To some, statistics seems to be a dry, boring subject. Learning statistics is not the most exciting field of study, but the power statistics provides is undeniable. In today’s world, data is abundantly available in many fields, but analyzing this data can be difficult. One of the most radical shifts in the previous decades is been how computers are used to quickly analyze statistical data, and analysts are being used to interpret this data in a number of industries. Here are three industries where statistical analysis is changing everything.
In the past, analyzing performance of athletes was often done using the eye test. Experts would watch athletes and rate their performance based on their subjective analyses. In addition, some basic statistics were used to evaluate performance. In baseball, some of the most popular statistics used were batting average and ERA. Over time, however, it was found that the most common baseball statistics did not provide much in terms of predictive value, and amateur statisticians found a number of new metrics by which to measure athletic performance. Few teams of listened to these amateurs, and most continued operating as they had for decades. A few teams, however, decided to take these statistical analysts seriously, and certain teams such as the Oakland A’s were able to compete on a high level by signing players who performed well when judged by these advanced statistics. The success of these teams has revolutionized how athletes are judged, and most professional teams now have several staff members who spend their time analyzing statistics.
Those who watch pundits on television eventually learn how pundits view politics. In presidential races, pundits take a simplistic view of how races should be analyzed, and political operators used to believe much of what pundits still say today. Recent analysis, however, has shown that many of the tenets that form how pundits view the world are inaccurate. To replace these misguided beliefs, many political operatives are now relying on statistical analysis to judge how a campaign is performing. Polling data is notoriously noisy in the statistical sense, but advanced algorithms can look past the noise and accurately predict the state of race. Statistical analysis can also be used to determine what issues will likely resonate with voters. By using polling data and statistical analysis, those managing political campaigns can help craft speeches that are targeted towards key demographics in elections. While the big story in recent years is how money is affecting politics, it may be the statistical analysis that is eventually viewed as the most important revelation in politics in recent years.
Finance and statistics have long been linked. In fact, the role of the stock market is to determine the value of companies based on objective measures. However, subjective analysis also plays an important role; many companies see their stocks rise and fall dramatically based on subjective measures of success, and succeeding in the stock market requires traders to see past what most on the market believe. In analyzing stock performance, statistical analysis can often help traders find great stocks to buy and determine when it is an appropriate time to sell. Advanced algorithms now guide much of the trading on the market, and a surprising amount of trading is done using computer programs. Here, however, traders must be wary; by analyzing the amount of data that the stock markets provide, it may be possible to find coincidences that can seem statistically relevant. To succeed on the market, it is important to realize which statistical trends are based on real-world factors and which are simply artifacts of statistical analysis.
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Mark McMillan is an operations analyst and guest author at How Do I Become A…, where he contributed to the Guide To Becoming An Operations Analyst.