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Let's see how data analysis can help us make better decisions!
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[SOUND] Hi I'm Ben and
0:00
welcome to data analysis basics.
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Making decisions with data.
0:09
We all make decisions.
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We decide when to get up and
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go to sleep, what to eat,
where to go to school or work.
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And that's only scratching the surface.
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Data analysis is the process we
use to examine information and
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make better positions.
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Sometimes, we'll see this is
beautiful charts and graphs.
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But it doesn't have to be
fancy to be data analysis.
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In fact, we all do this naturally
every time we go to the grocery store.
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Imagine you're looking for
some peanut butter.
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It's a small store and
they only have two options.
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A 10 ounce container that costs $5 and
a 20 ounce container that costs $8.
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Since you get twice as much peanut
butter with the 20-ounce option and
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the price is less than doubled,
the larger jar is the better deal.
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That's a pretty simple
example of data analysis.
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We took the prices and
sizes of two different products and
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made a decision which product to
buy based on that information.
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Though it's not always so simple.
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What if you are the CEO of McDonald and
you had to pick between two cities for
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a new location, what would you do?
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Our brains can only process
a limited amount of input, so
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we take shortcuts to determine what's
important, and sometimes we make mistakes.
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These kinds of errors in perception
are called cognitive biases.
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One of these that affects
our ability to analyze data
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is that humans tend to find
patterns in completely random data.
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These can cause us to identify
trends which are really just
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random variations overtime.
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If I flip a coin ten times and
get ten heads in a row,
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its tempting to say that the next flip
will almost and definitely be heads.
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But really, it's just about 50% chance.
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Other cognitive biases lead us to put more
weight on some observations than others.
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If we already have an idea
of what the data will say,
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then we'll tend to notice
examples that confirm our theory.
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We'll also give more weight to more
recent data than we give to older data.
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Data analysis gives us methods
to see beyond our biases,
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to get at the truth of
what the data shows.
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Let's go back to the grocery store.
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This time, it's a large supermarket
with dozens of options and
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several different brands.
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We've got chunky, smooth, natural,
there's even one with a chocolate swirl.
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If you're on a budget you could be
here forever trying to figure out
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which choice is the most cost effective.
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But at some stores they help you out by
showing you each jar's price per ounce.
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They do the math for you,
reducing the amount of information that
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you have to process and making it
easier to compare different options.
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If you wanted to use data analysis to
help pick the new McDonald's location,
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maybe you'd look at traffic data for
each city and
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compare that to the available
properties to help narrow it down.
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Just like the price per ounce label,
data analysis reduces complex sets of
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information into insights
that are easy to understand.
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And these insights can help us make
difficult decisions much simpler.
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Coming up, we'll look at where where we
can find some data to help us make those
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difficult decisions.
3:15
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