I will see odds on people winning elections as 5/1 etc, but have no idea how to figure out if that means they are likely to win or not, other than through context. I have looked it up but never quite ‘get’ it. Please explain to me how it works in a way so simply that a child would understand!
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An odds ratio has two numbers, x and y. To get a sense of how likely each outcome is, suppose you put x blue balls and y red balls into a bag. The first outcome should happen about as often as you would draw a blue ball out of the bag. The second outcome corresponds to red balls.
So 5/1 odds means that there are 5 blue balls and 1 red ball. That means the first event is 5 times more likely than the second. This is an easy way to interpret any odds with a 1, which is the most common way people talk casually about odds. If the odds are “a million to 1” then the more likely outcome happens a million times for every unlikely outcome.
But this method also works for odds without a 1. 3/2 odds means that the first event will happen 3/5 of the time and the second event 2/5. Etc.
Odds are handy in betting because they can turn a situation with uneven outcomes into a fair bet. Suppose one team in a matchup is expected to win 2 times out of 3. It wouldn’t work to give even odds where people betting on the better team can win exactly as much as they bet. Everyone would prefer that side of the deal. Instead, the people who bet for the better team should have to stake $2 to win $1, and the people betting against get to stake $1 to win $2.
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