# Probability in Real Life

Key takeways:

• Probability has thousands of everyday uses, from weather forecasting to credit scores.
• Probability distributions help to forecast power failures and network outages.
• Without probability, any form of gambling wouldn’t exist.

Probability isn’t just about flipping coins and counting cards in a deck: it is used in a wide range of real life areas, from insurance to meteorology and politics to economic forecasting.

## Probability Trees

Probability trees help to map out probabilities. As an example, the Federal government used this probability tree to assess the probability of another eruption on Mount Pinatubo in the Philippines:

Minimum spanning trees are a type of probability tree used for network designs like cable networks. They are also used for a diverse number of real life applications including real-time face tracking in video streams. For more examples, see: Tree Diagram Real Life Example.

## Conditional Probability

Conditional probability can be used to find the probability a presidential re-election campaign will be successful: the re-election of a president depends upon metrics like popularity ratings, the voting preference of voters, and the success of social media campaigns.

Meteorologists use conditional probability to make weather forecasts. For example, your local weather might state you have a 50% chance of rain today. This is conditional on many factors including a cold front coming to your area, rain cloud formation and wind direction.

## Predictive Analytics

Predictive analytics predicts the probability of future events based on past behavior. A few real life examples:

• Credit scores: a consumer’s past and current financial behavior determines the probability they will make timely payments in the future.
• Sports: Billy Bean (made famous by Brad Pitt in the movie Moneyball) used predictive analytics to turn his low-performing Major League Baseball Team into one of the highest performing teams.
• Power plants use predictive analytics to reduce outages and maintenance costs.

## Probability Distributions and Their Real Life Uses

The binomial distribution, which models the probability of “Successes” and “Failures”, is often presented as coin tosses or other trivial examples. However, the disribution is used in many real life situations. For example, let’s say a new drug is found to help cure the common cold. It’s either going to cure a cold (a “Success”) or it isn’t (a “Failure”). Another, more practical example: If you hunt for a parking space in a busy downtown area, you’re either going to find a space, or you are not. If this is something you do regularly, it could be helpful to know the probability (i.e., if it’s even worth trying to find a space on a given day).

Computer hardware failures can be modeled by the exponential distribution or Weibull distribution. Thes are memoryless (independent of their histories).

## Fun Uses of Probability in Real Life

Probability in everyday life isn’t just reserved for practical purposes. It can also be used for fun! For example, you can use probability to:

Permutations and combinations have many uses in gambling, including the need for state lotteries to calculate the number of ways lottery balls can be chosen.