Statistical Modeling is like building with LEGOS

Posted on November 17, 2010

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LEGOS:
1. Square red pieces can be stacked to build towers.
2. Long skinny pieces can be used as roads.
3. Long skinny pieces on top of square red towers can build bridges.
4. Curved skinny pieces can make turning roads or bridges.
5. Tubes, motors, wheels, etc. can make pretty much anything you can imagine.

STATISTICS:
1. Univariate statistics can be used to clean errors out of your data.
2. Correlations of past data with current data can predict future events.
3. Linear Regression can combine many correlations to predict even better.
4. Logistic Regression can predict curved relationships.
5. Simultaneous equations, Non-Linear Regression, etc. can be applied to improve pretty much any business process you can imagine.

THOUGHT PROVOKING QUESTION
Which of the following best describes how is your company is organized?

A. We hire really creative builders who have access to all the pieces.

B. We hire creative people who have only ever seen the red square pieces to tell the builders what to build.

C. We hire builders who have a big sack of Legos with lots of different pieces, but they’re not too interested in building anything they haven’t seen before.

D. We use robots to automatically build “stuff” that we use as bridges. The bridges usually work, but sometimes we fall through.

E. We don’t have any Legos.

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