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Lindley's paradox is a counterintuitive situation in statistics in which the Bayesian and frequentist approaches to a hypothesis testing problem give different results for certain choices of the prior distribution. The problem of the disagreement between the two approaches was discussed in Harold Jeffreys' 1939 textbook;[1] it became known as Lindley's paradox after Dennis Lindley called the disagreement a paradox in a 1957 paper.[2]

Although referred to as a paradox, the differing results from the Bayesian and Frequentist approaches can be explained as using them to answer fundamentally different questions, rather than actual disagreement between the two methods.

Description of the paradox

Consider the result x of some experiment, with two possible explanations, hypotheses H0 and H1, and some prior distribution π representing uncertainty as to which hypothesis is more accurate before taking into account x.

Lindley's paradox occurs when

  1. The result x is "significant" by a frequentist test of H0, indicating sufficient evidence to reject H0, say, at the 5% level, and
  2. The posterior probability of H0 given x is high, indicating strong evidence that H0 is in better agreement with x than H1.

These results can occur at the same time when H0 is very specific, H1 more diffuse, and the prior distribution does not strongly favor one or the other, as seen below.

Numerical example

We can illustrate Lindley's paradox with a numerical example. Imagine a certain city where 49,581 boys and 48,870 girls have been born over a certain time period. The observed proportion x of male births is thus 49,581/98,451 ≈ 0.5036. We assume the number of male births is a binomial variable with parameter θ. We are interested in testing whether θ is 0.5 or some other value. That is, our null hypothesis is H0:θ=0.5 and the alternative is H1:θ≠0.5.

Frequentist approach

The frequentist approach to testing H0 is to compute a p-value, the probability of observing a fraction of boys at least as large as x assuming H0 is true. Because the number of births is very large, we can use a normal approximation for the fraction of male births X∼N(μ,σ2), with μ=np=nθ=98,451×0.5=49,225.5 and σ2=nθ(1−θ)=98,451×0.5×0.5=24,612.75, to compute

P(X≥x∣μ=49222.5)=∫x=495819845112πσ2e−(u−μσ)2/2du=∫x=495819845112π(24,612.75)e−(u−49225.5)224612.75/2du≈0.0117.

We would have been equally surprised if we had seen 49,581 female births, i.e. x≈0.4964, so a frequentist would usually perform a two-sided test, for which the p-value would be p≈2×0.0117=0.0235. In both cases, the p-value is lower than the significance level of 5%, so the frequentist approach rejects H0 as disagreeing with the observed data.

Bayesian approach

Assuming no reason to favor one hypothesis over the other, the Bayesian approach would be to assign prior probabilities π(H0)=π(H1)=0.5, and then to compute the posterior probability of H0 using Bayes' theorem,

P(H0∣k)=P(k∣H0)π(H0)P(k∣H0)π(H0)+P(k∣H1)π(H1).

After observing k=49,581 boys out of n=98,451 births, we can compute the posterior probability of each hypothesis using the probability mass function for a binomial variable,

P(k∣H0)=(nk)(0.5)k(1−0.5)n−k≈1.95×10−4P(k∣H1)=∫01(nk)uk(1−u)n−kdu=(nk)B(k+1,n−k+1)≈1.02×10−5

where B(a,b) is the Beta function.

From these values, we find the posterior probability of P(H0∣k)≈0.95, which strongly favors H0 over H1.

The two approaches—the Bayesian and the frequentist—appear to be in conflict, and this is the "paradox".

The lack of an actual paradox

Template:No footnotes The apparent disagreement between the two approaches is caused by a combination of factors. First, the frequentist approach above tests H0 without reference to H1. The Bayesian approach evaluates H0 as an alternative to H1, and finds the first to be in better agreement with the observations. This is because the latter hypothesis is much more diffuse, as θ can be anywhere in [0,1], which results in it having a very low posterior probability. To understand why, it is helpful to consider the two hypotheses as generators of the observations:

  • Under H0, we choose θ=0.5, and ask how likely it is to see 49,581 boys in 98,451 births.
  • Under H1, we choose θ randomly from anywhere within 0 to 1, and ask the same question.

Most of the possible values for θ under H1 are very poorly supported by the observations. In essence, the apparent disagreement between the methods is not a disagreement at all, but rather two different statements about how the hypotheses relate to the data:

  • The Frequentist finds that H0 is a poor explanation for the observation.
  • The Bayesian finds that H0 is a far better explanation for the observation than H1.

For practical purposes (and particularly in the numerical example above), it could also be said that disagreement is rooted in the poor choice of prior probabilities in the Bayesian approach. This becomes clear if the region of θ≈0.5 is examined.

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For example, this choice of hypotheses and prior probabilities implies the statement: "if θ > 0.49 and θ < 0.51, then the prior probability of θ being exactly 0.5 is 0.50/0.51 ≈ 98%." Given such a strong preference for θ=0.5, it is easy to see why the Bayesian approach favors H0 in the face of x≈0.5036, even though the observed value of x lies 2.28σ away from 0.5. The deviation of over 2 sigma from H0 is considered significant in the frequentist approach, but its significance is overruled by the prior in the Bayesian approach.

Looking at it another way, we can see that the prior distribution is essentially flat with a delta function at θ=0.5. Clearly this is dubious. In fact if you were to picture real numbers as being continuous, then it would be more logical to assume that it would impossible for any given number to be exactly the parameter value, i.e., we should assume P(theta = 0.5) = 0.

A more realistic distribution for θ in the alternative hypothesis produces a less surprising result for the posterior of H0. For example, if we replace H1 with H2:θ=x, i.e., the maximum likelihood estimate for θ, the posterior probability of H0 would be only 0.07 compared to 0.93 for H2 (Of course, one cannot actually use the MLE as part of a prior distribution).

Reconciling the Bayesian and Frequentist approaches

If one uses an uninformative prior and tests a hypothesis more similar to that in the Frequentist approach, the paradox disappears.

For example, if we calculate the posterior distribution P(θ∣x,n), using a uniform prior distribution on θ (i.e., π(θ∈[0,1])=1), we find

P(θ∣k,n)=B(k+1,n−k+1).

If we use this to check the probability that a newborn is more likely to be a boy than a girl, i.e., P(θ>0.5∣k,n), we find

∫0.51B(49582,48871)≈.983.

In other words, it is very likely that the proportion of male births is above 0.5.

Neither analysis gives an estimate of the effect size, directly, but both could be used to determine, for instance, if the fraction of boy births is likely to be above some particular threshold.

Notes

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References

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    Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules

    Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.

    A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running

    The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more

    There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang
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  2. ↑ One of the biggest reasons investing in a Singapore new launch is an effective things is as a result of it is doable to be lent massive quantities of money at very low interest rates that you should utilize to purchase it. Then, if property values continue to go up, then you'll get a really high return on funding (ROI). Simply make sure you purchase one of the higher properties, reminiscent of the ones at Fernvale the Riverbank or any Singapore landed property Get Earnings by means of Renting

    In its statement, the singapore property listing - website link, government claimed that the majority citizens buying their first residence won't be hurt by the new measures. Some concessions can even be prolonged to chose teams of consumers, similar to married couples with a minimum of one Singaporean partner who are purchasing their second property so long as they intend to promote their first residential property. Lower the LTV limit on housing loans granted by monetary establishments regulated by MAS from 70% to 60% for property purchasers who are individuals with a number of outstanding housing loans on the time of the brand new housing purchase. Singapore Property Measures - 30 August 2010 The most popular seek for the number of bedrooms in Singapore is 4, followed by 2 and three. Lush Acres EC @ Sengkang

    Discover out more about real estate funding in the area, together with info on international funding incentives and property possession. Many Singaporeans have been investing in property across the causeway in recent years, attracted by comparatively low prices. However, those who need to exit their investments quickly are likely to face significant challenges when trying to sell their property – and could finally be stuck with a property they can't sell. Career improvement programmes, in-house valuation, auctions and administrative help, venture advertising and marketing, skilled talks and traisning are continuously planned for the sales associates to help them obtain better outcomes for his or her shoppers while at Knight Frank Singapore. No change Present Rules

    Extending the tax exemption would help. The exemption, which may be as a lot as $2 million per family, covers individuals who negotiate a principal reduction on their existing mortgage, sell their house short (i.e., for lower than the excellent loans), or take part in a foreclosure course of. An extension of theexemption would seem like a common-sense means to assist stabilize the housing market, but the political turmoil around the fiscal-cliff negotiations means widespread sense could not win out. Home Minority Chief Nancy Pelosi (D-Calif.) believes that the mortgage relief provision will be on the table during the grand-cut price talks, in response to communications director Nadeam Elshami. Buying or promoting of blue mild bulbs is unlawful.

    A vendor's stamp duty has been launched on industrial property for the primary time, at rates ranging from 5 per cent to 15 per cent. The Authorities might be trying to reassure the market that they aren't in opposition to foreigners and PRs investing in Singapore's property market. They imposed these measures because of extenuating components available in the market." The sale of new dual-key EC models will even be restricted to multi-generational households only. The models have two separate entrances, permitting grandparents, for example, to dwell separately. The vendor's stamp obligation takes effect right this moment and applies to industrial property and plots which might be offered inside three years of the date of buy. JLL named Best Performing Property Brand for second year running

    The data offered is for normal info purposes only and isn't supposed to be personalised investment or monetary advice. Motley Fool Singapore contributor Stanley Lim would not personal shares in any corporations talked about. Singapore private home costs increased by 1.eight% within the fourth quarter of 2012, up from 0.6% within the earlier quarter. Resale prices of government-built HDB residences which are usually bought by Singaporeans, elevated by 2.5%, quarter on quarter, the quickest acquire in five quarters. And industrial property, prices are actually double the levels of three years ago. No withholding tax in the event you sell your property. All your local information regarding vital HDB policies, condominium launches, land growth, commercial property and more

    There are various methods to go about discovering the precise property. Some local newspapers (together with the Straits Instances ) have categorised property sections and many local property brokers have websites. Now there are some specifics to consider when buying a 'new launch' rental. Intended use of the unit Every sale begins with 10 p.c low cost for finish of season sale; changes to 20 % discount storewide; follows by additional reduction of fiftyand ends with last discount of 70 % or extra. Typically there is even a warehouse sale or transferring out sale with huge mark-down of costs for stock clearance. Deborah Regulation from Expat Realtor shares her property market update, plus prime rental residences and houses at the moment available to lease Esparina EC @ Sengkang