Chapter 11, Problem 1FDD

FROM DATA TO DECISION

Critical Thinking: Was Allstate wrong?

The Allstate insurance company once issued a press release listing zodiac signs along with the corresponding numbers of automobile crashes, as shown in the first and last columns in the table below.

In the original press release. Allstate included comments such as one stating that Virgos are worried and shy, and they were involved in 211,650 accidents, making them the worst offenders. Allstate quickly issued an apology and retraction. In a press release. Allstate included this: “Astrological signs have absolutely no role in how we base coverage and set rates. Rating by astrology would not be actuarially sound.”

Analyzing the Results

The original Allstate press release did not include the lengths (days) of the different zodiac signs. The preceding table lists those lengths in the third column. A reasonable explanation for the different numbers of crashes is that they should he proportional to the lengths of the zodiac signs. For example, people are born under the Capricorn sign on 29 days out of the 365 days in the year, so they are expected to have 29/365 of the total number of crashes. Use the methods of this chapter to determine whether this appears to explain the results in the table. Write a brief report of your findings.