Seth's Blog : Survivor bias and the mistake of stability
Survivor bias and the mistake of stability
An asteroid has never destroyed the Earth, therefore an asteroid never will.
This brand has been involved in scandals before, and it has always come back stronger, so there’s nothing to worry about.
There have been technology changes before, but we’ve always managed to find clients for what we do.
Survivor bias is the trap of only considering the successful entries when thinking about risk. For example, if you look at the performance of mutual funds after ten years, most of them seem to do pretty well. But that’s partly because the ones that did really poorly didn’t make it to ten years.
We are lucky enough to live on a planet that hasn’t been destroyed by an asteroid. But that doesn’t mean that other planets haven’t had their life forms extinguished–we’re simply unaware of them.
Past performance is no guarantee of the future. Sorry.
We should plan accordingly.
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