agent Entrepreneur logo
MenuMENU
SearchSEARCH

A Timely Math Lesson

How small statistical samples can lead you in the wrong direction.

by Hannah Mitchell
January 16, 2025
A Timely Math Lesson

Picking out an extreme statistical example in meetings with customers can be misleading.

Credit:

Pexels/Lukas

3 min to read


Math was always my weakest subject in school, and I studiously avoided the more advanced courses as much as possible. Though I did take statistics in college, I remember nothing from the class, at least not consciously.

My career as a writer and editor has ironically forced me to get better at my everyday use of numbers to make sense of data and communicate it to readers. And in my current reading of a book by Nobel Prize-winning psychologist and researcher Daniel Kahneman, who died last March, I’m learning more that’s helping me make better sense of automotive industry statistics.

Ad Loading...

“Thinking, Fast and Slow,” published in 2011, is jam-packed with insights on how the human mind works, from decision-making to how we form impressions and interpret our world. 

One chapter in particular helped me gain new insight that could come in handy in the F&I office. It digs into how small research samples can be misleading. An example is a high rate of new kidney cancer cases in sparsely populated U.S. counties. Kahneman explains that, “extreme outcomes (both high and low) are more likely to be found in small than in large samples.”

So when I saw a recent LendingTree study about car thefts that pointed out a dramatic spike in Vermont between 2020 and 2022, I left the example out of my news item on the report. That’s because Vermont is the second smallest state by population, with far fewer residents than many larger U.S. cities. It’s an example of an extreme outcome.

What does this have to do with F&I? I share it because F&I managers need examples of the latest research to demonstrate their expertise and make relevant points to customers. Picking out extreme examples such as the Vermont theft rate could be misleading, painting a picture of car thieves run amuck on every street in the largely rural state, whereas the theft rate per 100,000 residents in 2023 would offer much more reality. The District of Columbia leads that list at about 1,150, according to LendingTree data.

Or as Kahneman further explained in the kidney cancer example:

Ad Loading...

“The incidence of cancer is not truly lower or higher than normal in a county with a small population, it just appears to be so in a particular year because of an accident of sampling. If we repeat the analysis next year, we will observe the same general pattern of extreme results in the small samples, but the counties where cancer was common last year will not necessarily have a high incidence this year.”

Even though I hated math growing up, I did appreciate the rare math teacher who was good at breaking it down into bite-sized steps that even I could absorb and understand. Kahneman was just one of those teachers that I happened upon. Hopefully his analysis will help you, too.

Hannah Mitchell is executive editor of F&I and Showroom.A former daily newspaper journalist, she honed her craft covering politics, business and more for publications that included the Charlotte Observer and the Orange County (Calif.) Business Journal. She holds a master’s degree in journalism from Columbia University, and her first car was a hand-me-down Chevrolet Nova.

Originally posted on F&I and Showroom

Subscribe to Our Newsletter

More Industry

Two white men's shaking hands
Industry•October 15, 2026

Penske Auto Group Deal a Record

The deal to take the dealership and transportation services company private sets a new pace for industry buy-sell transactions.

Read More →
Rows of cars parked in exterior lot
Industry•by Hannah Mitchell•October 8, 2026

War Toll a Damper on Used Auto Prices

Cox Automotive found wholesale depreciation to be elevated in September amid high fuel prices and this year's unusual hurricane season.

Read More →
Mechanic cleaning interior of engine
Industry•by Lauren Lawrence•October 8, 2026

Bridge the Maintenance Gap

With many drivers missing recommended maintenance, service departments offering transparency and efficiency have a better chance of reaching financially strained consumers.

Read More →
Ad Loading...
Ford F-150 truck rounding a curve
Industry•by Hannah Mitchell•October 1, 2026

California Store Has New Owner

The longtime dealership in the northern part of the state is known for robust fleet sales and has served the state capital for 115 years.

Read More →
crane lowering a pipeline into the ground
Industry•by Lauren Lawrence•October 1, 2026

BMW Plant Pursues Cleaner Energy

BMW Group Plant Leipzig has utilized hydrogen to help power its production since 2013, but a new pipeline is planned to take it to another level.

Read More →
Two dodge cars outside of dealership.
Industry•by Lauren Lawrence•September 17, 2026

Auto Affordability Inches Up

The latest Cox Automotive and Moody’s Analytics index shows a slight increase in new-vehicle affordability despite high prices.

Read More →
Ad Loading...
Five men smiling for photo in front of Honda car dealership.
Industry•by Lauren Lawrence•September 10, 2026

Ohio Auto Group Under New Ownership

After 79 years with the Schluter family, Mansfield Auto Group has been acquired by Missouri-based Clement Auto Group.

Read More →
Blue and white RV parked on beach facing the ocean.
Industry•by Lauren Lawrence•September 3, 2026

RV Group Expands Carolina Footprint

Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.

Read More →
Photo of two men and one woman on a discussion panel
Industry•by Hannah Mitchell•September 1, 2026

Agent Acumen

An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.

Read More →
Ad Loading...
Gloved hand holding two wrenches next to “Turn Overdue into Opportunity” Graphic
Industry•by Lauren Lawrence•August 27, 2026

Missed Maintenance Creates Opportunity

As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.

Read More →
Ad Loading...