Probably Approximately Correct

The best we can hope for when it comes to most decisions is to be probably approximately correct–a high probability of being about right. In finance, analysts compare proposed capital costs with discounted anticipated future cash flows to calculate a net present value–a bunch of assumptions with the hope of being probably approximately correct. Insurance is a hedge against a big loss; it's based on the probability of bad stuff happening–the insurance company makes a little money if their calculations are probably approximately correct. A doctor takes a few data points and makes a diagnosis hoping she is probably approximately correct. School facilities planners estimate future enrollment trends and then school boards estimate the likelihood of a community support for a construction bond, both hope to be probably approximately correct.