18 Chapter 1 EXAMPLEB Probability Let R; and R; denote the events that a red ball is drawn on the first trial and on the second trial, respectively, From the multiplication law, P(R,) is clearly 3, and if a red ball has been removed on the first trial, there are two red balls and one blue ball let. Therefore, P(R: | Ri) = 2. Thus, P(R, NR.) = } Suppose that if it is cloudy (B), the probability that it is raining (A) is .3, and that the probability that it is cloudy is P(B) = .2 The probability that it is cloudy and raining is P(ANB) = P(A|B)P(B) = 3 x .2 = .06 . Another useful tool for computing probabilities is provided by the following law. LAW OF TOTAL PROBABILITY Let By, Bs, ..., By be such that Uf", B; = @ and B M By = B fori # j, with P(B)) > 0 for all i. Then, for any event A, P(A) =O PAL B) PB) i= Proof Before going through a formal proof, itis helpful to state the result in words. The B, are mutually disjoint events whose union is ©. To find the probability of an event A, we sum the conditional probabilities of A given B,, weighted by P(B;). Now, for the proof, we first observe that P(A) = P(ANQ) -r(+°(09)) a (Ua n ») a Since the events A B; are disjoint, o(U jane) = branay JL =D Palayre) . iaEXAMPLE C EXAMPLE D 1.5 Conditional Probability 19 The law of total probability is useful in situations where it is not obvious how to calculate P(A) directly but in which P(A | B,) and P(B)) are more straightforward, such as in the following example. Referring to Example A, what is the probability that a red ball is selected on the second draw? ‘The answer may or may not be intuitively obvious—that depends on your in- tuition, On the one hand, you could argue that it is “clear from symmetry” that P(R2) = P(R)) = 3. On the other hand, you could say that it is obvious that a red ball is likely to be selected on the first draw, leaving fewer red balls for the second draw, so that P (Ro) < P(R)). The answer can be derived easily by using the law of total probability: P(Ry) = P(Rz| Ri) P(R:) + P(Re | By) P(By) 203 +I 1 3 a2 xsgixtat 3°a aa where B; denotes the event that a blue ball is drawn on the first trial . As another example of the use of conditional probability, we consider a model that has been used for occupational mobility. Suppose that occupations are grouped into upper (U), middle (M), and lower (L) levels. U; will denote the event that a father’s occupation is upper-level; U2 will denote the event that a son's occupation is upper-level, etc. (The subscripts index generations.) Glass and Hall (1954) compiled the following statistics on occupational mobility in England and Wales: Such a table, which is called a matrix of transition probabilities, is to be read in the following way: If a father is in U, the probability that his son is in U is .45, the probability that his sonis in M is 48, etc. The table thus gives conditional probabilities: for example, P(U2|U,) = .45. Examination of the table reveals that there is more upward mobility from Z into M than from M into U. Suppose that of the father’s generation, 10% are in U, 40% in M, and 50% in L. What is the probability that a son in the next generation is in U? Applying the law of total probability, we have P(U2) = P(Uz| Uy) PU) + P(U2 | My) P(M1) + P(U2 | Li) PL) = 45 x 10+.05 x 40+.01 x 50 = .07 P(M,) and P(L2) can be worked out similarly. .