Regression to the mean
Regression to the mean, also known as reversion to the mean, is a statistical phenomenon that occurs when a variable unusually high or low on one measurement is likely closer to the average on the subsequent measurement. This is because extreme values are less likely to occur again and more likely to be followed by a value closer to the norm.
Regression to the mean can be seen in many different areas of life. For example, a student who gets a very high score on one test will likely get a lower score on the next, even if they studied just as hard. This is because it is difficult to maintain such a high level of performance, and the student is more likely to make some mistakes on the next test.
Another example of regression to the mean is the performance of sports teams. A team with an excellent season will likely have a worse one next year, even if they have the same players. This is because it is difficult to maintain such a high level of performance over multiple seasons.
Regression to the mean is an important concept because it can lead people to make incorrect data assumptions. For example, if a teacher sees that a student has significantly improved their test scores, they may assume that the student is now a better learner. However, it is possible that the student's improvement was simply due to regression to the mean and that their true level of performance has not changed.
Here are some examples of regression to the mean in everyday life:
- A basketball player who shoots 70% from the field in one game is likely to shoot closer to their average of 50% in the next game.
- A stock that has outperformed the market in the past year is likely to underperform the market in the next year.
- A child who does very well on one test will likely do closer to their average on the next test.
- A company with a very profitable year will likely have less fortunate years
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Regression to the mean is a natural phenomenon seen in many different areas of life. It is important to be aware of this phenomenon to make informed decisions about data.
There are many Cognitive Biases, many more than most people realise. If you want to think your way out of a mind trap, you must first realize you're already trapped.
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