“Weighted Factor Models: Consider using the geometric mean instead of the arithmetic mean” by Soemano Zeijlmans

In short: Building weighted factor models using a regular weighted average (“weighted arithmetic mean”) allows high values in one factor to compensate for very low values or a zero in another. This poorly reflects the multiplicative nature of many impact-oriented weighted factor models. Using the weighted geometric mean avoids this issue by penalising low values more strongly. Weighted factor models (WFMs) are a useful prioritisation tool when comparing multiple options based on multiple criteria. They’re simple mathematical models used to make decisions by assigning different levels of importance (“weights”) to the criteria. Each option is scored on all criteria, and a final score for each option is calculated by taking the weighted average of the scores. In effective altruism, WFMs are used to, for example, evaluate one's career focus, determine the beneficiaries of a development programme, or compare different interventions. In many applications of a WFM useful for [...] ---Outline:(03:21) Some background: weighted arithmetic and weighted geometric means(03:33) Weighted arithmetic mean(04:48) Weighted geometric mean(05:38) The problem with weighted arithmetic means(07:16) Example 1: Which group of animals should we advocate for?(09:27) Example 2: Which job should I pick?(11:51) Example 3: Geographic weighted factor model(13:39) When to use the weighted geometric mean(14:32) When not to use the weighted geometric mean(16:20) How much does this matter?(17:19) Implementation in spreadsheet software(17:24) Google Sheets(17:51) Excel(18:03) LibreOffice CalcThe original text contained 4 footnotes which were omitted from this narration. --- First published: October 21st, 2024 Source: https://forum.effectivealtruism.org/posts/86PYvFEJoZq8g87gk/weighted-factor-models-consider-using-the-geometric-mean --- Narrated by TYPE III AUDIO.