Analytics Magazine Analytics Magazine, May/June 2014 | Page 32

ME AS URIN G A NY T H I NG probabilities to uncertain outcomes has been tested with frequentist methods. That is, extremely large trials have been conducted where individuals’ probabilities were compared to observed outcomes. As mentioned earlier, the authors and other researchers have verified that people who are trained as “calibrated probability assessors” can repeatedly assign probabilities that, after sufficient trials, align with the observed frequencies. Since probability is your state of uncertainty, and since you can be calibrated, you can always state a probability – in the Bayesian sense. 6. Statistical significance doesn’t mean what you think, and what it does mean you probably don’t need. Another issue the author was observing that was getting in the way of useful measurements was that there was a widely held, but very vague, understanding of the concept of “statistical significance.” The new edition addresses pervasive misunderstandings of this idea and then makes the case that, even when it is understood, it isn’t directly relevant to most real decision-making problems. The book contains examples in which just five sample observations, or in some cases even just one observation, su