Have you heard the one about the river-crossing statistician who drowns after determining that the water is, on average, only three feet deep? This, says author Sam L. Savage, is just one example of the flaw of averages.

But don't despair, Savage writes in The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty. There are sensible ways to make judgments involving uncertainty and risk. Reason senior editor Michael C. Moynihan met up with Savage to discuss the "seven deadly sins" of averages and how a greater understanding of these flaws could prevent future financial meltdowns.

Approximately 4:30. Shot by Dan Hayes and edited by Meredith Bragg.

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