Wayne L. Winston is Professor Emeritus of Decision Sciences at the Kelley School of Business at Indiana University. He currently teaches Sports Analytics at IU, and has taught analytics to organizations including Microsoft, eBay, Cisco, Deloitte, the U.S. military, Eli Lilly, JP Morgan, and more. A two-time Jeopardy! Champion, he has consulted on analytics for two top NBA teams.

Introduction xxvii Part I What Happened? 1 Chapter 1 Preliminaries 3 Basic Concepts in Data Analysis 3 What Is a Random Variable? 9 Excel Calculations 13 Chapter 2 Was the 1969 Draft Lottery Fair? 17 The Data 17 The Analysis 18 Excel Calculations 20 Chapter 3 Who Won the 2000 Election: Bush or Gore? 23 Projecting the Undervotes 24 What Happened with the Overvotes? 25 The Butterfl y Did It! 25 Excel Calculations 28 Chapter 4 Was Liverpool Over Barcelona the Greatest Upset in Sports History? 31 How Should We Rank Upsets? 31 Leicester Wins the 2015-2016 Premier League 32 #16 Seed UMBC Beats #1 Seed Virginia 33 The Jets Win Super Bowl III 33 Other Big Upsets 34 Chapter 5 How Did Bernie Madoff Keep His Fund Going? 35 The Mathematics of Ponzi Schemes 36 Madoff's Purported Strategy 37 The Sharpe Ratio Proves Madoff Was a Fraud 39 Benford's Law and Madoff's Fraud 40 Excel Calculations 41 Chapter 6 Is the Lot of the American Worker Improving? 45 Is U.S. Family Income Skewed? 45 Median Income and Politics 46 Causes of Increasing U.S. Income Inequality 48 Money Isn't Everything: The Human Development Index 50 Create Your Own Ranking of Well-Being 50 Are Other Countries Catching Up to the U.S.? 51 Excel Calculations 52 Chapter 7 Measuring Income Inequality with the Gini, Palm, and Atkinson Indices 53 The Gini Index 53 The Palma Index 56 The Atkinson Index 57 Excel Calculations 59 Chapter 8 Modeling Relationships Between Two Variables 61 Examples of Relationships Between Two Variables 61 Finding the Best-Fitting (Least Squares) Line 62 Computing the Beta of a Stock 63 What Is a Good R2? 64 Correlation and R2 65 We are Not Living in a Linear World 67 Excel Calculations 69 Chapter 9 Intergenerational Mobility 73 Absolute Intergenerational Mobility 74 Intergenerational Elasticity 74 Rank-Rank Mobility 75 Comparing IGE and Rank-Rank Mobility 75 Measuring Mobility with Quintiles 78 The Great Gatsby Curve 80 Excel Calculations 82 Chapter 10 Is Anderson Elementary School a Bad School? 85 How Can We Adjust for Family Income? 86 Estimating the Least Squares Line 86 Can We Compare Standardized Test Performance for Students in Different States? 86 Excel Calculations 87 Chapter 11 Value-Added Assessments of Teacher Effectiveness 89 Simple Gain Score Assessment 90 Covariate Adjustment Assessment 91 Layered Assessment Model 91 Cross-Classified Constant Growth Assessment 91 Problems with VAA 93 How Much Is a Good Teacher Worth? 94 Excel Calculations 95 Chapter 12 Berkeley, Buses, Cars, and Planes 97 Simpson's Paradox and College Admissions 98 The Waiting Time Paradox 100 When Is the Average of 40 and 80 Not 60? 100 Why Pre COVID Were There Never Empty Seats on My Flight? 101 Excel Calculations 101 Chapter 13 Is Carmelo Anthony a Hall of Famer? 103 What Metric Defines Basketball Ability? 104 Wins Above Replacement Player (WARP) 105 Manu, Melo, Dirk, and Dwayne 106 How Do 25,000 Points Lead to So Few Wins? 106 Chapter 14 Was Derek Jeter a Great Fielder? 109 Fielding Statistics: The First Hundred Years 109 Range Factor 110 The Fielding Bible: A Great Leap Forward 111 The Next Frontier 112 Chapter 15 "Drive for Show and Putt for Dough?" 115 Strokes Gained 115 The Myth Exposed 116 Chapter 16 What's Wrong with the NFL QB Rating? 117 NFL Quarterback Rating 117 ESPN's Total Quarterback Rating 124 Excel Calculations 125 Chapter 17 Some Sports Have All the Luck 127 Skill vs. Luck: The Key Idea 127 The Results 129 Chapter 18 Gerrymandering 131 A Stylized Example 132 The Mathematics of Gerrymandering 136 Chapter 19 Evidence-Based Medicine 143 James Lind and Scurvy: The Birth of Evidence-Based Medicine 143 The Randomized Streptomycin Tuberculosis Trial 145 Excel Calculations 146 Hormone Replacement: Good or Bad? 148 Chapter 20 How Do We Compare Hospitals? 151 Ratings Criteria 152 Conclusion 156 Excel Calculations 157 Chapter 21 What Is the Worst Health Care Problem in My Country? 159 Disability-Adjusted Life Years 159 Determination of Disability Weights 160 To Age Weight or Discount, That Is the Question 162 Key Facts About World Health 163 Part II What Will Happen? 167 Chapter 22 Does a Mutual Fund's Past Performance Predict Future Performance? 169 Mutual Fund Basics 170 Morningstar Ratings 170 Risk-Adjusting Fund Returns 171 How Well Do Morningstar Star Ratings Predict a Fund's Future Performance? 175 The Effect of Expense Ratio on Long-Term Performance 177 Excel Calculations 178 Chapter 23 Is Vegas Good at Picking NFL Games? 181 How NFL Betting Works 181 Bias and Accuracy 184 Vegas Forecasts are Unbiased 185 Totals Predictions and Money Line Predictions are Unbiased 188 NFL Accuracy: The Line vs. the Computers 188 A System Works Until It Doesn't 189 Chapter 24 Will My New Hires Be Good Employees? 191 What Data Do We Need to Determine Attributes That Best Predict Employee Performance? 192 Besides GMA, Not Much Affects Job Performance 196 Excel Calculations 197 Chapter 25 Should I Go to State U or Princeton? 199 Analyzing Princeton vs. Penn State 200 Excel Calculations 202 Chapter 26 Will My Favorite Sports Team Be Great Next Year? 203 Francis Galton and Regression to the Mean 203 Regression to the Mean in the NFL and the NBA 204 Excel Calculations 207 Chapter 27 How Did Central Bankers Fail to Predict the 2008 Recession? 209 The Inverted Yield Curve 210 The Sahm Rule: Early Warning Signal for Recession 211 Control Charts and the Housing Price/Rent Ratio 211 Excel Calculations 215 Chapter 28 How Does Target Know If You're Pregnant? 219 What Available Data Can Be Used to Identify Pregnant Women? 220 Problems Arise 220 An Example of a Pregnancy Prediction Score 221 Chapter 29 How Does Netflix Recommend Movies and TV Shows? 225 User-Based Collaborative Filtering 226 Item-Based Filtering 229 Chapter 30 Can We Predict Heart Attacks in Real Time? 233 Posterior Probability 234 Sensitivity and Specifi city 235 ROC Curve 235 Back to the Apple Heart Study 237 AliveCor and KardiaBand 239 Chapter 31 Is Proactive Policing Effective? 241 Hot Spots Policing 242 Predictive Policing 243 CCTV 244 Stop and Frisk 244 Broken Windows 246 Excel Calculations 247 Chapter 32 Guess How Many are Coming to Dinner? 249 Which Parameters Must Be Estimated? 250 The Data 252 The Results 253 Which Factor Really Matters? 254 Excel Calculations 254 Chapter 33 Can Prediction Markets Predict the Future? 259 Examples of Trade Contracts 260 Prediction Market Trading Mechanisms 261 Accuracy of Prediction Markets and Wisdom of Crowds 262 Chapter 34 The ABCs of Polling 265 Why are 1,112 People Enough to Represent U.S. Voters? 265 Why Doesn't a Larger Population Require a Larger Sample Size? 267 So, What Can Go Wrong? 268 Rating Polls 271 Chapter 35 How Did Buzzfeed Make the Dress Go Viral? 273 Measuring Instagram Engagement 274 Tweets Do Not Always Go Viral Immediately 274 Do the First Few Days Predict the Future of a Meme? 275 Chapter 36 Predicting Game of Thrones TV Ratings 277 What Does Google Trends Tell Us? 277 Predicting the Present with Google Trends 278 Using Google Trends to Forecast GOT Ratings 279 Excel Calculations 281 Part III Why Did It Happened? 283 Chapter 37 Does Smoking Cause Lung Cancer? 285 Correlation and Causation Redux 285 The Key Evidence 286 Could Air Pollution Have Caused Lung Cancer? 287 The Cigarette Companies Hit Back 287 Excel Calculations 288 Chapter 38 Why are the Houston Rockets a Good Basketball Team? 291 NBA Shooting Math 101 292 Zach LaVine Battles the Bulls' Analytics Department 295 Conclusion 296 Excel Calculations 296 Chapter 39 Why Have Sacrifice Bunts and Intentional Walks Nearly Disappeared? 297 The Case Against Bunting 298 Bunting Against the Shift 299 Why are Intentional Walks on the Decline? 300 Chapter 40 Do NFL Teams Pass Too Much and Go for It Often Enough on Fourth Down? 301 The Ascent of Passing 301 Fourth Down Strategy 303 New Data Partially Vindicates the Coaches 304 Teams Should Go for Two More Often 306 Chapter 41 What Caused the 1854 London Cholera Outbreak? 307 Cholera 307 Snow and the Broad Street Pump 308 Snow's Randomized Controlled Trial 310 Conclusion 311 Excel Calculations 312 Chapter 42 What Affects the Sales of a Retail Product? 313 Painter's Tape 313 Estimating the Model Parameters 315 Excel Calculations 316 Chapter 43 Why Does the Pareto Principle Explain So Many Things? 319 Power Laws 320 Why Do Incomes Follow the Pareto Principle? 322 Why Do a Few Websites Get Most of the Hits? 323 Excel Calculations 324 Chapter 44 Does Where You Grow Up Matter? 327 Quasi-Experimental Design vs. Randomized Controlled Trials 328 What Drives Neighborhood Differences in Upward Mobility? 329 How Can We Make Things Better? 330 Chapter 45 The Waiting is the Hardest Part 333 Which Factors Influence the Performance of a Queueing System? 334 Operating Characteristics of a Queueing System 334 How Does Variability Degrade the Performance of a Queueing System? 335 Calculating the Operating Characteristics of a Queueing System 336 Excel Calculations 338 Chapter 46 are Roundabouts a Good Idea? 339 What Is a Roundabout? 340 History of Roundabouts 340 Benefi ts of Roundabouts 341 Disadvantages of Roundabouts 343 Roundabout Capacity 344 Roundabouts and Revolutions 345 Chapter 47 Red Light, Green Light, or No Light? 347 What Causes Traffic Jams? 347 How Should We Set the Lights? 348 Ramp Meters and Equity 349 Measuring the Impact of Ramp Meters 350 The Twin Cities Metering Holiday 350 Part IV How Do I Make Good Things Happen? 351 Chapter 48 How Can We Improve K-12 Education? 353 Tennessee's STAR Study on K-2 Class Size 355 Cost-Benefi t Analysis 356 Can Predictive Analytics Increase Enrollment and Performance in Eighth-Grade Algebra I? 360 Excel Calculations 360 Chapter 49 Can A/B Testing Improve My Website's Performance? 363 Improving Obama's Fundraising in 2008 364 The Mechanics of Resampling 365 Excel Calculations 366 Chapter 50 How Should I Allocate My Retirement Portfolio? 369 The Basic Portfolio Optimization Model 369 The Effi cient Frontier 372 Diffi culties in Implementing the Markowitz Model 374 Excel Calculations 374 Chapter 51 How Do Hedge Funds Work? 377 Growth in Hedge Funds and Hedge Fund Fee Structure 378 Shorting a Stock 378 Long/Short and Market-Neutral Strategies 378 Convertible Arbitrage 380 Merger Arbitrage 382 Global Macro Strategy 383 Hedge Fund Performance 384 The George Costanza Portfolio 384 Excel Calculations 385 Chapter 52 How Much Should We Order and When Should We Order? 389 The Economic Order Quantity Model 389 Reorder Points, Service Levels, and Safety Stock 392 Excel Calculations 393 Chapter 53 How Does the UPS Driver Know the Order to Deliver Packages? 397 Why Is the Traveling Salesperson Problem So Hard? 398 Solving the Traveling Salesperson Problem 399 The Traveling Salesperson Problem in the Real World 400 Excel Calculations 401 Chapter 54 Can Data Win a Presidential Election? 405 Democratic Presidential Analytics 405 The GOP Strikes Back 409 Cambridge Analytica and the 2016 Election 411 Excel Calculations 412 Chapter 55 Can Analytics Save Our Republic? 415 Arrow's Impossibility Theorem 416 It's Not Easy to Pick a Winner! 417 Ranked-Choice Voting 419 Approval Voting 420 Quadratic Voting 420 Excel Calculations 421 Chapter 56 Why Do I Pay Too Much on eBay? 423 How Many Pennies in the Jar? 423 The Importance of Asymmetric Information 424 The Winner's Curse and Offshore Oil Leases 424 Sports Free Agents and the Winner's Curse 425 Can You Avoid the Winner's Curse? 425 Excel Calculations 427 Chapter 57 Can Analytics Recognize, Predict, or Write a Hit Song? 429 How Does Shazam Know What Song You are Listening To? 430 How Did Hit Song Science Know Norah Jones's Album Would Be a Smash? 431 Can Artifi cial Intelligence Write a Good Song? 433 Chapter 58 Can an Algorithm Improve Parole Decisions? 437 An Example of Risk Scores 438 ProPublica Criticizes Risk Scores 441 Skeem and Lowenkamp and PCRA 443 Machine Learning and Parole Decisions 444 Chapter 59 How Do Baseball Teams Decide Where to Shift Fielders? 449 The Debut of the Shift 449 The Return of the Shift 450 Empirical Evidence on the Shift 452 Why Not Just Beat the Shift? 452 Excel Calculations 453 Chapter 60 Did Analytics Help the Mavericks Win the 2011 NBA Title? 457 How Can You Evaluate a Basketball Player? 457 From Player Ratings to Lineup Ratings 459 Chapter 61 Who Gets the House in the Hamptons? 463 The Basic Idea 464 What Asset Division Is Best? 465 Excel Calculations 466 Index 469