Pareto, Power Laws, and Fat Tails: A Beginner's Guide to Non-Gaussian Statistics

Explore a beginner-friendly guide to Power Laws and discover three key problems with applying traditional statistical methods to analyze them in this 27-minute video. Delve into concepts such as the Gaussian and Pareto distributions, Mediocristan vs Extremistan, and Fat Tails. Learn why the mean can be meaningless, regression may not work, and payoffs can diverge from probabilities when dealing with power law distributions. Gain insights into the controversy surrounding Extremistan and understand the implications of fat-tailed phenomena. Access additional resources, including related videos, articles, and a GitHub repository, to further enhance your understanding of these complex statistical concepts.

Intro -
Outline -
The Gaussian Distribution -
The Pareto Distribution -
Power Laws -
Mediocristan vs Extremistan -
3 Problems with STAT 101 -
Problem 1: The Mean is Meaningless -
Problem 2: Regression Doesn't Work -
Problem 3: Payoffs Diverge from Probabilities -
Controversy in Extremistan -
Fat Tails -
Takeaways -