Regression to the mean
After an unusually extreme result, the next one tends to be closer to average, purely by chance.
In plain English
Extreme results are partly luck. Luck doesn't repeat on command, so whatever comes next is usually more ordinary. Anything you do right after an extreme gets the credit (or the blame) for a change that would have happened anyway.
Uncle Gary explains
Uncle Gary's hangover cure works every time. He only ever drinks it at his absolute worst, and from there the only way is up.
Why it matters for your money
It makes remedies, coaches and strategies look effective when they are applied right after an extreme. That's why we always compare with a control group.
Where we tested it
- Do Hangover Cures Work? Why Every One of Them Seems To
- The Employee of the Month Curse
- How Long Does It Take to Form a Habit? Why Your Routine Lasts Four Days
- Lesson 12: Linear Regression: Drawing the Line (and Knowing Where to Stop)
Related terms
All glossary terms. Educational content, not financial advice.