Web of Finance
|Sep 09, 2008 1:28 pm
||Statistical reasoning -- is this right or wrong?
| Adrian Scott|
|| I came across this example, quoted in a trading book.
Is the reasoning correct or wrong? ;)
"Example. "Baby boys to baby girls ratio." Consider the following example from research on statistical reasoning (Nisbett, et al., 1987). There are two hospitals: in the first one, 120 babies are born every day, in the other, only 12. On average, the ratio of baby boys to baby girls born every day in each hospital is 50/50. However, one day, in one of those hospitals twice as many baby girls were born as baby boys. In which hospital was it more likely to happen? The answer is obvious for a statistician, but as research shows, not so obvious for a lay person: It is much more likely to happen in the small hospital. The reason for this is that technically speaking, the probability of a random deviation of a particular size (from the population mean), decreases with the increase in the sample size. To index
" -- http://www.statsoft.com/textbook/esc.html
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