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Why We Suck at Probabilities

Trevor O'Hara
2 min read
Why We Suck at Probabilities
Photo by Joe Maldonado / Unsplash

Last week I was giving a talk to a group of startup founders in London. We got onto the theme of success and successful outcomes in life. My point, which I make repeatedly, is that we vastly underestimate the role of randomness and chance in our life decisions and I quoted Taleb in the discussion:

"We are blind to probabilities. We do not make rational choices, but emotional onces." - Nassim Taleb, Fooled by Randomness.

My argument was that if we really understood probabilities more, we'd probably not make as many (rash) decisions, particularly when it comes to starting new businesses.

There is of course an evolutionary take on this: it's called the "here and now" because humans evolved to prioritize both survival and reproduction.

1. Immediate vs. Future Consequences: Our predecessors lived in situations where resources and threats were more important in the short run than in the long term. Being able to move rapidly in the face of an immediate threat, such as an attack by a predator was more important than considering the statistical possibility of such an occurrence. In the modern world, when we ignore the likelihood of long-term dangers such as lifestyle diseases or failing to plan for retirement, these decisions may result from this survival drive.

2. Certainty Bias: Our desire for certainty and predictability is probably an evolutionary trait designed to maintain control and reduce dangers or threats.

3. Pattern Recognition: Humans are skilled at recognising patterns, which has historically assisted us in identifying predators or locating food. Our ability to see patterns and trends in seemingly random events, however, might fool us and cause us to make inaccurate probabilistic assessments. This phenomenon is known as "apophenia."

4. Social & Emotional Factors: Humans are incredibly social beings. Consequently, emotions frequently influence our decisions. These factors would have been critical for our ancestors' survival and social cohesiveness, but in the modern world, they can mislead us in situations where we're better off making probabilistic decisions.

5. Limited Cognitive Resources: Let's face it: trying to assess the probability of an outcome takes up cognitive resources. Not only are they difficult, but they're also counterintuitive. Our brains didn't evolve that way. They evolved to be efficient, allowing us to concentrate our cognitive abilities on tasks that were critical for our survival.

Keep in mind though that our brains are highly adaptive, even though we might have trouble understanding probabilities. Probabilistic thinking does take training and practice, but the first step is recognizing that there's very little in life you can be 100% sure of.