Annie Duke won her first World Series of Poker bracelet in 2004. In 2018 she published Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts. The book’s description calls her a “poker champion turned business consultant” who teaches readers “how to get comfortable with uncertainty.” The book became a national bestseller.
How Many School Buses?
Candidates for jobs at American consulting firms are given questions like this one, from a Yale career guide: “How many yellow school busses are used for elementary schools in [city you are recruiting for]?” The guide says that “the approach to the solution is more important than solution itself.”
These market sizing questions “test your thought process, ability to structure, general business and numbers sense.” The guide adds: “There is often a broad range of acceptable answers instead of one correct one.”
The Credit Score
In 1989 the company Fair, Isaac and Company created the first general-purpose personal credit score. The FICO score ranges from 300 to 850. Lenders use it “to assess an individual’s credit risk.”
According to FICO, 90% of top lenders use it. A borrower’s score affects the interest rate he or she is offered.
Go for It, by 22.6%
In 2021 the NFL introduced the Next Gen Stats Decision Guide, first shown on NBC. On fourth down, it gives a team’s win probability if it goes for it, attempts a field goal, or punts. A recommendation can read: “Go for it, by 22.6%.”
Coaches are now “going for it on fourth down, when the numbers say they should, at a higher rate than ever before.” In the first nine weeks of the 2021 season, teams went for it in 147 of 268 situations where the model favored it by two or more percentage points. That rate of 55% was a six-year high.
Chance of Rain
In 1965 the National Weather Service began giving the probability of precipitation in forecasts across the country. Since then, Americans have heard the weather as a number: a 30 percent chance of rain, a 70 percent chance of snow.
The number means “the probability of occurrence of measurable precipitation at a point in a specified period of time.” In one study published by the National Weather Service in 1980, “a majority of the participants believed that a PoP forecast is an area forecast.”
A 30 Percent Chance
On the morning of the 2016 presidential election, Nate Silver’s website FiveThirtyEight gave Hillary Clinton about a 71% chance of winning, and Donald Trump about 29%. Trump won, and many commentators said the forecasters had got it wrong.
Silver disagreed. “We had him with a 30 percent chance, and that’s a pretty likely occurrence,” he said in 2017. “I don’t think people have a good intuitive sense for how to translate polls to probabilities.”
The Value of a Statistical Life
When the U.S. Department of Transportation decides whether a safety rule is worth its cost, it uses a figure called the value of a statistical life. For analyses with a 2025 base year, the figure is $14.2 million.
The department explains how it works. If a person “is willing to pay $1,000 to reduce the annual risk of death by one in 10,000,” that person “is said to have a VSL of $10 million.” It adds: “What is involved is not the valuation of life as such, but the valuation of reductions in risks.”
B Less Than PL
In 1947 a federal appeals court decided a case about a barge, the Anna C., that broke loose in New York harbor while its bargee was ashore. Judge Learned Hand wrote that the owner’s duty to guard against such accidents “is a function of three variables”: the probability that the barge will break away, the gravity of the injury if it does, and the burden of adequate precautions.
He then wrote it as algebra. “If the probability be called P; the injury, L; and the burden, B; liability depends upon whether B is less than L multiplied by P.” It became known as the Hand formula.
Moneyball
The Oakland Athletics, working with one of the smallest payrolls in baseball, used statistical analysis to identify undervalued players and won more games than teams spending several times as much.
The scouts hated it. The methods were unorthodox, the reasoning was unfamiliar, and it produced wins — which ended the argument.
The vocabulary of results
Results-oriented. A standard phrase on an American résumé. The claim is not that the person works hard or knows the field, but that they can be judged by what came out.
Deliverables. American project language names the output as the unit of work. Not tasks, not effort, not hours. The thing handed over.
Track record. Not qualifications, not references, not what someone believes about themselves. What has already been produced, and can be pointed at.
Best practice. Methods are adopted from a competitor, another industry, another country, on the grounds that they work. There is no loyalty in the concept — the practice earns its place by outcome and loses it the same way.
Return on investment. Every expenditure becomes a candidate for the calculation, including training, meetings, research and attention. The question is not whether the thing is good. It is what came back.