Do you know the difference between odds and probability?
It’s once again time to get ready for the National Football League (NFL) Super Bowl, and the odds-makers are making their forecasts. Many an office worker is looking to join the fun by participating in office pools to see if, this year, they get lucky.
One person, however, is raising his eyebrows as people make their selection. Seth Schwartz, PhD, a faculty member at the University of Miami and the author of the CITI Program’s Fundamentals of Biostatistics, an online statistics course.
“It’s probably the most common challenge for students taking a statistics course — understanding the difference between odds and probability,” he says. “If you bet on your team to win and you have 3:1 odds, what does that mean?”
What are the odds?
It doesn’t mean that your team is three times more likely to win. What it means is that if you have 3:1 odds, from an infinite set of possible games, your team will win one game for every three games it loses. In this case, you are facing odds against your team winning.
Probability, on the other hand, is described in percentages. For example, a 50 percent probability that a coin will land on tails.
You would have to do some calculations to measure the probability of your team winning based on the odds, or the other way around. Of course, there is no way to know for sure what the true odds are. But odds are set to determine the payout of the gamble — the higher the risk, the higher the reward if you win.
“Probability and odds both are terms that describe the likelihood of an event occurring. But they are not mathematically equivalent,” says Schwartz.
If you are planning to take a college course in statistics and feel you need to be better prepared, consider the online statistics class that we developed. Or, if you’re in any industry that requires research — medicine, marketing, or bookie — this go-at-your-own-pace online course may be a perfect introduction to statistics.