A shortcut for making less-biased predictions, taking base averages into account.
Regarding this problem: “Julie is currently a senior in a state university. She read fluently when she was four years old. What is her grade point average (GPA)?”
Recall that the correlation between two measures—in the present case, reading age and GPA—is equal to the proportion of shared factors among their determinants. What is your best guess about that proportion? My most optimistic guess is about 30%. Assuming this estimate, we have all we need to produce an unbiased prediction. Here are the directions for how to get there in four simple steps:
Start with an estimate of average GPA.
Determine the GPA that matches your impression of the evidence.
Estimate the correlation between your evidence and GPA.
If the correlation is .30, move 30% of the distance from the average to the matching GPA.
A shortcut for making less-biased predictions, taking base averages into account.
Regarding this problem: “Julie is currently a senior in a state university. She read fluently when she was four years old. What is her grade point average (GPA)?”
Daniel Kahneman, Thinking, Fast and Slow