Probability Is an Essential Tool for Decision Making in Many Real Life Areas - Coursework Example

Probability as an essential tool for decision making in real life situations Student name Course Instructor Institution Due Date Introduction Probability can be defined in two simple ways. First, probability can be referred to as the measure of the likelihood that an event would occur (Kallenberg, 2002). Secondly, probability can be defined as the measure of the truth of a hypothesis. As humans, we can never be certain about everything in life. We can only predict certain thing and the only certainty is events that have already happened. As such, many people come up with predictions in an attempt to tell what will happen in the future. The accuracy of the predictions is based on the probability. In probability, there are various constants, variables and assumptions due to uncertainty. The factors that are being assumed, variables and constants therefore lead to certain models that are used in the probability equations (Kallenberg, 2002). Probability is not just a concept that is used in mathematics but also in all other disciplines and in real life. Every individual is faced with a challenge to make the right decisions each and every day. There are always consequences to every decision and therefore the right decision should be made. Probability comes in handy when making decisions. It facilitates decision making thus increasing the likelihood of making the best decision. This paper looks into the concept of probability in decision making in three different fields which are medicine, elections and insurance. As a result, the paper seeks to illustrate the importance of probability in real life decision making situations. Probability in Medicine Professionals in the medical field face the challenge of saving lives for the better part of their careers. The decisions that they make play a fundamental role in the determination of whether the individual will live or will die (Daniel, 2000). In some cases, the sick or ill patients visit the medical facilities wen the signs and symptoms of illness are still at an early stage. It is therefore the duty of the medical officer to ensure that the correct diagnosis is made to prevent acceleration of the condition and the deterioration of the health of the patient. The medical practitioner has to evaluate the health status of the patient through examining the symptom and making an evaluation. A critical look at the patient’s medical history plays a great role in the process. The medical history will facilitate the evaluation of the probability of a certain illness through provision of related occurrences (Banerjee, 2009). In other cases, the patients visit the hospitals when the symptoms of an illness or a disease are at an advanced stage. In such cases, the disease can easily identified as compared to when the symptoms are just appearing. A case in point where probability is used in the determination of the illness is the following case. Mr. John Jones is a 70 year old native Australian suffering from prostate cancer. He has been suffering from this illness for the last four years and has subsequently been attending chemotherapy sessions in order to help resolve his health status. Mr. Jones normally attends the checkup sessions every month and for the last one year, his health has been improving tremendously. On one of the routine checkups and a chemotherapy session a physical examination indicated that Mr. Jones vitals were recorded. All signs indicated that he was in a healthy status and thus the chemotherapy session was administered using Gemcitabine (Gemzar®) as the main drug. The only difference that was noted was that Mr. Jones had lost some weight. However, after the administration of the chemotherapy drugs, Mr. Jones started complaining of having a severe headache. After a while he started vomiting and complained of fatigue. Even though he was put to bed rest, Mr. Jones complained of fatigue and acted like he was confused. It was also noticed that for the 16 hours that Mr. Jones had been in the hospital, he has not visited the bathroom(Daniel, 2000). Through probability, the doctor was able to identify that the patient has been suffering from acute renal failure(Daniel, 2000). The symptoms such as vomiting, headaches, fatigue, weight loss, not visiting the bathroom etcetera were a sign of low fluid and electrolyte levels. However, the specific drug that was being used for chemotherapy Gemcitabine is associated with renal failure as one of the side effects. After being put on medication for renal failure, Mr. Jones was able to recover thanks to the application of probability in his health condition. Not only do medics use probability to establish the illness affecting individuals, but they also use probability to determine the type of medicine or drugs that are best suited to cure certain illnesses. This form of probability is determined by use of statistics to make the best possible decision or the option that has the least and less significant side effects (Wren, 2005). For instance drug A and Drug B are in tests. When drug A was administered to 30 patients, 15 of them got cured. On the other hand, when drug B was administered to 30 patients, 25 of them got cured. Statistically, drug B would be most effective and thus used by medics (Banerjee, 2009). The above cases shows how important probability is in the field of medicine and it is thus a life saver. Probability in Elections To many political scientists, politics is regarded to be a game of numbers (Carey et.al, 2000). In democratic states, the majority wins while the minority get to for the opposition. The electoral process is complex and tedious. As such, participants need to know whether their ambitions will become reality or if they will end up losing in the elections. For such predictions to be accurate, statistics come in handy in ensuring that the candidates have a high chance of winning and that the likelihood for their success is significant. Probability in elections is not just used to determine who the winner will be but also to streamline the campaign process for maximum votes gathering. Statistics is key in the electoral process from the beginning. In order to know the possible outcome of the elections, the first statistic to be analyzed is the population of the country and the population that is eligible for voting. Other factors such as age, interest in politics, and historical voter turnouts are also analyzed for the people to predict the numbers of people who will turn up to participate in the elections. This data can be collected and analyzed from different parts of a country and also for the whole country. The political parties and candidates can therefore make strategic decision on which parts of the country they would focus their campaigns to get the maximum votes. For instance some candidates would focus on regions where they have assured votes while other would focus on regions where they are less popular to increase their chances of winning(Carey et.al, 2000). The candidates who participate in the elections are also analyzed by voters and other organizations with vest interests to know the likely hood of a candidate’s win(Schulman, 2011). In most countries, there are people who have a lot of money that finances campaigns of a popular candidate who will in turn favor the individuals or certain organizations when candidate is formulating policies of the state. The ability of the candidate to win is analyzed through statistics for instance the amount of support the candidate has, the financial ability of the candidate, the social life of the candidate (the number of scandals the individual has been involved in), the political history of the candidate, the policies that the candidate advocates for and many other factors. There are also assumptions that are made in politics when looking at the probability in elections. For example, one of the most common assumptions is that the elections would be free and fair without any cases or rigging. After winning the his first term as the president of the united states of America, many people started becoming skeptical whether or not Barrack Obama would win his second term. For this reason various individuals and organizations looked into the probability of Obama winning a second term. A research conducted by Eric Schulman and Daniel Debowy to get to know the likelihood of Obama getting re-elected was able to predict a 69% chance (Schulman, 2011). This ended up to be true though it was a close competition. The probability focused on various aspects such as the candidates term in office, if the candidate was divorced or not, if the candidate is of a particular religion, if the candidate was a child of a senator etcetera. The variables led to a conclusive result of the probability in the United States 2012 elections results. Probability in Insurance Insurance companies take risks when they are offering insurance policies to individuals who participate in their offers (Azcue, 2009). When an insurance company is wrong on their calculations, they make loses and thus there is a great need for the companies to be right to ensure that they are profitable. The entire business of insurance is based on the likely hood of an event happening that would warrant the client to be compensated. There are numerous variables that must be considered when formulating an insurance policy. At the same time, the assumptions must be minimal. Before an insurance premium is offered statistics on the occurrence of similar events is analyzed (Azcue, 2009). For instance, if an individual lives in an earthquake prone area and goes ahead to insure their house against earthquakes, the premiums will be higher based on the opinion that the likelihood of the house being affected by an earthquake are higher than normal. The same case applies to health and death insurance covers. A young man who is between 18 and 23 years old faces a high likely hood of getting involved in an accident as compared to a lady who is between 35 and 40 years old. Older people who eat unhealthy and do not exercise face a higher likely hood of being affected by a heart attack than those who eat healthy food and work our regularly. However, there are individuals live in high risk places or lead risky lifestyles but are not affected by the aspect that they are insures against. Insurance companies come up with algorithms to determine the best clients who offer minimal risks to their business (O'brien, 2010). Thesealgorithms are based on models that consider specific variables and assumptions to provide the best insurance policies at the best prices. His prepares insurance companies for claims from clients. Due to uncertainty, there may be more than expected claims in an insurance company. In such cases, the insurance company insures itself against multiple claims. As a result if a client is claiming $ 10 million, the insurance company will pay $ 4 million while the other liability will be forwarded to the second insurer. The profitability of any insurance company is therefore dependent on the ability of the company to come up with accurate probability which will foster best customer selection and policy prices(O'brien, 2010). Conclusion The likelihood of the occurrence of an event determines the choices that we make in life. In both professional and personal life, probability ensures that the best choices are made to make our existence better and more enjoyable in every way possible (Jeffrey, 1992). No matter the type of personality (introverts or extroverts)or the type of industry (medicine, financial, educational etcetera) probability is a tool which facilitates accurate decision making. With accurate application of probability whether statistical or otherwise decision that are not only informed but also accurate will be made. As such, the importance of probability and its application in real life cannot be over emphasized. References Azcue, P., & Muler, N. (2009). Optimal investment strategy to minimize the ruin probability of an insurance company under borrowing constraints. Insurance: Mathematics and Economics, 44(1), 26-34. Banerjee, A., Jadhav, S., & Bhawalkar, J. (2009). Probability, clinical decision making and hypothesis testing. Industrial Psychiatry Journal, 18(1), 64-69. Carey, J. M., Niemi, R. G., & Powell, L. W. (2000). Incumbency and the Probability of Reelection in State Legislative Elections. The Journal of Politics, 62(03), 22. Daniel W. W. (2000), Biostatistics-A foundation for analysis in the Health Sciences. 7th Edition. John Wiley and Sons Inc: New York; pp. 204–294. Jeffrey, R.C., Probability and the Art of Judgment, Cambridge University Press. (1992). pp. 54-55. Kallenberg, O. (2002) Foundations of Modern Probability, 2nd ed. Springer Series in Statistics. Pp. 650. O'brien, C. (2010). Insurance Regulation and the Global Financial Crisis: A Problem of Low Probability Events*. The Geneva Papers on Risk and Insurance Issues and Practice, 35(1), 35-52. Schulman, E., & Debowy, D. (2011). What is the Probability that Barack Obama Will Be Re-Elected in the 2012 U.S. Presidential Election?Annals of Improbable Research, 16(4), 1. Wren, J. D. (2005). Truth, Probability, and Frameworks. PLoS Medicine, 2(11), e361. Read More

Through probability, the doctor was able to identify that the patient has been suffering from acute renal failure(Daniel, 2000). The symptoms such as vomiting, headaches, fatigue, weight loss, not visiting the bathroom etcetera were a sign of low fluid and electrolyte levels. However, the specific drug that was being used for chemotherapy Gemcitabine is associated with renal failure as one of the side effects. After being put on medication for renal failure, Mr. Jones was able to recover thanks to the application of probability in his health condition.

Not only do medics use probability to establish the illness affecting individuals, but they also use probability to determine the type of medicine or drugs that are best suited to cure certain illnesses. This form of probability is determined by use of statistics to make the best possible decision or the option that has the least and less significant side effects (Wren, 2005). For instance drug A and Drug B are in tests. When drug A was administered to 30 patients, 15 of them got cured. On the other hand, when drug B was administered to 30 patients, 25 of them got cured.

Statistically, drug B would be most effective and thus used by medics (Banerjee, 2009). The above cases shows how important probability is in the field of medicine and it is thus a life saver. Probability in Elections To many political scientists, politics is regarded to be a game of numbers (Carey et.al, 2000). In democratic states, the majority wins while the minority get to for the opposition. The electoral process is complex and tedious. As such, participants need to know whether their ambitions will become reality or if they will end up losing in the elections.

For such predictions to be accurate, statistics come in handy in ensuring that the candidates have a high chance of winning and that the likelihood for their success is significant. Probability in elections is not just used to determine who the winner will be but also to streamline the campaign process for maximum votes gathering. Statistics is key in the electoral process from the beginning. In order to know the possible outcome of the elections, the first statistic to be analyzed is the population of the country and the population that is eligible for voting.

Other factors such as age, interest in politics, and historical voter turnouts are also analyzed for the people to predict the numbers of people who will turn up to participate in the elections. This data can be collected and analyzed from different parts of a country and also for the whole country. The political parties and candidates can therefore make strategic decision on which parts of the country they would focus their campaigns to get the maximum votes. For instance some candidates would focus on regions where they have assured votes while other would focus on regions where they are less popular to increase their chances of winning(Carey et.al, 2000). The candidates who participate in the elections are also analyzed by voters and other organizations with vest interests to know the likely hood of a candidate’s win(Schulman, 2011).

In most countries, there are people who have a lot of money that finances campaigns of a popular candidate who will in turn favor the individuals or certain organizations when candidate is formulating policies of the state. The ability of the candidate to win is analyzed through statistics for instance the amount of support the candidate has, the financial ability of the candidate, the social life of the candidate (the number of scandals the individual has been involved in), the political history of the candidate, the policies that the candidate advocates for and many other factors.

There are also assumptions that are made in politics when looking at the probability in elections. For example, one of the most common assumptions is that the elections would be free and fair without any cases or rigging. After winning the his first term as the president of the united states of America, many people started becoming skeptical whether or not Barrack Obama would win his second term.

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