Important Math Concepts To Know: Pareto Principle, Benford's Law, Survivorship Bias

The Pareto Principle is sometimes called the 80/20 rule, which means that 80% of the effects come from 20% of the causes. While the exact numbers vary in different situations, in general, some of the causes give most of the effects. For example, 20 ailments are the reason for over half of hospital visits.

Benford's Law states that 40% of statistics start with the number one, and that larger numbers are less likely to be the leading significant digit. This is a simple way of determining whether a group of statistics from the same source is credible. If the group of statistics do not mostly start with small numbers, it could mean there was some flaw in the study, such as the sample size being too small or not random enough. It could also mean the data does not follow a normal distribution, which is rare, but possible. 

Survivorship Bias refers to the fact that inverse data is often more useful than the actual data collected. During WW2, records were kept of damaged aircraft. Since aircraft with damaged wings often returned safely, this meant that aircraft damaged in other places did not. This led to engineers adding armor to the engines and cockpits of aircraft. 

The math of these concepts is fairly simple and easy to apply. Unfortunately, often it is not. Now that you know about them, try applying it.