MAT 271 Probability and Statistics

Lecture 1: Introduction

Asst. Prof. N. Kemal Ure

Istanbul Technical University

ure@itu.edu.tr

February 11, 2020

Overview

1 Introduction

2 Why Probability Theory?

3 Why Statistics?

4 Applications

5 Summary
Introduction
Introduction

▶ The main focus of this lecture is to give semi-formal answers to

following questions:

∎ What is probability theory? Why do we need it?

∎ What is statistics? Why do we need it?

∎ Are they useful for engineering?

∎ What are some popular applications of these concepts?

▶ The objective is to give you a ”big picture” view of probability theory

and statistics and motivate you for the rest of the class.
Why Probability Theory?
Introduction

▶ In both social life and in engineering, we are often faced with

uncertain situations:

∎ What is the chance that I will make it to the class in time?

∎ What is the chance that my UAV will survive severe weather?

▶ Probability theory offers us the tools that take these informal

statements and turns them into mathematical objects

∎ So that we can do computation with them!

∎ So that we can estimate the probabilities of these uncertain events.

▶ That is cool, but why do we need to estimate these probabilities?

Decision Making

▶ That is cool, but why do we need to estimate these probabilities?

∎ Because understanding probability theory is the key to good
decision making.

▶ Without thinking about it consciously, you make your even daily

decisions based on probabilities
∎ Example: Selecting your transportation route to the school
∎ Example: Selecting courses from different professors
∎ Example: Betting and TV Quiz Shows

▶ Nice, but do we really need advanced mathematics to deal with these

simple problems?
Decision Trees

▶ Let’s look at a concrete example to understand why probability based

decision making can be non-trivial. (Example taken from Bertsimas’
Data, Decision and Models)

▶ Bill is a 3rd year engineering student and he needs to pick a summer

job (paid internship). He faces several decisions:

∎ He meets with the VP of a famous company (Vanessa), she tells him that
she is impressed with him and she should apply to her company.

∎ The manager at the previous company (John) he interned at offers him

12, 000 USD for the summer.

∎ He can also apply to his school’s career office, and they can find a
summer job for him.
Decision Trees

▶ How should Bill decide?

∎ He needs to reply to John as soon as possible. Vanessa’s offer is not on

the table yet. School can wait.

∎ Note that there is a sequence of decisions, not a single one.

Decision Trees

▶ First decision, accept or reject

John’s offer

▶ Next, is Vanessa going to make

an offer?:
∎ This is a probabilistic event that
we have no control over
∎ Note the differences between

circles and squares

Decision Trees

▶ Second decision, accept or reject Vanessa:

▶ Outside sources tell that her average offer is around 14, 000 USD.
Decision Trees

▶ Final link in the chain, apply school’s corporate program.

∎ But what is the average salary for that? That is where the data comes in:

∎ Based on this information, we can complete the final branch of our

decision tree
Decision Trees

▶ Here is the final branch

Decision Trees

▶ Now let’s put in the other information (and estimations) we have

Decision Trees

▶ Now let’s put in the other information (and estimations) we have

Decision Trees

▶ Next, we evaluate decision tree by multiplying gains and probabilities

Why Statistics?
Statistics

▶ Note that in the previous example, probabilities played a key role in

solving the problem.
∎ But if they are not handed to us, how do we compute those probabilities?
∎ We need to look at the data!

▶ Statistics offers us the tools for computing probabilities (and related

information) from data.
▶ Here is a picture that portrays the relationship between them (taken
from Wasserman’s All of Statistics)
Statistics

▶ Statistics is all about drawing probabilistic conclusions from limited

number of samples
Statistics

▶ Statistics is all about drawing probabilistic conclusions from limited

number of samples
An Important Remark

▶ One of the pitfalls of probability is it seems intuitive and easy, but

actually it is very deceptive and error-prone most of the time

▶ Try answering questions below intuitively

∎ A test for a rare disease (1 in a thousand) gives true positive results with
probability 0.95. If your test is positive, what is the probability that you
are infected?
∎ In a party of 10, what is the probability that two people has the same
birthday? What if there were 30 people?
∎ A cargo plane has 8 adjacent crate slots and whenever two heavy crates
are next to each other plane might become unstable. Given that there is a
7% chance of loading a heavy crate to the airplane, what is the
probability that aircraft might become unstable?
An Important Remark

▶ Same goes for statistics. It is actually very easy to lie using statistics
▶ Sample Bias:
∎ All my friends listen to metal music, therefore metal music is the most
popular genre
∎ A banking company conducts a mobile survey and the results are ’70% of
the customers are interested in using a mobile baking app’. Are these
results reliable?

▶ Correlation and Causation:

∎ Sale of ice-creams increases sales of sun glasses
∎ Sending more emails at work gets you promoted

▶ You will learn how to overcome these pitfalls in this course. After
this course ends you will know how to think and answer correctly in
probabilistic problems.
Applications
Applications

▶ Probability and statistics has tons of real-life applications. One of the

major objectives of this course is to familiarize you with them.
▶ Here are some applications we will take a look at throughout the
course

▶ Health
∎ Life expectancy
∎ Drug Trials
∎ Medical Tests

▶ Safety
∎ Traffic accidents
∎ Aviation safety
∎ Workload estimation
Applications

▶ Networks
∎ Transportation network
delays
∎ Communication network

reliability

▶ Manufacturing Processes
∎ Yield estimation
∎ Product quality control

▶ Social Sciences
∎ Education
∎ Environments
∎ Demography
Applications

▶ Artificial Intelligence
∎ Computer Vision
∎ Language Processing

▶ Autonomous Systems
∎ Perception
∎ Planning and Decision
Making

▶ Forescasting
∎ Finance
∎ Weather Prediction
∎ Retail
Summary
Summary

▶ This lecture:

∎ Why probability and statistics are important.

∎ Some popular applications of probability and statistics

▶ What is next?

∎ We start our journey into probability theory with sample spaces and
probability laws.