3 Surprisingly Ways to Improve Your Mental Health
If it isn’t obvious, people are stressed. Incredibly stressed. More often than not, according to...
Read MoreHave you ever thought about how many business leaders dropped out of college? It might make you wonder if dropping out of college is better than finishing. If so, you may have just fallen victim to survivorship bias!
Survivorship bias is when you only look at the positive outcomes for a group, the ‘survivors.’ So for college dropouts who became business leaders, you’re only looking at the dropouts who made it big. You’re forgetting about all those that didn’t make it.
Some cases of survivorship bias are literal, as in the case of survivors of shipwrecks. They might report what saved them, but we can’t check with the victims to compare if that’s what really made the difference. But survivorship bias can also be more about success than literal survival, such as only looking at restaurant success stories and not those that have shut down.
One famous example of survivorship bias is in popular music. It is a common refrain to hear from people that “music sucks these days! It was so much better back in my day!” Then, the music fan will turn on a radio station with hits from their era to prove it, and it really does seem like there are more good songs.
The problem is that the songs aren’t the same ones they heard back then. Radio stations today only play the classics that have ‘survived’ the test of time – the big successes. Unfortunately, we don’t know what the classics are yet for new songs, so you’ll hear a much wider variety of them.
Now, let’s look at a helpful video that will take us through one of the most famous examples of survivorship bias, WWII aircraft coming back with bullet holes. When watching the video, think about what the data says about the planes before you choose where they should place more armor on the planes. The answer might not be what you think.
Looking at the video, it turned out we should place more armor in places with no bullet holes. Thus, these are likely the places where getting shot causes a plane to crash, whereas the returning aircraft were still ok to keep flying.
Survivor bias is a crucial concept in the business and investing world. Many business leaders provide overly optimistic advice because they are survivors. Unfortunately, we are not getting advice from people who have failed, so we don’t have good data for comparison.
Those whose investments have failed or whose businesses have gone bankrupt are usually not the ones providing advice. Hence, you should always practice caution when hearing only their success stories, as you’re not hearing the other side.
If it isn’t obvious, people are stressed. Incredibly stressed. More often than not, according to...
Read More
We’re stating the obvious early, according to Forbes, travel will be 40% cheaper this fall...
Read MoreExplore & Discover