Matthew Leitch explains some widespread myths about sample sizes and illustrates some effects that may surprise you.
Finance professionals are not usually required to be statisticians, but we do acquire and analyse data, and sometimes need to think about how far we can generalise from that data. At times we might decide against a simple survey or other data-gathering exercise because we overestimate the amount of data needed for a reliable conclusion. At other times we may err the other way and generalise too far.
People often overestimate the sample size needed for surveys. Typically, they think a sample of several hundred is needed when in fact fewer than 100 would be enough. One reason for this is the tendency to think that samples need to be a particular percentage of the population sampled. You might even see samples expressed as a percentage of the population.
This is an extract from the Business & Management Magazine, Issue 252, March 2017.