A successful…
In your introductory statistics class, probability took center stage. Odds were for gamblers. But it turns out odds play an important role in statistics, too. The relationship between the two is simple. To estimate the probability that event “A” will happen, we divide the number…
He spoke with Val Woodside, our Customer Success Specialist at Statistics.com about his experience in the certificate program. Tell us about your experience at Statistics.com? It was excellent. For me it was the first time that I studied through this online process. You have to…
Good psychics have a knack for getting their audience to reveal, unwittingly, information that can be turned around and used in a prediction. Statisticians and data scientists fall prey to a related phenomenon, leakage, when they allow into their models highly predictive features that would…
As the popularity of data science has grown, so too has advice on how to get jobs in data science. A common form of advice is a list of sample questions you might be asked at your job interview (see here and here for examples). …
The Three Stooges comedy sketch “Ants in the Pantry,” (1935), features the Stooges as exterminators whose target customers don’t have enough pests. The Stooges solve the problem by bringing their own pests (ants and mice) on sales calls, and surreptitiously releasing them. Having created the…
We encountered “Type III error” when it turned out that most people answering our Puzzle question were, in fact, answering a different question from the one that was asked. Type III error is answering the wrong question, and it is a big factor in the…
“Extremism in the defense of liberty is no vice. Moderation in the pursuit of justice is no virtue.” So said Barry Goldwater, running for U.S. President in 1964. At the time, the voters rejected his pitch for purity, and his opponent, Lyndon Johnson, won a…
The recent U.S. election was one of the most controversial and closest ever, and turnout percentage may be the highest in a century. Still, 37% of the voting age population did not vote. The traditional explanation for why people don’t vote is that they feel…
Dr. Carlos Carcach is Professor & Director of the Center for Public Policy at the Escuela Superior de Economía y Negocios (ESEN) in Santa Tecla, El Salvador, and coordinator of ESEN's post-graduate program in predictive analytics, which offers online instruction in partnership with Statistics.com, using…
World War 2 gave the statistics profession its big growth spurt. Statistical methods such as correlation, regression, ANOVA, and significance testing were all worked out previously, but it was the war which brought large numbers of people to the field as a profession. They didn’t…
“A little knowledge is a dangerous thing,” said Alexander Pope in 1711; he could have been speaking of the use of statistics by experts in all fields. In this article, we look at three consequential mistakes in the field of statistics. Two of them are famous, the third required a deep dive into the corporate annual reports of
“A little knowledge is a dangerous thing,” said Alexander Pope in 1711; he could have been speaking of the use of statistics by experts in all fields. In this article, we look at three consequential mistakes in the field of statistics. Two of them are famous, the third required a deep dive into the corporate annual reports of
Researchers and analysts are familiar with the famous 5% benchmark in statistics, the typical probability threshold at which a result becomes statistically significant. (The probability in question is the probability that a result as interesting as the real-life result will happen in the null model.) …
By Will Goodrum* Note: A version of this article was first published on the Elder Research blog. Your company has made it a strategic priority to become more data-driven. Good! A major anticipated component of this transition is to implement new data technology (e.g., a…
As of this writing, there are about 40 Coronavirus vaccines in the clinical trial process, plus another 135 in preclinical development. Russia has jumped the gun and “approved” a vaccine that has just begun Phase 3 trials, and, likewise, China has approved a pre-Phase 3…
By John Elder, Founder and Chair of Elder Research, Inc. Last week, in Recidivism, and the Failure of AUC, we saw how the use of “Area Under the Curve” (AUC) concealed bias against African-Americans defendants in a model predicting recidivism, that is, which defendants would re-offend. …
On average, 40% - 50% of convicted criminals in the U.S. go on to commit another crime (“recidivate”) after they are released. For nearly 20 years, court systems have used statistical and machine learning algorithms to predict the probability of recidivism, and to guide sentencing…
Prepared by Peter Bruce, Mark Smith and Ramon Perez, this case study was originally published at elderresearch.com. In early 2020, Sira-Kvina Kraftselskap, a large producer of hydroelectric power in Norway, suffered a breakdownof one of its major generators. Company technicians went through established diagnostics…
In casual statistical analysis, you sometimes hear references to outliers, along with the suggestion that they should be ignored or dropped from the analysis. Quite the contrary: often it is the outliers that convey useful information. They may represent errors in data collection, e.g. a…
Myth 1: It’s All About Prediction “Who cares whether we understand the model - as long as it predicts well!” This was one of the seeming benefits of the era of big data and predictive modeling, and it set data science apart from traditional statistics. …
In his book Predictive Analytics, Eric Siegel tells the story of marketing efforts at Telenor, a Norwegian telecom, to reduce churn (customers leaving for another carrier). Sophisticated analytics were used to guide the campaigns, but the managers gradually discovered that some campaigns were backfiring: they…
Statistical Thinking 2: Safety in Numbers – Calculating Probabilities for Convoys Early 1942 was a critical period for the Allies in WWII. Russia was on its heels, with German armies at the gates of Moscow and preparing an offensive in southern Russia. Alone among the…
Statistical Thinking 1 Several years ago, an NPR reporter wanted a comment from me for his story about an unusual event: a woman had won a state lottery jackpot for a second time. Winning once was low enough odds, but winning twice? The reporter found…
Guest Blog - Grant Fleming, Data Scientist, Elder Research Progress in data science is largely driven by the ever-improving predictive performance of increasingly complex black-box models. However, these predictive gains have come at the expense of losing the ability to interpret the relationships derived between…
An economics professor and an engineering professor were walking across campus. The engineering professor spots something lying in the grass - “Look- here’s a $20 bill!” The economist doesn’t bother to look. “It can’t be - somebody would have picked it up.” This old joke…
In 1998, Craig Fox and Amos Tversky reported on a survey in which U.S. basketball fans were asked to judge the probability that each of 8 teams might win the championship. Students of statistics can probably guess the outcome - the probabilities for all the…
A recent development in the modeling of Covid-19 data has been the use of mobile phone location data, now available from Google, to estimate the degree to which social distancing restrictions have been implemented, and the effect they have had. One interesting analysis comes from…
It was 150 years ago when Darwin first used the term “evolution” in his writing (in his book The Descent of Man). Two months ago, in The Normal Share of Paupers, I briefly discussed the unfortunate eugenics baggage that the discipline of statistics inherited from…
Covid-19 has brought statistical concepts and terms into the news as never before. One confusing tangle is the array of terms surrounding diagnostic test results. The most basic is accuracy - what percent of test results are correct. This is not necessarily the most important…
Died-in-the-wool software developers can get quite passionate about the relative virtues of one programming language or another, their debates sometimes threatening to transport you back to middle-school arguments about the greatest ballplayers of all time. Though their computer passions find other outlets as well, data…
In late December, Statistics.com was acquired by Elder Research, Inc. Many of you have asked for more detail, so here’s an introduction to the folks at Elder Research and some stories of what they do. There are 100+ employees at Elder Research, led by John…
There are tens of thousands of epidemiologists the world over, and we are beginning to see a bumper crop of forecasts for the ultimate 2020 death toll from Covid-19. It’s a grim but important forecasting task. Most citizens would support draconian measures to prevent deaths…
Five years ago last month, the psychology journal Basic and Applied Social Psychology instigated a major debate in statistical circles when it said it would remove p-value citations from papers it published. A year later, the American Statistical Association (ASA) released a statement on p-values…
There are many moving parts in modeling the spread of an epidemic, a subject that has lately attracted the attention of great numbers of statistically-oriented non-epidemiologists (like me). I’ve put together a “lay statistician’s guide” to some of the important parameters and factors (and I…
Anyone with internet access these days has their eyes on two constellations of data - the spread of the coronavirus, and the resulting collapse of the financial markets. Following the 13% one-day drop of the stock market a week ago, The Wall Street Journal forecast…
In his book, The Wisdom of Crowds, James Surowiecki recounts how Francis Galton, a prominent statistician from the 19th century, attended an event at a country fair in England where the object was to guess the weight of an ox. Individual contestants were relatively well…
Which would you rather have? A large sample that is biased, or a representative sample that is small? The American Statistical Association committee that reviewed the 1948 Kinsey report on male sexual behavior, based on interviews with over 5000 men, left no doubt of their…
Companies now have a lot of data on their customers at an individual level. Suppose you are tasked with forecasting customer spending at a grocery chain, and you want to understand how customer attributes, local economic factors, and store issues affect customer spending. You could…
In 2009, China began regional pilot programs that repurposed credit scores to a broader purpose - scoring a person’s “social credit.” 100 years earlier, at the height of the eugenics craze, the famous statistician Francis Galton undertook to repurpose statistical concepts in service of social…
The goal of any direct mail campaign, or other messaging effort, is to persuade somebody to do something. In the business world, it is usually to buy something. In the political world, it is usually to vote for someone (or, if you think you know…
Predicting the probability that something or someone will belong to a certain category (classification problems) is perhaps the oldest type of problem in analytics. Consider the category “repays loan.” Equifax, the oldest of the agencies that provides credit scores, was founded in 1899 as the…
In 2008, Elon Musk was concerned about leaks of sensitive information at Tesla Motors. To catch the leaker, he prepared multiple unique versions of a new nondisclosure agreement he asked senior officers to sign. Whichever version got leaked would reveal the leak source. This is…
In last week’s Brief I described how The Institute’s courses, and its Mastery, Certificate and Degree programs would continue without interruption, following our acquisition by Elder Research, Inc. Now I’d like to talk about how the Institute’s students stand to gain from the expertise and…
The “streetlight effect:” A man is looking for his keys under a streetlight. Policeman: “Where did you lose them?” Man: “In the alley, near the door to the bar.” Policeman: “Why are you looking here?” Man: “The light’s better.” This is related to the more…
Know those ads that follow you around the web, as a result of tracking cookies? Many see them as an invasion of privacy, and EU rules made them subject to user consent. Google recently announced that Chrome will eventually stop supporting these cookies. A win…
What do stormy days, weekend evenings, and the last day of the month have in common? They are all good times to negotiate a good price for a new car. Inclement days yield less customer traffic in auto showrooms, which is good for the buyer. …
Every 30 minutes a new business book is published; many of them purport to teach effective selling. Most of them make sense, but solid quantitative analysis is rarely on the front burner. This is strange, because effective selling requires demonstrating value. Sales professionals are taught…
“Do you have a bag?“ or “Would you like a bag?” have become common parts of the brick-and-mortar retail transaction. Reusable bags, or simply doing without, have reduced the flow of plastic and paper into recycling. E-commerce is a different matter. I just unpacked a…
Most businesses use statistics and analytics to one degree or another, but there is only one industry that is built solely on this discipline. This week we look at the casino business - in particular, the odds on slots. Slot machines are a casino’s best…
Betting has had a long and close relationship with the science of probability and statistics. In the mid-1600’s, the French intellectual and gambler Antoine Gombaud, who called himself Chevalier de Méré, enlisted the help of the mathematician Blaise Pascal to solve several puzzles involving dice…
Unforeseen Consequences in Data Science After the massive Exxon Valdez oil spill, states passed laws boosting the liability of tanker companies for future spills. The result was not as intended: fly-by-night companies, whose bankruptcy would not be consequential, took over the trade. In this blog…
Terminology in Data Analytics As data continue to grow at a faster rate than either population or economic activity, so do organizations' efforts to deal with the data deluge, and use it to capture value. And so do the methods used to analyze data, which…
Data analytics and data science are popular terms, and skills in these areas are in great demand. But what do these terms mean? Below is an overview and a listing of related courses. For information about our certificate programs in data science and analytics, click here.…
Gambler’s Fallacy I - forgetting that the “coin has no memory” Gamblers often believe that after a long streak of one outcome, the probability of a different outcome has increased. Sports commentators often say that a batter in a slump is “due” for a hit.…
Does better AI offer the hope of prejudice-free decision-making? Ironically, the reverse might be true, especially with the advent of deep learning. Bias in hiring is one area where private companies move with great care, since there are thickets of laws and regulations in most…
A friendly query about your holiday might be a question you get from a roaming agent in the check-in area at the Tel Aviv airport. Israel, considered to have the most effective airport security in the world, does not rely solely on routine mechanical screening…
1.2 million scientific papers were indexed by PubMed in 2011 (see Are Scientists Doing Too Much Research), ample proof that there are lots of people studying the same or similar things. For example, there have been Over 100 studies of suicide following psychiatric institutionalization 38 studies…
A casual user of machine learning methods like CART or naive Bayes is accustomed to evaluating a model by measuring how well it predicts new data. When examining the output of statistical models, they are often flummoxed by the profusion of assessment metrics. Typical multiple…
In hospitals, “sentinel events” are events that carry with them a significant risk of unexpected death or harm. It is estimated that ⅔ of such sentinel events result from communications failures during the handoff of a patient from one provider to another (e.g. during a…
Some applications of machine learning and artificial intelligence are recognizably impressive - predicting future hospital readmission of discharged patients, for example, or diagnosing retinopathy. Others - self-driving cars, for example - seem almost magical. The matching problem, though, is one where your first reaction might…
It is a truism of machine learning and predictive analytics that 80% of an analyst's time is consumed in cleaning and preparing the needed data. I saw an estimate by a Google engineer that 25% of the time was spent just looking for the right…
To a statistician, a sample is a collection of observations (cases). To a machine learner, it's a single observation. Modern data science has its origin in several different fields, which leads to potentially confusing homonyms and synonyms, like these: Homonyms (words with multiple meanings): Bias: To…
In most statistical modeling or machine learning prediction tasks, there will be cases that can be easily predicted based on their predictor values (signal), as well as cases where predictions are unclear (noise). Two statistical learning methods, boosting and ProfWeight, use those difficult cases in…
In 1994, Jim Collins and Jerry Porras, former and current Stanford professors, published the best-seller Built to Last that described how "long-term sustained performance can be engineered into the DNA of an enterprise." It sold over a million copies. Buoyed by that success, Collins and a…
If you are working on New Year's Eve or New Year's Day, odds are it is from home, where you can (usually) control the temperature in the home. Which, from the standpoint of productivity, is a good thing. According to a study from Cornell, raising…
False alarms are one of the most poorly understood problems in applied statistics and biostatistics. The fundamental problem is the wide application of a statistical or diagnostic test in search of something that is relatively rare. Consider the Apple Watch's new feature that detects atrial…
An ethical algorithm... Ethics in algorithms is a popular topic now. Usually the conversation centers around the possible unintentional bias or harm that a statistical or machine learning algorithm could do when it is used to select, score, rate, or rank people. For example -…
Thirty years ago, GE became the brightest star in the firmament of statistical ideas in business when it adopted Six Sigma methods of quality improvement. Those methods had been introduced by Motorola, but Jack Welch's embrace of the same methods at GE, a diverse manufacturing…
Fake social media accounts and Russian meddling in US elections have been in the news lately, with Mark Zuckerberg (Facebook founder) testifying this week before the US Congress. Dr. Jen Golbeck, who teaches Network Analysis at Statistics.com, published an ingenious way to determine whether a…
Cambridge Analytica's wholesale scraping of Facebook user data is big news now, and people are shocked that personal data is being shared and traded on a massive scale on the internet. But the real issue with social media is not harming to individual users whose…
We just attended the analytics conference of INFORMS' (The Institute for Operations Research and the Management Sciences) this week in Baltimore, and they held a special meeting for directors of academic analytics programs to better align what universities are producing with what industry is seeking.…
"Money and Brains" and "Furs and Station Wagons" were evocative customer shorthands that the marketing company Claritas came up with over a half century ago. These names, which facilitated the work of marketers and sales people, were shorthand descriptions of segments of customers identified through…
“The goal is to turn data into information, and information into insight.” – Carly Fiorina, former CEO, Hewlett-Packard Co. Speech given at Oracle OpenWorld “Data is the new science. Big data holds the answers.” – Pat Gelsinger, CEO, EMC, Big Bets on Big Data, Forbes“Hiding within those…
Statistics.com Receives College Recommendation from the American Council on Education (ACE) College Credit Recommendation for Online Data Science Courses from The Institute for Statistics Education at Statistics.com LLC The American Council on Education's College Credit Recommendation Service (ACE CREDIT) has evaluated and recommended college credit…
There was an interesting article a couple of weeks ago in the New York Times magazine section on the role that Big Data can play in treating patients -- discovering things that clinical trials are too slow, too expensive, and too blunt to find. The…
Ever wonder why, in World War II, ships in convoys were safer than ships traveling on their own? Most people assume it was due to the protection afforded by military escort vessels, of which there was a limited supply (insufficient to protect ships traveling on…
What's the probability that the NSA examined the metadata for your phone number in 2013? According to John Inglis, Deputy Director at the NSA, it's about 0.00001, or 1 in 100,000. A surprisingly small number, given what we've all been reading in the media about…
The devastation wrought by Super-Typhoon Haiyan in the Philippines is the biggest test yet for the nascent technology of "artificial intelligence disaster response," a phrase used by Patrick Meier, a pioneer in the field. When disaster strikes, a flood of social media posts and tweets…
There are Red States and Blue States. The three blue states of the Pacific coast constitute the Left Coast. For Colin Woodward, Yankeedom comprises both New England and the Great Lakes. If you're into accessories, there's the Bible Belt, the Rust Belt, and the Stroke…
I did not start off in the field of statistics; my first real job was as a diplomat. And from my undergraduate days I recall a professor who taught a cultural history of Russia. He was one of the world's top experts. Possessed of a…
Mutual attraction is a dominant force in the universe. Gravity binds the moon to the earth, the earth to the sun, the sun to the galaxy, and one galaxy to another. And yet the universe is expanding; the result is a larger universe comprised of…
