The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty

CHAPTER 47

A Posthumous Visit by My Father

My father’s 1954 book, The Foundations of Statistics, is described on its jacket cover as “a critical examination of statistics, viewed as the discipline of rational decision in the face of uncertainty.”¹ It took the point of view that probability was subjective and that it was reflected in the gambles a person would make. Although controversial at the time and still not universally accepted, the prediction markets discussed earlier affirm that this perspective is at least widely held today. But the book is so mathematical that I can decipher only snippets.

Thus I was intrigued when Michael Schrage discovered a very readable article of my father’s, of which I had been unaware, entitled “The Shifting Foundations of Statistics.”² It had been hiding under my own nose for years in a 736-page memorial collection of his writings. I presume the paper in question was written shortly before my father’s death in 1971 because it was published in 1977 in a collection of various authors. Unlike his mathematical writings, this piece was completely accessible to me. It made me realize how little my father and I had discussed the technical details of statistics, a field that I had studiously avoided with the exception of a required course in college.

I vividly recall one pivotal scientific discussion with him, however. I had just proven the first result in my doctoral dissertation in computational complexity, and we scheduled time to discuss it. I was ...