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by yellowapple
3974 days ago
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> The fact that Brazil may have an exceptionally good year, only means that it is likely to have a less-exceptional year after that, due to regression to the mean. Isn't that a Monte Carlo fallacy? One outcome in a sequence of tests does not mean that others are more likely in the future. If you flip a coin and get 10 heads in a row, your likelihood of getting a tails on the next flip (assuming a perfectly-balanced coin) is still 50%. Brazil's good year may be another case of climate change for all we know, and could very well persist for awhile; or, you might be right and next year things will balance out again. We don't know either way yet. That isn't to say that we shouldn't be concerned regardless; you're correct in your observation that having all our figurative, coffee-flavored eggs in one basket - even if that basket is the size of Brazil - is rarely a good idea. |
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> "One outcome in a sequence of tests does not mean that others are more likely in the future. If you flip a coin and get 10 heads in a row, your likelihood of getting a tails on the next flip (assuming a perfectly-balanced coin) is still 50%"
True, but I am arguing that out of 10 flips, the average number of heads will likely be 50%. If you got 10 heads in a row, that would be 100%, an exceptional event, possibly like Brazil's good year. However, if you were to flip 10 more coins, it is much more likely that you will get less than 100% heads flips, as it will regress closer to the mean of 50%.
I guess the main point I was arguing is that just because Brazil might have a good outlook in the future, does not mean the article is invalid and too presumptuous.