Odds

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            Odds

What are the Odds about? 

The notion of Odds refers to the ratio of the probability of the two possible of a binary variable (Everitt, 1998). Regarding the ratio of the odds for the above binary variable in two groups of subjects, Everitt (1998) indicates that if the two possible situations of the variable are labelled "success" and "failure" then the odds ratio is a measure of the odds of a success in one group relative to that in the other; and the odds ration is equal to one (1) when the odds of a success in each group are identical.

In business terms, the concept of Odds refers to probable number of times an event is likely to occur, expressed as the ratio of number of probable occurrences to the number of probable non-occurrences (BusinessDictionary, 2016). It indicates that if an event E has an associated probability p, the probability of its not occurring is (1-p), and odds on E are = p ÷ (1 - p).

Similarly, Nelson (2004) designates that when an event E has probability p of occurring, and probability q of not-occurring [q=1-p], then the 'odds on E' is the ratio of p to q or p÷q. 

Why do odds matter?

References and useful links

Everitt, B.S. (1998). The Cambridge - Dictionary of Statistics. United Kingdom: Cambridge University Press

Nelson, David (2004). The Penguin Dictionary of Statistics. London, England: Penguin books

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