Central Limit Theorem - CLT
Categories: Metrics, Accounting
A political poll says 46% of people support sending the marines to kill all the aliens and conquer Mars. To get that result, the pollster doesn't call everyone in the country and ask them what they think. Instead, the pollster calls maybe 1,000 people...a small enough group that it's not really a difficult/expensive task, but big enough for the information to be statistically significant. This process is called sampling.
It works because of the Central Limit Theorem, or CLT. The proposition states that if you take a big enough sample out of a large group, the mean of the smaller sub-group will be the same as the mean of the larger group. Basically, the small group will resemble the larger group, only smaller. Like a mini-me situation.
If your box of Raisin Bran has one raisin for every 5 bran flakes, then a bowl of Raisin Bran from that box (assuming it's a big enough bowl) will also have one raisin for every 5 flakes. CLT at work.
