FREE Delivery in the UK.
Usually dispatched within 1 to 3 months.
Dispatched from and sold by Amazon. Gift-wrap available.
+ £2.80 delivery
Used: Very Good | Details
Condition: Used: Very Good
Comment: Expedited shipping available on this book. The book has been read, but is in excellent condition. Pages are intact and not marred by notes or highlighting. The spine remains undamaged.
Have one to sell?
Flip to back Flip to front
Listen Playing... Paused   You're listening to a sample of the Audible audio edition.
Learn more
See all 2 images

The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty Hardcover – 10 Jul 2009

4.0 out of 5 stars 7 customer reviews

See all 7 formats and editions Hide other formats and editions
Amazon Price
New from Used from
Kindle Edition
£15.80 £0.01
Note: This item is eligible for click and collect. Details
Pick up your parcel at a time and place that suits you.
  • Choose from over 13,000 locations across the UK
  • Prime members get unlimited deliveries at no additional cost
How to order to an Amazon Pickup Location?
  1. Find your preferred location and add it to your address book
  2. Dispatch to this address when you check out
Learn more
click to open popover

Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Then you can start reading Kindle books on your smartphone, tablet, or computer - no Kindle device required.

  • Apple
  • Android
  • Windows Phone

To get the free app, enter your mobile phone number.

Product details

  • Hardcover: 416 pages
  • Publisher: John Wiley & Sons; 1 edition (10 July 2009)
  • Language: English
  • ISBN-10: 0471381977
  • ISBN-13: 978-0471381976
  • Product Dimensions: 16.3 x 3.8 x 23.1 cm
  • Average Customer Review: 4.0 out of 5 stars 7 customer reviews
  • Amazon Bestsellers Rank: 1,080,805 in Books (See Top 100 in Books)
  • Would you like to tell us about a lower price?
    If you are a seller for this product, would you like to suggest updates through seller support?

  • See Complete Table of Contents

Product description

From the Inside Flap

Despite all its promise, the Information Age is also laden with a dizzying array of technological, economic, and political uncertainties. While the electronic spreadsheet brought the power of business modeling to tens of millions, in so doing, it also paved the way for an epidemic of what Sam Savage calls the Flaw of Averages. This set of systematic errors occurs in all types of business and scientific endeavors when smart people focus on single average values in the face of uncertainty and risk, and it is an accessory to the economic catastrophe that culminated in 2008. The Flaw of Averages also ensures that plans based on averages of such uncertainties as customer demand, completion time, and interest rate are below projection, behind schedule, and beyond budget. In his book, Savage draws on recent breakthroughs in technology, along with new data structures and management protocols, to offer an approach to curing the Flaw of Averages.

Savage begins by providing a basis for intuitively grasping and visualizing risk and uncertainty, using simple everyday props such as game–board spinners and dice. He refers to such statistical jargon as standard deviation and covariance as Red Words, and instead uses straightforward, everyday language throughout the book. He does not assume any statistical background on the part of the reader, but claims that for those with extensive training in the field, the first section of the book will repair the damage. He then describes how risk and uncertainty are handled in the field of finance, where the Flaw of Averages was first systematically conquered by Modern Portfolio Theory. Savage describes how the recenteconomic turmoil was caused in part by clinging blindly to this early work while not adhering to its fundamental principles. He then shows how these principles still form an excellent foundation for managing uncertainty and risk in other areas of industry and government, and provides examples in supply chain management, project portfolios, national defense, healthcare, climate change, and even sex.

In the book’s final section, Savage reveals current developments in the emerging field of Probability Management―a path towards increased transparency and a potential cure for the Flaw of Averages. Finally, the book includes a Red Word Glossary that defines statistical terms in plain English to assist readers in defending themselves against those wielding technical mumbo jumbo.

The goal of The Flaw of Averages is to help you make better judgments involving uncertainty and risk, both when you have the leisure to deliberate, and, more importantly, when you don’t. Its approach of a more transparent representation of uncertainty is helping people and some big companies to make better decisions today.

From the Back Cover


“Statistical uncertainties are pervasive in decisions we make every day in business, government, and our personal lives. Sam Savage’s lively and engaging book gives any interested reader the insight and the tools to deal effectively with those uncertainties. I highly recommend The Flaw of Averages.”
William J.Perry, Former U.S. Secretary of Defense

“Enterprise analysis under uncertainty has long been an academic ideal. . . . In this profound and entertaining book, Professor Savage shows how to make all this practical, practicable, and comprehensible.”
Harry Markowitz, Nobel Laureate in Economics

A Groundbreaking must–read for anyone who makes business decisions in the face of uncertainty

As the recent collapse on Wall Street shows, we are often ill–equipped to deal effectively with uncertainty and risk. Yet every day we base our personal and business plans on these kinds of uncertainties, whether they be next month’s sales, next year’s costs, or tomorrow’s stock price.

In The Flaw of Averages, Sam Savage―known for his creative exposition of difficult subjects―describes common avoidable mistakes in assessing risk in the face of uncertainty. He explains why plans based on average assumptions are wrong, on average, in areas as diverse as finance, healthcare, accounting, the war on terror, and climate change. Instead of the usual anachronistic statistical jargon, Savage presents complex concepts in plain English, connecting the seat of the reader’s intellect to the seat of their pants.

Savage also presents the emerging field of Probability Management aimed at curing the Flaw of Averages through more transparent communication of uncertainty and risk. Savage argues that this is a problem that must be solved if we are to improve the stability of our economy, and that we cannot repeat the recent mistakes of applying “steam era” statistics to “information age” risks.

See all Product description

Customer reviews

Share your thoughts with other customers
See all 7 customer reviews

Top customer reviews

5 September 2016
Format: Paperback|Verified Purchase
19 July 2015
Format: Paperback|Verified Purchase
20 April 2014
Format: Hardcover|Verified Purchase
21 January 2013
Format: Kindle Edition|Verified Purchase

Would you like to see more reviews about this item?

Where's My Stuff?

Delivery and Returns

Need Help?