The book “The signal and the Noise” by Nate Silver talks about the making of predictions, why those predictions fail, and ways of improving them. Elections are a good example of the concepts around which this book has been formed. Let us look at it this way; many predictions usually are made about particular leaders and their chances of winning the elections. However, only a few of these predictions become realized, with quite a number failing. Having given information on how predictions can fail from chapter one to seven, chapter eight gives information on how to gauge those predictions so as to improve on them (Silver, 2012). That is where the explanation of a theory known as Bayesian theory comes in.
The Bayesian theory is a theory that explains the calculation of probabilities by getting new events and having our expectations fit into these new sets of information or events. I would give an example of a misplaced phone. It beeps and you hear the sound. You, however, insert your predictions on places in has been found misplaced in the past and check those places to find if it is beeping from there.
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Nate then continues to talk about how we have moved from Bayesian methods to ‘frequentist’ statistical methods. Frequentist probability is based on the making of conclusions from frequent activities. This statistical method is however, a cause of what are more renown as false positives and statistical favoritism or bias as is stated by Nate (Silver, 2012).
A series of examples like gambling are used. Nate talks of a successful gambler who applies the Bayesian theory. It is explained by how this gambler, Voulgaris, makes a lot of money out of betting, which is all about predictions (Silver, 2012). These people do not bet on precise things but normally think of probabilities. That is what Voulgaris did, watched many games that he liked and ended up becoming good at predicting them when it comes to betting.
- Reference
Silver, N. (27th September 2012). The Signal and the Noise: Why So Many Predictions Fail - but Some Don't. Penguin Group.
