Tag Archives: uncertainty

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How to Make Better Decisions: Recognize Uncertainty

It’s a complex world, and we are constantly making decisions.  Just imagine the number of decisions we make about breakfast:  How big a breakfast should I have?  Should I have coffee?  If so, how much?  Should I have toast?  Should I use butter?  Should I have one piece or two?  Should I cut the toast?  If so, should they be cut into rectangles or triangles?  Should I keep the crust? Should I have juice?  Should it be apple juice or orange juice?  How about milk?  I haven’t even gotten to the pancakes, waffles, syrup, sausage, cereal, bacon… (mmm, bacon…)

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And these aren’t the really important ones!  How do we know we’re making good decisions, and can we make better ones?
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A Review of The Signal and The Noise, A New Book by Nate Silver

Imagine a guy with glasses who used to model baseball stats and play online poker nailing the outcome of the 2012 elections. And when I say “nailing”, I mean that he correctly predicted the U.S. Presidential contest in every one of the 50 states (and nearly every U.S. Senate race, too). He even performed better than some of the most widely-used polling firms. Now imagine that he gives his thoughts on making these types of predictions. That’s exactly what Nate Silver does in his new book The Signal and the Noise.

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I’ve worked in what’s now being called “data science” for nearly twenty years. The title of Silver’s book – The Signal and the Noise – presents an important and sometimes overlooked part of this science. The “signal” is what we’re looking for in the data, and the “noise” is all the stuff in the data that gets in the way of what we’re looking for.