A LITTLE LESSON ABOUT EXTRAPOLATING

The extrapolation in the accompanying cartoon (from Randall Monroe’s website, xkcd.com) is rediculous. No one would ever do that kind of silly data-based projection into the future. In many areas of our daily lives, however, people make unjustified predictions based on existing, accurate data. Consider these 2 examples, one dealing with the stock market and the other concerning survey research.

How do people tend to invest their money in the stock market? From controlled experiments as well as from observational studies, the findings are the same. When the stock market has been doing well, most people are “bullish” and want to invest more. In contrast, when there’s been a recent drop in stock values, the typical investor gets “bearish” and wants to sell. The term extrapolation bias has been coined to describe cases like these wherein people think that the future will be a continuation of the past. You, too, possess this bias if you make short-term predictions that fail to consider (1) the variability of data points used to form a “trend line” and (2) the possibility that a trend line can change its direction and, for example, begin to angle down even though it has been angling up.

If you receive a mailed or online survey, do you fill it out and send it in? If you do, you help to increase the survey’s response rate: the percentage of contacted people who complete and return the survey. In a recent research study (http://gradworks.umi.com/33/91/3391754.html), the response rate was only 8.41%. Despite receiving completed surveys from just 241 of the 2,865 people initially contacted, the researcher extrapolated the study’s findings to all of the individuals to whom the survey was sent. This is an unjustified thing to do because “nonrespondents” may well be different from those from whom data are collected. Most likely, we all are guilty of this kind of extrapolation-beyond-the-data. We hear opinions expressed by trusted friends, relatives, co-workers, neighbors, bloggers, or TV analysts, and then we presume that others have the same thoughts. ’Tis a risky thing to do!

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Filed under Jokes & Humor, Mini-Lessons

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