﻿ The Cost of Not Understanding Probability Theory | SimoleonSense

## The Cost of Not Understanding Probability Theory

Understanding probability, gamblers fallacy, and improving society.

Introduction (Via Math Blog)

Misconceptions about probability theory and statistics have major repercussions on society. From seemingly minor things like the excessive sensationalism of some headlines, all the way to the jailing of innocent people based on “statistical evidence”. One of the most common misconceptions is the so called Gambler’s fallacy.

Excerpts (Via Math Blog)

People who fall for this fallacy, do so because of a fundamental misunderstanding of how probability works. They combine the probability of past events (irrelevant for independent trials), with that of future events. With the example above, some people would also erroneously conclude that “tails is long due to come up” and as such would think that it’s more likely to occur.

This informal fallacy has contributed to the ruin of many gamblers over the years. A tragic example of what happens when you uphold this way of looking at odds occurs with many who play the game of “Lotto” in Italy, a very popular lottery game played amongst the general population.

Favorite Excerpt (Via Math Blog)

An increased awareness of probability and statistics can only improve society and its ability to assess situations and make rational decisions. How do we begin to remedy this situation, not only in Italy, but around the world? We can start by devoting far more time in grade, middle and high school math classes, in order to teach students about this important subject and the implications that it can have on their everyday lives, understanding of society, and ability to make wise financial decisions.