Mental Models - Base Rate Neglect 🐴
Mental Models - Base Rate Neglect 🐴
Issue #54
I love this model. Being aware of base rates is such a powerful way to be right more often when forecasting.
This one sticks with you as you navigate the world. Read on, and become obsessed with base rates.
What is Base Rate neglect?
Base rate neglect is the tendency to base judgments on specifics, ignoring general statistical information.
In simpler words, we tend to put too much weight on the details of our one case, ignoring all the cases that came before it.
Here's a great example that illustrates base rate neglect:
Karen was a successful athlete in high school and college and continues to compete in several team and individual sports. Karen also follows professional sports and can recite team statistics with remarkable accuracy.
Which of the following descriptions is more likely?
a. Karen is a high school physical education (PE) teacher and coach.
b. Karen is an elementary school teacher. *
* Elementary school is called primary school where I'm from.
If you are like most people you guessed option a. Even if you did guess b, you can probably feel the intuitive pull towards option a.
The answer is option b, because there are far higher rates of elementary school teachers than high school PE teachers who are also coaches.
As this paper explains, "we tend to ignore or to underweight base rate probabilities (i.e., the proportion of elementary school teachers to high school PE teachers who are coaches). Instead we tend to "rely heavily on descriptive, individuating information" such as the fact Karen was an athlete.
Why is this interesting?
Base rate neglect comes up all the time. You'll notice yourself and others getting caught up in the details frequently.
Got a bad headache? It's unlikely you have a terminal illness.
Tested positive for a disease? It still might be unlikely you have the disease, check the false positive rate.
Password isn't working? It's probably not a software glitch, it's more likely you just got your password wrong.
Refactoring your SaaS app? It is likely to take longer than you expect, as the majority do. Ditto your kitchen remodel.
To combat base rate neglect? Daniel Kahneman suggests to say to your team "before we discuss this situation, what is the relevant base rate?”
I'll leave you with this pithy advice often taught to new doctors:
When you hear hoofbeats, think horses, not zebras.
Want to go deeper?
🤔 Why are there more covid vaccinated people hospitalized than unvaccinated? Do vaccines not do anything? Take into account base rates of vaccination in the population.
📖 Kahneman's ever relevant classics Thinking Fast and Slow and the more recent Noise should be on every bookshelf.
📖 Factfulness is a top read that might help you internalized some base rates about the world.
🔖 Want to forecast better? Read more about Reference Class Forecasting in my post about The Planning Fallacy.
🧠 Build your latticework! Revisit related mental models: