Douglas Miller, a professor in Policy Analysis and Management and the College of Human Ecology/Economics, discusses luck and uncertainty as it relates to economists in a recent article on the Cornell Research website.
“When we look at an estimate,” Miller says in the piece, “we want to know how large a role chance or luck may have played in producing it. Of course, we’d rather avoid luck altogether, but that’s often beyond our control. What we can do is carefully assess how much of our main estimate may be the product of luck.”
“Our sense of statistical uncertainty is critical in decision making. If, for example, our methods for calculating uncertainty are faulty and make our measurement of statistical uncertainty too low, we can wind up being falsely confident and draw conclusions that are unsupported by the evidence.”