keen comments on Absence of Evidence Is Evidence of Absence - Less Wrong
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I disagree with the article for the following reason: if I have two hypotheses that both explain an "absence of evidence" occurrence equally well, then that occurrence does not give me reason to favor either hypothesis and is not "evidence of absence."
Example: Vibrams are a brand of toe-shoes that recently settled a big suit because they couldn't justify their claims of health benefits. We have two hypotheses (1) Vibrams work, (2) Vibrams don't work. Now, if a well-executed experiment had been done and failed to show an effect, that would be evidence against a significant benefit from Vibrams. However, if the effect were small or nobody had completed a well-executed experiment, I see no reason that (2) would fit the evidence better than (1), so we are justified in saying this absence of evidence is not evidence of absence.
Although the original saying, I think, was meant in the absolute sense (evidence meaning proof), it is still fitting in the probabilistic sense. Absence of evidence is only evidence of absence when combined with one hypothesis explaining an occurrence better than the other, so the saying holds.
In the situation you describe, the settlement is weak evidence for the product not working. Weak evidence is still evidence. The flaw in "Absence of evidence is evidence of absence," is that the saying omits the detailed description of how to correctly weight the evidence, but this omission does not make the simple statement untrue.