From the course: Business Math
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Low-probability events: Fear of flying, black swans, and extinction of the dinosaurs
From the course: Business Math
Low-probability events: Fear of flying, black swans, and extinction of the dinosaurs
- Are you afraid of flying? - In a commercial airplane, no, I'm as calm as a summer's morning when I fly. - Now, you know, of course, that some people are terrified of flying. - Absolutely, this is a classic example of the difficulty people have in understanding low-probability events. - Exactly, for example, in 2016, there were zero people killed in commercial airline crashes in the United States and zero in 2015, and zero in 2014. - A 2013 study found that that fatality rate for U.S. air travel was 0.07 fatalities for every one billion passenger miles flown. Now, note, with no recent airliner fatalities, that rate has decreased, but we'll use it for comparison. - That means that if the average commercial air trip is 500 miles, there is one fatality for every 29,000,000 trips. - By comparison, the same 2013 study found that the fatality rate for U.S. travel in cars and light trucks was 7.3 fatalities for every one billion passenger miles driven. - That means that if the average…
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Contents
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Low-probability events: Fear of flying, black swans, and extinction of the dinosaurs4m 57s
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Famous averages: Dow Jones and consumer prices6m 29s
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Income distribution: The difference between mean and median4m 34s
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Probabilities: Life insurance and the weather5m 53s
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Conditional probabilities and counting cards7m 20s
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Variance and the concept of risk6m 15s
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