3 Concepts to Help You Consider Base Rates When Deciding
Edition 68 — read on Resolve.blog | April 26th, 2022
Happy thinking Tuesday!
Here is one quote, one question, and big idea to challenge the way you make decisions and improve your life.
“Ignorance more often begets confidence than knowledge.”—Charles Darwin
What historical data can I use to predict the outcome in this situation?
With little or no new information an existing source of information can give a helpful insight as to what is likely to happen.
A big idea…
What do you trust more—facts or stories?
The historical data tells the truth and creates a base rate. A story could be a one off or a freak of nature. Don’t let your cognitive bias fall for the story.
Base rates are far safer to use when making decisions than a anecdote.
Base rates are safe.
This is why we have a fallacy against them. 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 eat mostly fast food.
We ignore the base rate data in favour of the anecdote.
This fallacy is naïve.
Without creditable information, the only safe bet is 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.
And yet, 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?
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.
We build up to decisions by using base rates to give guidance on future outcomes. Deciding whether to go for a walk isn’t based on looking outside but on the historical data of weather from this month over many years.
The point is not to fall for ignorance.
Base rates give us historical information for the times when we have nothing better to base our decisions on. And in a risk-averse world, it seems like a sensible place to build decisions. We need to remember the safety of base rates and use them more often.
It's a better way to decide.
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Keep on making great decisions!
Founder, The Resolve Blog