Have you ever made a decision based on the success stories of others without considering the countless unseen failures? Then you've likely fallen prey to Survivorship Bias. This article will shed light on what Survivorship Bias is, why it matters, and how to avoid it in decision making.
Picture yourself as an aspiring author. You idolize successful authors like J.K. Rowling and Stephen King, and admire how their books have become global sensations. You enthusiastically pursue your writing career, believing that if they could do it, so can you. However, you're conveniently ignoring the fact that for every successful author like Rowling or King, there are thousands who never make it past the manuscript stage. This blindspot is what we call Survivorship Bias.
Survivorship Bias is a logical error that focuses on successful outcomes while overlooking failures. It occurs when we base our understanding or make decisions by concentrating only on the survivors (successful instances) of a particular scenario and ignoring those who failed or did not make it.
Survivorship Bias can lead to overly optimistic beliefs because failures are overlooked. It can influence a variety of decisions - from career paths, investment strategies, to business plans, and can result in unrealistic expectations and misguided decisions.
In our aspiring author example, ignoring the struggles of unsuccessful authors might lead you to neglect essential steps in honing your craft, or underestimating the effort required to get a book published.
To avoid falling into the Survivorship Bias trap, you can:
Consider the Entire Picture: Acknowledge both the success stories and the failures. Research about those who tried and failed, and understand the challenges they encountered.
Question the Data: Be critical about the data presented to you. Does it account for every test case, or only the successful ones?
Always Consider The Base Rate: Understand the overall rate of success and failure in the field of your interest.
Using these pointers, let's return to our aspiring author. To avoid Survivorship Bias, you shouldn't just study successful authors. Instead, learn from the journey of authors whose books didn't sell well. Understand the challenges of the publishing process, and the overall success rate (base rate) in the industry. Only by considering both sides - success and failure - can you develop a realistic view of your journey and make well-informed decisions.
Survivorship Bias is a critical cognitive bias to understand as it affects our judgment and decision-making process. By being aware of it and incorporating strategies to avoid it, we can make more balanced and informed decisions, whether in our professional lives, personal endeavors or investments.