In this chapter, we study basic concepts of probability. The first two chapters focussed on exploring and describing data in hand. In Chapter 3, we learned how to produce quality data that can be reliably used to infer conclusions about the wider population.

You might then ask yourself, “Where does the study of probability fit in our data journey?” The answer lies in recognizing that the reasoning of statistical inference rests on asking, “How often would this method give a correct answer if I used it very many times?” When we produce data by random sampling a randomized comparative experiment, the laws of probability answer the question, “What would happen if we repeated this process many times?” As such, probability can be viewed as the backbone of statistical inference.

The importance of probability ideas for statistical inference is reason enough to delve into this chapter. However, our study of probability is further motivated by the fact that businesses use probability and related concepts as the basis for decision making in a world full of risk and uncertainty.