Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Opinion / Online Views/  Nate Silver’s golden run
BackBack

Nate Silver’s golden run

Silver stood aside from the general punditry about a close election to predict an Obama win

Silver’s blog FiveThirtyEight.com accounts for a fifth of the total traffic to the New York Times website in the days leading to the US election. His success shows that even areas such as politics that are soaked with emotion can be analyzed with rigour. (Silver’s blog FiveThirtyEight.com accounts for a fifth of the total traffic to the New York Times website in the days leading to the US election. His success shows that even areas such as politics that are soaked with emotion can be analyzed with rigour. )Premium
Silver’s blog FiveThirtyEight.com accounts for a fifth of the total traffic to the New York Times website in the days leading to the US election. His success shows that even areas such as politics that are soaked with emotion can be analyzed with rigour.
(Silver’s blog FiveThirtyEight.com accounts for a fifth of the total traffic to the New York Times website in the days leading to the US election. His success shows that even areas such as politics that are soaked with emotion can be analyzed with rigour. )

So, one of the two guys won the race to the White House.

But there was also an unusual hero in the US presidential election season—a numbers guy who stood aside from the general punditry about a close election to predict that Obama was headed for a win. He also correctly predicted who would win in all 50 states as well as the District of Columbia.

The man is Nate Silver, a 34-year old statistician. He moved his blog—FiveThirtyEight.com, for the 538 voters in the US electoral college—to the New York Times in June 2010. The blog accounted for a fifth of the total traffic to the New York Times website in the days leading to the US election.

“Sharp data analysis beats squishy feelings. The accuracy of a handful of statisticians versus the bloviating punditry is for me, the single most dramatic storyline of the election. Nate Silver showed data, logical reasoning and mathematics outperform “gut feel" and instinct," wrote financial blogger Barry Ritholtz on Wednesday, in a post on what he thought were the six key lessons of the presidential race.

One of the fatal flaws of punditry is the temptation to infest public discourse with views that are never backed by data. Silver has a lot to teach us.

But it is not only in journalism that intuition often trumps numbers.

The story of Billy Beane is quite well known, thanks to Moneyball, the book by Michael Lewis that was subsequently made into a film starring Brad Pitt. Beane was the manager of the Oakland baseball team, who used the statistical analysis provided by a Yale economics graduate, Peter Hand, to pick undervalued players rather than chase the stars.

In his recent book—Thinking, Fast and Slow—behavioural economist and Nobel laureate Daniel Kahneman, has said that the Moneyball episode is a good example of how “prediction by representativeness is not statistically optimal". There is a good Wikipedia entry of this particular heuristic: https://en.wikipedia.org/wiki/Representativeness_heuristic

It is nobody’s case that intuition has no value in analysis, but it can be an excuse for lazy thinking. And statistical analysis has been used to good effect in other areas as well. A Princeton economist named Orley Ashenfelter shocked the wine pundits by developing a simple regression model to predict the price that wine produced in a particular year would fetch later. In case such matters interest you, his independent variables were winter rainfall, average growing season and harvest rainfall.

Evolution has not equipped human beings to think probabilistically, a massive wiring flaw in an uncertain world. But the success of Silver in the past few months shows that even areas such as politics that are soaked with emotion can be analyzed with rigour.

It would be good to see some of this respect for numbers in India as well

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 07 Nov 2012, 10:02 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App