The Safety of Base Rates
History can help you improve your decisions
We live in a world with an overriding wealth of information on the dangers of smoking, drinking — and eating fast food. And yet, we will still focus on the guy who lived to 101 even though he smoked, drank and ate mostly fast food. Even though he is the exception, we still prefer his story.
We ignore the base rate data in favour of the anecdote.
This fallacy is naïve.
Without creditable information, what better way to decide is there than referencing a relevant base rate?
Making decisions without considering base rates is foolish.
It would be like betting on your poker hand without looking at your cards first. Or sunbathing in December without checking to know where you were first. When betting on a horse race, how many of us don’t study the form guide. Instead, choosing to back a horse because of its name. Our cognitive biases do love the opportunity to fool us by letting the base rate fallacy take hold.
Charles Darwin wasn’t wrong when he said: “Ignorance more often begets confidence than knowledge.”
Yes, we’ve all been there.
It might surprise you to know we use base rates far more than we appreciate.
