Base rates give me the same comfort a visit to my grandparents gave me when I was young.
Yes, just like my nan and grandad, base rates are safe and packed full of wisdom. When I want fact over opinion on stuff I know little about, the mental model of base rates is where I go. The concept is to use historical data as it relates to your decision and use it as a baseline for deciding.
When we don’t know better, base rates enable us to make smarter decisions.
When we don’t know better, base rates prevent us from making reckless decisions.
What are Base Rates?
Base rates in decision-making explain known probabilities established from historical data. A simple example is knowing what the temperature in London in May will be. Historical data tells us the temperature ranges from 15 to 19 degrees with it becoming warmer later in the month. This information forms a base rate for you to make many decisions, from what to wear, what to eat and even when and where to eat.
Of course, base rates won’t always be right. But in a quest to always be brilliant, sometimes avoiding stupidity is easier. This is where base rates can be rather helpful.
Before I show you how powerful base rates can be, I need to warn you about our cognitive biases.
Our mind has a wonderful capacity to use its judgement when it feels like it. These instincts have given us the ability to intuitively know when to freeze—or fight. But they also make us susceptible to adopting fallacies when we shouldn’t.
The Danger of the Base Rate Fallacy
The base rate fallacy is the moment we accept a story over data.
The fallacy occurs when we take a ‘one-off’ event over more creditable information. We use unique stories to justify doing something the base rate says we shouldn’t.
“I smoke because my nan smoked all her life and died when she was 98.” “My friend always drives without a seatbelt, and he is still alive!”
Both stories are indicative of the anomalies that exist in every data set. Take a broad range of data and the averages show the story to be a ‘one-off’—a freak.
The base rate fallacy prevents us from accepting the logic in favour of the romantic.
The majority of people who smoke will die younger than those who don’t. Drivers involved in a car accident with a seatbelt on will reduce their risk of dying by 45%.
Oh yes. It’s good to know about the power of base rates if you want to make smarter, safer decisions.
The Pedestrian Priority Changes
Driving in the UK requires a deep understanding of the highway code.
The once a handy pocket-sized book has now evolved into an app containing the rules. New drivers must pass a theory test based on the highway code, before attempting their driving test. Recently the law changed giving priority to pedestrians. Now road users (bikes, cars, and lorries) have to give way to pedestrians waiting to cross the road, regardless of where they are crossing from.
This rule change has annoyed drivers, but the logic to change the rule stems from base rates.
Data collection from accidents has shown that pedestrians are at greater risk of serious injury or death. The driver of the vehicle always survives.
But the highway code always placed greater emphasis on the vehicle user, rather than the pedestrian.
Base rates show the person most at risk in an accident is a pedestrian. Dig a little deeper and we find the majority of pedestrian vs vehicle accidents occur when the pedestrian is attempting to cross the road.
Of course, the base rate bias can lead us astray.
“The accident happened because the kid didn’t look both ways before crossing.” “I didn’t see the car coming because of the tree. It was blocking my view of what was coming.” “I thought I could make it across before the car got here.”
The excuses are stories.
The excuses—should we believe them—are leveraging our desire to trust the narrative of a few of the historical data of the many. It is the base rate fallacy trying to take hold.
With these stories, it would be easy to say the accidents are down to errors of judgement. The pedestrians should have looked for a safer place to cross. The UK government has even invested in more pedestrian crossings and programmes to teach kids how to cross roads safely.
Yes, pedestrian accidents happen less, but still too often.
Evading the fallacy and trusting the base rate suggests that the old rules gave priority incorrectly. Stephen Edwards, the interim chief executive at Living Streets, said: “Road users who have potential to cause the greatest harm should take the greatest share of responsibility to reduce the danger they pose.”
It’s Time for You to Make Smarter Decisions
I’m guessing you want to make smarter decisions.
The arguments for using base rates when deciding are pretty clear. The pedestrian priority changes offer a compelling example of how base rates can allow us to make more informed decisions. Without substantial new information, decisions made based on historical data are better.
So, how do take the step and use data over stories to decide?
The good news is you already are using data over stories far more than you might realise. Judgements on what you eat, what you wear—even what you watch on TV stem from data. Sadly, that also makes you prone to suffering from base rate bias too.
The crux of avoiding biases and using base rates more comes down to your awareness.
- Are you being reckless?
- Are you ignoring the obvious information for the anecdote?
- Is the story you’re trusting at extreme odds with the historical data you have?
You have to be more self-aware when making decisions. The arguments I’ve used before about being more reflective, of pausing before deciding are never more relevant than now. It’s your awareness that lets you step outside of your decision and check your thoughts.