Carl Sagan Explains the Drake Equation
Professor Frank Drake proposed an equation that could be used to estimate the number of detectable extraterrestrial civilizations in the Milky Way galaxy. The equation was deemed important for his work at the National Radio Astronomy Observatory in Green Bank, West Virginia (which I've driven by many times  their huge telescope is quite a sight!). In essence, Drake decided to define a series of limiting factors, so that we could take the total number of observable stars, then scope way down to get to some estimate for how many might have civilizations that we could contact. The resulting Drake Equation is one of the most exciting bits of math I've ever seen. Wikipedia explains it like so:
The Drake equation states that:
where:
 N = the number of civilizations in our galaxy with which radiocommunication might be possible (i.e. which are on our current past light cone);
and

R_{*} = the average rate of star formation in our galaxy

f_{p} = the fraction of those stars that have planets

n_{e} = the average number of planets that can potentially support life per star that has planets

f_{l} = the fraction of planets that could support life that actually develop life at some point

f_{i} = the fraction of planets with life that actually go on to develop intelligent life (civilizations)

f_{c} = the fraction of civilizations that develop a technology that releases detectable signs of their existence into space

L = the length of time for which such civilizations release detectable signals into space
If that's too mathheavy for you, just watch Carl Sagan explain it in this eightminute video:
Where it really gets interesting (and frustrating) is when you start to figure how many of these detectable civilizations are actually currently broadcasting during a time period when we might actually contact them or receive their broadcast (adjusted, of course, for the massive lag time to get the broadcast from point A to point B). Sagan touches on part of this problem in his discussion, but doesn't get into the details. Read more about all this at Wikipedia, or check out this detailed lecture:
A review of the Drake Equation from RiAus on Vimeo.