The Flaw of Averages by Sam L. Savage (Book Review of the Week-ish)
Maybe it’s because I’m such a big baseball fan, but I love numbers. I read Baseball Prospectus and Baseball Reference religiously – where else are you going to compare Ryan Howard and David Wright’s OPS+, for instance? (Wright compares favorably, by the way).
I love Rotten Tomatoes for calculating how likely I am to enjoy a movie. And I can’t go a week without checking out FiveThirtyEight.com for well-reasoned political insights.
Given that, it’s possible not everyone is the right audience for Sam Savage’s The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty.
The Flaw of Averages
is not a perfect book, by any means. For one thing, the book tends to be broad, not deep (that’s also a benefit, as I’ll discuss in a moment). For another, I really wish Savage gave more examples of how to apply his “probability management” concepts to problems outside the discussion without the use of proprietary software or Excel plug-ins.
Of course, meeting this second challenge likely would have entailed a lot more math. And limiting the math in the book is one of the reasons it’s so approachable.
Savage is funny, in a geeky-college-professor kind of way. The description of the drunk staggering down the middle of a busy freeway (his average position is alive; his average state is dead), illustrates Savage’s “Flaw of Averages” perfectly. He’s knowledgeable (his descriptions of portfolio management and option theory were outstanding). And he’s not afraid to be controversial (see Chapter 10 and Part 8 of the book, for instance). All good, in my view.
As I mentioned above, the breadth of topics Savage covers has a big upside: Almost any business owner, manager or staffer could learn something about how to apply numbers more effectively and how to interpret other people’s numbers more critically. While I prefer how readily you can apply the lessons in Douglas Hubbard’s How to Measure Anything: Finding the Value of Intangibles in Business
Ultimately, the book would make a solid addition to the bookshelf of anyone how likes numbers as much as I do. And, even more important, would make a significant improvement for those who don’t.
Grab a copy
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I broadly agree with this review. The book’s strongest point is its approach to explaining probability to a non-technical audience. Its discussion of the solutions reads more like one big advertisement for proprietary software. Still a must-read.
Thanks for the comment, Laurent. I agree that Savage does speak a fair bit about his software throughout the book, and although I didn’t find it excessive, I can see how some might. I think his discussions of how to “do-it-yourself” on many of the topics (using things like the Data Analysis tool pack in Excel, for instance), offset the more promotional aspects of the book. Along with Douglas Hubbard’s How to Measure Anything (my review), it’s a core addition to any business bookshelf.
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