Tag Archives: Multiple regression

WHAT SEEMS TO BE TRUE OFTEN ISN’T

Many People Get Fooled

The Motley Fool provides advice on money management and investing. However, its recommendations can and should be used by people in other fields. For example, the following 20-word tip, from the “Fool’s School,” should be memorized by everyone who encounters statistically-based claims or findings in politics, medicine, psychology, education, and all other arenas of our lives:

“Never blindly accept what you read. Think critically about not just words, but numbers. They’re not always what they seem.”

Here are 5 examples illustrating how numbers in statistics often do NOT mean what they seem to indicate:

Example A

If the 14 players on a basketball team have a median height of 6 feet 6 inches, it might seem that 7 of those athletes must be shorter than 6’6” whereas 7 must be taller than that. Wrong!

Example B

If the data on 2 variables produce a correlation of +.50, it might seem that the strength of the measured relationship is exactly midway between being ultra weak and ultra strong. Not so!

Example C

If a carefully conducted scientific survey indicates that Candidate X currently has the support of 57% of likely voters with a margin of error of plus or minus 3 percentage points, it might seem that a duplicate survey conducted on the same day in the same way would show Candidate X’s support to be somewhere between 54% and 60%. Bad thought!

Example D

If a null hypothesis is tested and the data analysis indicates that p = .02, it might seem that there’s only a 2% chance that the null hypothesis is true. Nope!

Example E

If, in a multiple regression study, the correlation between a particular independent variable and the dependent variable is r = 0.00, it might seem that this independent variable is totally useless as a predictor. Not necessarily!

The Motley Fool’s admonition, shown above in italics, contains 20 words. If you can’t commit to memory the entirety of this important warning, here’s a condensed version of it:

“Numbers. They’re not always what they seem.”

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Filed under Mini-Lessons, Misconceptions