I think that the general difficulty that many people have in understanding statistics is an important problem, because it leads people to misinterpret the world around them. General managers of baseball teams overpay for free agents coming off of good years because they underestimate the chances that the recent good year was just the result of variance around a mediocre mean – or at least they did until the Billy Beane era. - Steve from Bookmarklet

Retail investors plow money into expensive mutual funds that have beaten the S&P 500 index for a few years in a row because they underestimate the chances that recent success is the result of pure, dumb luck; more importantly, the scandal of mutual fund expenses goes unchallenged because of the conventional wisdom that you should pay more to get into “better” funds. (I think it is possible, though unlikely, that some fund managers could actually be better than the market; but with all the statistical noise, you are not going to find them unless you look at a very long period of time.) - Steve