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Prepare to be awed: > An impressive series of studies by Thomas Åstebro sheds light on what happens when optimists receive bad news. He drew his data from a Ca
by JoshuaDavid 14y ago
Prepare to be awed:
> An impressive series of studies by Thomas Åstebro sheds light on what happens when optimists receive bad news. He drew his data from a Canadian organization—the Inventor’s Assistance Program—which
collects a small fee to provide inventors with an objective assessment of the commercial prospects of their idea. The evaluations rely on careful ratings of each invention on 37 criteria, including need for the product, cost of production, and estimated trend of demand. The analysts summarize their ratings by a letter grade, where D and E predict failure—a prediction made for over 70% of the inventions they review. The forecasts of failure are remarkably accurate: only 5 of 411 projects that were given the lowest grade reached commercialization, and none was successful.
- Kahneman, Thinking Fast and Slow
The full data table is available here: http://www.fptt-pftt.gc.ca/pdf/Astebro_Gerchak.pdf http://www.fptt-pftt.gc.ca/pdf/Astebro_Gerchak.pdf (page 36)
- natrius 14y agoPredicting failure is easy. Predicting success is hard. Your quote is only about the easy part.
- JoshuaDavid 14y agoThey also get 55% on success for A-rated companies, which is also pretty good. It's not quite 60%, but it's very close, and considering how much above 60% they get on predicting failures, I think that shows a fairly high accuracy of prediction.
- jopt 14y ago55% is just as close to 50% (coin toss) as 60%.
- aaronblohowiak 14y ago55% on A-rated companies is way better than the "coin-toss" model of randomly assigning a rating to each company, because there are more than two ratings.
- overcyn 14y agoFar far less than half of companies succeed. So identifying successful companies by random draw is not equivalent to a coin toss. In the case of this study, its 10%.
- jopt 14y agoI apologise for ever posting this trainwreck of statistical reasoning. I don't know what I was thinking.