Probability and the Power of Narrowing Uncertainty
When it comes to data and making decisions, most of us leave an incredibly valuable tool sitting unused in our proverbial decision-making toolboxes. PROBABILITY is the likelihood something will or will not happen. You may know it as “the odds”.
We don’t use this tool because we may not have wrapped our heads around what it means or can do for us – acceptable, we can learn. Some don’t use it because we think it’s no better than what we’re already doing – a lost opportunity, let me convince you why.
So, what is this and why is it important?
In order to understand probability, do not search on the internet for the term until you finish this article. One of the first things listed in search results is how a coin toss has a 50/50 chance of landing on heads or tails. Herein lies a common misunderstanding of probability’s value. Yes, that’s true for a coin. It is not true in many other comparisons, and it’s temptingly easy to interpret equal chances as meaning the odds don’t matter or that answers are unknowable. This is far from the case.
There is a true story of a world leader deciding if he should authorize a now infamous military action and he says on record, “this is a 50-50 shot” while deciding. Only it wasn’t. The official probability calculations he held in his hand were a more than 63% likelihood of the operation being successful (less than 37% change of it being unsuccessful). He authorized the action and it was successful. According to those statistics, the best answer was “yes”. The odds were in his favor.
Question: So why did an experienced leader say it was a toss-up decision? He would have talked about those same odds much differently if he was using them to pick the winner of a sports tournament, with a clear favorite and an underdog.
Answer: There is a pervasive gut tendency to think things are either a sure thing or unknowable. The reality is much closer to likely or unlikely. Throw in a healthy dose of not wanting to be wrong, and we have a recipe for saying something can’t be known, when degrees of certainty are actually quite knowable.
I’d like to make the case that this affects everyone reading. We come to conclusions and make decisions every day based on what we expect to happen. We often do so with minimal information backing up those expectations. The value of harnessing probability is that it examines how certain you should be and how right you’ve been in the past. Probability tells you that if there are 4:1 odds something is likely to happen, the right answer is “yes!”, and not “maybe” or “I don’t know”.
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About the Author
Constance is Daxko's Senior Data Strategist and leads the Daxko Data Analytics team.More Content by Constance Miller