Extreme Value Theory and how one bad day can change your life
Kuala Lampur, Oct. 26 -- Not so fun fact: Our lives are often judged not by how we regularly live it but by its most extreme events.
There is a branch of statistics called Extreme Value Theory in which an extraordinarily high value overwhelmingly impacts the entire set of numbers, even shifting the average by a huge percentile.
A simple example is salaries. If you take the monthly pay of 100 junior staff in, say, an insurance company, any one of their wages will not substantially impact the average.
But if you add the salary of the CEO of the regional group into that set, suddenly this addition could mutate the average to an unrecognisable number.
It's like adding JK Rowling's earnings to the earnings of the average 10,000 authors jus...
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