Here's a Better Way to Deal With Life's Risks

We all spend time making decisions with some risk involved. We look at each situation and consider the likelihood that something will happen as well as if it would be worth it.
For example, whether to sprint across the street when the sign says “don’t walk.”

Expected value is then the odds of something happening multiplied by the cost of the expected value of the situation.

Part of the expected value is estimating the chance or probability of the situation.

Many people have poor judgement calculating real probabilities. They overstate the chance of rare events and underestimate the possibility of common events.

For example, many people don't like to fly on planes because they are scared they might be in a crash, yet the actual chance is close to zero.