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Probability refers to the likelihood of an event occurring. It can be expressed as a number (0.5) or a percentage (50%). Statistical tests allow psychologists to work out the probability that their results could have occurred by chance, and in general psychologists use a probability level of 0.05.
Oct 13, 2023 · A p-value, or probability value, is a number describing how likely it is that your data would have occurred by random chance (i.e., that the null hypothesis is true). The level of statistical significance is often expressed as a p-value between 0 and 1.
To summarize, the probability that an event happens is the number of outcomes that qualify as that event (i.e. the number of ways the event could happen) compared to the total number of outcomes (i.e. how many things are possible).
- Example 1: Weather Forecasting
- Example 2: Sports Betting
- Example 3: Politics
- Example 4: Sales Forecasting
- Example 5: Health Insurance
- Example 6: Grocery Store Staffing
- Example 7: Natural Disasters
- Example 8: Traffic
- Example 9: Investing
- Example 10: Card Games
Perhaps the most common real life example of using probability is weather forecasting. Probability is used by weather forecasters to assess how likely it is that there will be rain, snow, clouds, etc. on a given day in a certain area. Forecasters will regularly say things like “there is an 80% chance of rain today between 2PM and 5PM” to indicate t...
Probability is heavily used by sports betting companies to determine the odds they should set for certain teams to win certain games. For example, a sports betting company may look at the current record of two teams and determine that team A has a 90% probability of winning while team B has just a 10% probability of winning. Based on these probabil...
Political forecasters use probability to predict the chances that certain candidates will win various elections. For example, a forecaster might say that candidate A has a 60% chance of winning, candidate B has a 20% chance of winning, candidate C has a 10% chance of winning, etc. to give voters an idea of how likely it is that each candidate will ...
Many retail companies use probability to predict the chances that they’ll sell a certain amount of goods in a given day, week, or month. This allows the companies to predict how much inventory they’ll need. For example, a company might use a forecasting model that tells them the probability of selling at least 100 products on a certain day is 90%. ...
Health insurance companies often use probability to determine how likely it is that certain individuals will spend a certain amount on healthcare each year. For example, a company might use factors like age, existing medical conditions, current health status, etc. to determine that there’s a 90% probability that a certain individual will spend $10,...
Grocery stores often use probability to determine how many workers they should schedule to work on a given day. For example, a grocery store may use a model that tells them there is a 75% chance that they’ll have more than 800 customers come into the store on a given day. Based on this probability, they’ll schedule a certain amount of workers to be...
The environmental departments of countries often use probability to determine how likely it is that a natural disaster like a hurricane, tornado, earthquake, etc. will strike the country in a given year. If the probability is quite high, then the department will make decisions about housing, resource allocation, etc. that will minimize the effects ...
Ordinary people use probability every day when they decide to drive somewhere. Based on the time of day, location in the city, weather conditions, etc. we all tend to make probability predictions about how bad traffic will be during a certain time. For example, if you think there’s a 90% probability that traffic will be heavy from 4PM to 5:30PM in ...
Investors use probability to assess how likely it is that a certain investment will pay off. For example, a given investor might determine that there is a 1% chance that the stock of company A will increase 100x during the upcoming year. Based on this probability, the investor will decide how much of their net worth to invest in the stock.
Probability is routinely used by anyone who plays card games on a regular basis. For example, professional poker players use probability to determine how likely it is that a certain hand of cards will win and this informs them on how much they should bet. If a player knows that there is a high probability that they will win a certain hand based on ...
Oct 11, 2023 · A bell-shaped curve, also known as a normal distribution or Gaussian distribution, is a symmetrical probability distribution in statistics. It represents a graph where the data clusters around the mean, with the highest frequency in the center, and decreases gradually towards the tails.
Aug 31, 2015 · The distinction between probability and likelihood is fundamentally important: Probability attaches to possible results; likelihood attaches to hypotheses. Explaining this distinction is the purpose of this first column.
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To summarize, the probability that an event happens is the number of outcomes that qualify as that event (i.e., the number of ways the event could happen) compared to the total number of outcomes (i.e., how many things are possible).
