Monday, October 03, 2011

Statistics hints at Existence of God

At the onset of this post let me make a few things clear. I am not an atheist. I have faith in the bible. But I do not hesitate in questioning facts about the bible. Now, according to some, that makes me an atheist. Atleast, it does not make me a fanatic. So I leave it at that.

My professor of economics, Mr. Sakhalkar, once made a statement that when one reads he should not be selective. That creates a bias and restricts ones circle of influence. Going down that path a couple of years ago took me down the path of the origins of religion.

A very interesting fact came to the conscious. "God" was an invention of man to blame someone for things that man did not understand and could not control. In the old days, the most frightful element for man was fire. He could not understand it, he could not control it and it was most destructive force. So a Fire God existed. And among all the gods, the Fire God was the most powerful one. There was Water God, Land God, Wind God, Sun God, Star God and so on.

As man started understanding the elements of nature, the importance of that God diminished. Until the God itself was abolished. Eventually as we sit in the twenty-first century, almost all of the element Gods are extinct. When the Gods started disappearing, man found reason to blame other men for various elements. So a forest fire was because some fool dropped a lighted cigarette on dry grass. Understanding man and its nature became a prime topic of importance. God now starting taking form of man. A convenient person to blame when things go beyond explanation.

A statistical model is a function which describes the observed behaviour based on identified independent variables. But what most sales personnel (call them consultants or statisticians) leave out is the "epsilon" (E). Every function in statistics has the epsilon attached to it. Consider the following function which forecast the amount of sale at a retail outlet.

Y = aX + bZ + ε

where Y is the amount of sale, X is the average salary of store visitors and Z is the fact that it is raining. ε represents the epsilon or the error component. This is statisticians' way of keeping themselves legally safe (yup... statisticians are smarter than lawyers). It implies that though the function predicts the amount of sale, there is an error component which explains the deviation in actual amount against the predicted amount. So if the actual sales is different from the predicted amount, blame the error component and not the statistician.

There is a whole lot of effort expended in trying to understand and explain this error component. New variables found, new algorithms applied, but the ε still lives on. Till date there has not been any statistics model that does not have the ε in it.

Even a statement that "All crows are black." will be stated by a statistician as "It is with 95% level of confidence that 99% of the time all crows are black." This is with the understanding that if someone sees a crow with is not all black, the statistician is safe with his statement.

So now we have a EPSILON which is the unexplained factor and responsible for all the deviations in the statistical model. In some cases, like predicting the likelihood of a patient surviving a critical operation, this EPSILON also represents a dangerous and frightening probability. A play in the equation that is unexplained and blamed for any deviation in our predictive capabilities. EUREKA ---- we have found the "STATISTICS" GOD.

ε

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