Introducing Guesstimate, a Spreadsheet for Things That Aren’t Certain
Existing spreadsheet software is made for analyzing tables of data. Excel, Google Sheets, and similar tools are fantastic for doing statistics on things that are well known.
Unfortunately many important things are not known. I don’t yet know if I will succeed as an entrepreneur, when I will die, exactly how bad sugar is for me. No one really knows what the US GDP will be if Donald Trump gets elected, or if the US can ‘win’ if we step up our fight in Syria. But we can make estimates, and we can use tools to become as accurate as possible.
Estimates for these things should feature ranges, not exact numbers. There should be lower and upper bounds.
The first reaction of many people to uncertain math is to use the same techniques as for certain math. They would either imagine each unknown as an exact mean, or take ‘worst case’ and ‘best case’ scenarios and multiply each one. These two approaches are quite incorrect and produce oversimplified outputs.
This is why I’ve made Guesstimate, a spreadsheet that’s as easy to use as existing spreadsheets, but works for uncertain values. For any cell you can enter confidence intervals (lower and upper bounds) that can represent full probability distributions. 5000 Monte Carlo simulations are performed to find the output interval for each equation, all in the browser.
At the end of this you don’t just understand the ‘best’ and ‘worst’ scenarios, but you also get everything in between and outside. There’s the mean, the median, and several of the percentiles. In the future I intend to add sensitivity analyses and the value of information calculations.
Guesstimate is free and open source. I encourage you to try it out. Make estimates of things you find important or interesting. I’m looking forward to seeing what people come up with.