- Formulas
- APR Formula
- Total Variable Cost Formula
- How to Calculate Probability
- How To Find A Percentile
- How To Calculate Weighted Average
- What Is The Sample Mean?
- Hot To Calculate Growth Rate
- Hot To Calculate Inflation Rate
- How To Calculate Marginal Utility
- How To Average Percentages
- Calculate Debt To Asset Ratio
- How To Calculate Percent Yield
- Fixed Cost Formula
- How To Calculate Interest
- How To Calculate Earnings Per Share
- How To Calculate Retained Earnings
- How To Calculate Adjusted Gross Income
- How To Calculate Consumer Price Index
- How To Calculate Cost Of Goods Sold
- How To Calculate Correlation
- How To Calculate Confidence Interval
- How To Calculate Consumer Surplus
- How To Calculate Debt To Income Ratio
- How To Calculate Depreciation
- How To Calculate Elasticity Of Demand
- How To Calculate Equity
- How To Calculate Full Time Equivalent
- How To Calculate Gross Profit Percentage
- How To Calculate Margin Of Error
- How To Calculate Opportunity Cost
- How To Calculate Operating Cash Flow
- How To Calculate Operating Income
- How To Calculate Odds
- How To Calculate Percent Change
- How To Calculate Z Score
- Cost Of Capital Formula
- How To Calculate Time And A Half
- Types Of Variables
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Summary. To calculate probability, divide the number of ways the event can occur by the total number of outcomes. Remember that this is different than calculating odds, which are the probability of something happening divided by the probability of it not happening.
Summary. To calculate probability, divide the number of ways the event can occur by the total number of outcomes. Remember that this is different than calculating odds, which are the probability of something happening divided by the probability of it not happening.
Have you ever checked the weather in the morning, heard there was an 80% chance of rain that day, and changed your outfit or your plans? If you have, then you’ve made a decision based on probability.
We’re going to walk you through the basics of probability concepts and how to calculate them. This way, when you need to predict an outcome or make a decision based on probability, you’re ready to rise to the occasion.
Key Takeaways:
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Probability is the likelihood that something will happen.
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Almost all professions involve the use of probability at one time or another. However, there are certain jobs that rely heavily on calculating probability, such as statisticians, meteorologists, and healthcare professionals.
Probability is calculated by dividing the number of ways the event can occur by the total number of outcomes.
Probability and odds are different concepts. Odds are the probability that something happens divided by the probability that it doesn’t happen.
What is Probability?
Probability is how likely something is to happen. When you calculate probability, you’re approximating the chances of something happening and representing it with a precise number. So when the weather reports an 80% chance of rain, that means it’s 80% likely to rain that day. In other words, if you were to get these same weather conditions ten times, then eight of those times you’d get rain.
It’s impossible to predict things with absolute certainties, like the weather, but probability lets you get as close as possible. Whether you’re calculating something simple, like a coin toss, or something complex, you can use probability to help you understand the outcome like a sales forecast.
With probability, you’ll be able to make more educated decisions and back up your predictions with data to make compelling arguments. You can find ways to use probability in every part of your life, from simple day-to-day guesses to complicated sales predictions and marketing plans.
How to Calculate Probability
The great thing about probability is that it uses a simple formula, no matter what you want to gauge the likelihood of. If you can do some simple multiplication and division, you can calculate probability for any situation in no time. Here’s the basic formula for probability:
Probability of something happening = number of ways the event can occur ÷ total number of outcomes
Let’s break down how you can find the numbers you need and calculate the likelihood of an event. We’ll use the simple example of picking marbles out of a bag to make the process easy to understand, but probability can get much more complex if you need to handle big events.
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Find your event. First, you need to figure out what variable helps you determine the probability. For example, if you have a bag of colored marbles and you want to figure out the probability of picking a blue one, that’s the variable you need to figure out. The outcome you want to calculate is how likely you’ll be to pull a blue marble from the mixed bag.
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Find all the outcomes. Next, you need to find the total number of outcomes you can get in this situation. So, if your bag of marbles has 20 in all, you have 20 possible outcomes. This step determines what all of your possibilities are in this situation, not the specific outcome you want to calculate.
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Find your desired outcome. You need to figure out how many chances there are for your desired outcome to happen. For this example, count how many of those 20 marbles are blue so you can figure out your chances of choosing a blue marble. For this example, say you count 11 blue marbles in the bag of 20 marbles.
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Do your calculation. Now that you have all of the numbers you need, you can proceed with the next step and use the formula to find the probability. Divide 11 by 20, and you should get 0.55, or 55%. What does this number mean? It means the probability of you pulling a blue marble from the bag is 55%.
Odds Vs. Probability
When you’re talking about the likelihood of something happening, it’s easy to confuse odds and probability. People define the odds as the probability that something happens divided by the probability that it doesn’t happen.
Knowing the odds of an event happening is an excellent way to check the outcome you want. If you only pay attention to the likelihood of an event happening, you might miss the likelihood of it not happening.
If the probability of something happening is 70%, you might think that’s a number close enough to 100% that you can rely on it. But, you must realize that it also means there’s a 30% chance that the event doesn’t happen. As you can see, calculating the odds factors in the chances of something happening and something not happening.
Calculating Odds Example
For example, take a look at the marble bag again. There are still 20 marbles in the bag, but this time you want to find the odds of choosing a green marble. There are two green marbles, so now you want to divide two by 20 and get 0.1.
What does this number mean? It means that there’s a 0.9 probability that you don’t choose a green marble. To find the odds, you need to divide 0.1 by 0.9 to get 0.1111, or 11.11% odds.
How to Calculate Probability With Multiple Random Events
Unfortunately, not everything can be as simple as one person picking marbles out of a bag. Sometimes you need to calculate the probability of an event when multiple factors are going on. Luckily, you can calculate the probability of something happening when there are multiple events involved. It’s easy to do once you know how to get the probability for one event.
We’ll use something similar to the marble example again. Let’s say your company is awarding a prize if someone picks a marble that matches the company colors from a bag. The company colors are red and white, and you want to figure out the likelihood of one person picking red from bag A while another person playing picks white from bag B at the same time.
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Calculate the Probability of Each Event
You know a bag of marbles comes with 500 marbles with 100 red, 250 white, 50 blue, and 100 green. So, you can calculate the probability of someone picking a red marble from bag A by taking 100 red marbles and dividing it by the 500 total marbles to get 0.2. For bag B, you take the 250 white marbles and divide by the 500 total marbles and get 0.5.
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Calculate the Probability of the Two Events Occuring Simultaneously
Now that you know the likelihood of these two events happening, you can calculate the probability of them happening simultaneously by multiplying the individual probabilities. So you’ll multiply 0.2 by 0.5 to get 0.1. This means that there’s a 10% chance that someone will pull a red marble from bag A while someone pulls a white marble from bag B.
Taking it one step further, you can also calculate the odds of this happening. To find the odds of this situation, you can divide 0.1 by 0.9 to get 11.11% odds that this happens.
Jobs that Involve Statistics and Probability
Some people are better at understanding, calculating, and interpreting probabilities than others. If you love figuring out the odds of something happening or love using data to make your decisions, you might want to look for a job that involves lots of statistics and probability. Here are a few careers that rely heavily on probability, predictions, and forecasting.
Just keep in mind that almost every job will require you to use probability and analysis, so even if you don’t pursue one of these careers, you’ll still be using statistics and probability in your work. It might just be less often than in these fields where probabilities rule the work you do every day.
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Meterologist
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Financial analyst
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Biostatistics
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Medical professions
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Risk assessment
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Public health
Probability FAQ
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How do you calculate probability for multiple events?
To calculate probability for multiple events you must first calculate the probability of each independent event. Then you multiply the probabilities of each independent event with one another.
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What is the difference between probability and odds?
The difference between probability and odds is that probability only factors in the likelihood of something happening, while odds also factors in the likelihood of it NOT happening.
To calculate odds you take the probability that something happens and divided it by the probability that it doesn’t happen.
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Will I need to know about probability at my job?
Yes, you should know the basics about probability for your job. Although some jobs require a heavy use of probability, such as a statistician, every profession uses probability at some point or another.
This is because the workplace is filled with so many dynamic situations, it is necessary for professionals to take into account multiple outcomes in any scenario.
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What is the formula for probability?
The formula for probability is the number of ways the desired event can occur divided by the total number of outcomes.
For example, if you’re trying to calculate the probability of pulling a blue marble out of a bag of 20 marbles, and 4 of those 20 marbles are blue, you’d divide 4 (the number of blue marbles, aka your desired outcome) by 20 (the total number of outcomes).
This gets you a probability of 0.2, or 20%.
Final Thoughts
No matter what field or industry you’re in, you’ll have to use probability at some point. We use probability in our everyday lives, even if we don’t know it. Knowing how to calculate the probability of something and understanding what that means is a key skill for anyone.
Probability can help you in all facets of professional decision-making, from which marketing plan to go with or which approach will get you better sales numbers. The possibilities for using probability are endless, as long as you understand the basics.
References
- Formulas
- APR Formula
- Total Variable Cost Formula
- How to Calculate Probability
- How To Find A Percentile
- How To Calculate Weighted Average
- What Is The Sample Mean?
- Hot To Calculate Growth Rate
- Hot To Calculate Inflation Rate
- How To Calculate Marginal Utility
- How To Average Percentages
- Calculate Debt To Asset Ratio
- How To Calculate Percent Yield
- Fixed Cost Formula
- How To Calculate Interest
- How To Calculate Earnings Per Share
- How To Calculate Retained Earnings
- How To Calculate Adjusted Gross Income
- How To Calculate Consumer Price Index
- How To Calculate Cost Of Goods Sold
- How To Calculate Correlation
- How To Calculate Confidence Interval
- How To Calculate Consumer Surplus
- How To Calculate Debt To Income Ratio
- How To Calculate Depreciation
- How To Calculate Elasticity Of Demand
- How To Calculate Equity
- How To Calculate Full Time Equivalent
- How To Calculate Gross Profit Percentage
- How To Calculate Margin Of Error
- How To Calculate Opportunity Cost
- How To Calculate Operating Cash Flow
- How To Calculate Operating Income
- How To Calculate Odds
- How To Calculate Percent Change
- How To Calculate Z Score
- Cost Of Capital Formula
- How To Calculate Time And A Half
- Types Of Variables