During World War II, Allied engineers studied returning bomber planes to determine how to improve their protection. Their initial calculations assumed that reinforcing the areas with the most bullet holes would be most effective. However, statistician Abraham Wald offered a counterintuitive solution: reinforce the areas with no bullet holes. Wald's insight was based on the understanding that the bullet holes on these planes represented areas that did not result in fatal damage. The missing data—the planes that did not return—likely had bullet holes in critical areas that led to their destruction. His insight, which combined human intuition with an understanding of the data generation process, resulted in a significant reduction in casualties. This story demonstrates the importance of human judgment, alongside mathematical models, in making informed decisions. This is the central theme of "Prediction Machines." Throughout the book, the authors—Ajay Agrawal, Avi...
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