Sampling bias

Sampling bias occurs when a sample is not representative of the full population. That distorts the results and weakens the validity and generalizability of findings in studies and analyses, including in finance.

Example

In a financial market research study, if the stocks in the sample come mostly from one industry or market segment, the conclusions may not reflect broader market trends and dynamics. To avoid sampling bias, researchers need a sample selection process that is representative of the wider population. That leads to more accurate insights that can be applied more reliably across the market.