Heavy Tails

When the average misleads

An interactive lesson with 6 steps, about 5 minutes: you predict, drag and solve, with instant feedback on every answer. It runs in your browser and needs JavaScript.

What you’ll learn

• In heavy-tailed data, a few extreme values dominate totals.
• The mean can be wildly unrepresentative; the median is more robust.
• Short records can badly underestimate the risk of extremes.

Steps

1. A billionaire walks into a café
2. Heavy-tailed distributions
3. The 80/20 rule
4. Planning for disasters
5. Eighty of eighty
6. Fewer and fewer rich