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Understanding probability
Understanding probability will help you get a more correct picture of the world and help you make better decisions.
Most of us fall prey to the same handful of issues because aspects of probability go against what we think is intuitive.
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Assuming events are independent when they are not
When two event are interconnected, the former happening increases or decreases the probability of the latter happening.
- Your car insurance gets more expensive after an accident because car accidents are not independent events. A person who gets in one is more likely to get into another in the future.
- Most of our plans don’t go as we’d like. We get delayed, we have to backtrack, we have to make unexpected changes. Sometimes we think we can compensate for a delay in one part of a plan by moving faster later on. But the parts of a plan are not independent. A delay in one area makes delays elsewhere more likely as problems compound and accumulate.
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Not understanding when events are independent
In Naked Statistics, Charles Wheelan explains: “A different kind of mistake occurs when events that are independent are not treated as such . . . If you flip a fair coin 1,000,000 times and get 1,000,000 heads in a row, the probability of getting heads on the next flip is still 1/2. The very definition of statistical independence between two events is that the outcome of one has no effect on the outcome of another.”
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When improbable events happen
While particular improbable events are improbable, the chance of any improbable event happening at all is highly probable.
- Your chances of getting struck by lightning are almost zero. But with so many people walking around and so many storms, it has to happen to someone sooner or later.
- The same is true for clusters of improbable events. The chance of any individual getting struck by lightning more than once is even closer to zero than the chance of it happening once. Yet when we look at all the people in the world, it’s certain to happen to someone.
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CURATED BY
Life is not about waiting for the storms to pass. It`s about learning how to dance in the rain.
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