This has been huge on the blogosphere: the Gates foundation may have blown a lot of money after it fell for a statistical fallacy. Here’s Megan McArdle riffing on Tyler Cowen who drew from Howard Wainer’s recent book*.

What the Gates Foundation did was steer a lot of money towards small schools because a bigger fraction of them performed *far above* average.

The fallacy is that because the schools’ student bodies are smaller, the variance of their scores will be larger. This almost guarantees that many of them will be *far above* the mean.

You can tell if this issue has come up by seeing if there are also many of them that are far below the mean, and Tyler has a plot of that. Of course, the education nomenklatura love to point out the huge number of clinkers among small schools to justify agglomerating into bigger fiefdoms.

*Back in the stone age, I enjoyed another one of Howard Wainer’s books so much for classroom examples that I photocopied the whole thing so that I could more quickly run off a page or two for students when the need arose.