Head First Data Analysis

Chapter 7. Subjective Probabilities: Numerical belief

Sometimes, it’s a good idea to make up numbers.

Seriously. But only if those numbers describe your own mental states, expressing your beliefs. Subjective probability is a straightforward way of injecting some real rigor into your hunches, and you’re about to see how. Along the way, you are going to learn how to evaluate the spread of data using standard deviation and enjoy a special guest appearance from one of the more powerful analytic tools you’ve learned.

Backwater Investments needs your help

Backwater Investments is a business that tries to make money by seeking out obscure investments in developing markets. They pick investments that other people have a hard time understanding or even finding.

Their strategy means that they rely heavily on the expertise of their analysts, who need to have impeccable judgment and good connections to be able to get BI the information they need for good investment decisions.

It’s a cool business, except it’s about to be torn apart by arguments among the analysts. The disagreements are so acrimonious that everyone’s about to quit, which would be a disaster for the fund.

The internal crisis at Backwater Investments might force the company to shut down.

Their analysts are at each other’s throats

The analysts ...