Browse MBAs SECTION 8: Business Statistics & Data Analytics

The Confidence & Uncertainty Explainer

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The Confidence & Uncertainty Explainer

Explain the uncertainty around this estimate so I don't over-trust it.

The estimate: [DESCRIBE — E.G. A SURVEY RESULT, A FORECAST, A SAMPLE
AVERAGE]
How it was produced: [SAMPLE SIZE, METHOD]

Provide:
1. The confidence interval or margin of error, and what it really means
   (in plain terms, not the textbook misinterpretation)
2. How much the estimate could plausibly be off
3. Whether the sample size is adequate for the precision I need
4. How the uncertainty affects the decision
5. What would tighten the estimate if precision matters

Correct the common misreading of "95% confidence" and tell me how much
faith to actually put in this number.

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