[HN Gopher] The Flaw of Averages (2020)
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The Flaw of Averages (2020)
Author : refrigerator
Score : 30 points
Date : 2024-05-14 07:14 UTC (1 days ago)
(HTM) web link (causal.app)
(TXT) w3m dump (causal.app)
| dang wrote:
| Discussed at the time:
|
| _Forecasting with uncertainty_ -
| https://news.ycombinator.com/item?id=22842847 - April 2020 (20
| comments)
| mjburgess wrote:
| The mean of a set of measures is only characteristic of those
| measures if the error in each is random, ie., if there's equally
| probably positive errors, vs. negative.
|
| We teach means as something somehow fundamental and commonly
| useful; but they're rarely useful and highly derivative.
| SkyMarshal wrote:
| At the end he gives two ways running Monte Carlo simulations,
| spreadsheet plugins, and his own app Casual. Surely there are
| more. Are there other tools for Monte Carlo sims that HN'ers use
| and like? Preferably local FOSS apps?
| jmount wrote:
| STAN is an industrial grade Monte Carlo realization.
| SkyMarshal wrote:
| Thanks!
|
| https://github.com/stan-dev
|
| https://mc-stan.org/docs/reference-
| manual/mcmc.html#hamilton...
| adammarples wrote:
| Pymc3
| SkyMarshal wrote:
| Thanks!
|
| https://www.pymc.io/
| tunesmith wrote:
| You can do a monte carlo simulation in a spreadsheet without a
| plugin, too. For each of the inputs, create a column where the
| cell retrieves a random value according to the probability
| distribution you pick. Then, drag down 1000 rows or 10000 rows
| or whatever, and finally calculate percentiles based off of the
| outputs of each row.
|
| A few years ago when I met my now-wife, I was paying a mortgage
| and she was paying rent, and we wanted to get an idea of what
| we could afford if we wanted to stick with the budget were were
| already comfortable with. So the inputs were the possible sale
| price of my house, the possible interest rate of the new
| mortgage, etc. We experienced what the article describes; while
| we were quite conservative about each of all of those elements,
| the 99th percentile was a lot less conservative than the worst-
| case scenario of each and every input we plugged in, and it
| gave us an accurate target of what kind of home price we felt
| we could actually afford.
| m0llusk wrote:
| This is kind of rude in that it uses the term "The Flaw of
| Averages" as well as some ideas and even an image from the book
| by the same name by Sam Savage and Jeff Danziger but gives them
| no credit. If you can't come up with your own expressions and
| drawings then you should credit the source that you end up using.
| tqi wrote:
| > but it's very rare for everything to go wrong all of the time.
|
| I think in reality the inputs to these models are a lot less
| independent than they would like. Even in the example at the
| start of the article, I suspect that for most folks income from a
| side hustle and investment rate of return are both highly
| correlated to the overall economic conditions. Attempting to add
| statistical rigor to something as open ended as predicting the
| future feels quixotic.
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