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Mental Models - Survivorship Bias 💰
This week we’re looking at a mental model called Survivorship Bias. Once you’re aware of this concept, you’ll start noticing it everywhere! 👀
What is Survivorship Bias?
Survivorship Bias is our tendency to focus on successful examples and ignore failures. The failures often didn't survive to be seen, so we miss them. The outcomes that we do see were the ones that "survived".
Why is this interesting?
When we only take into account the successful examples, this leads to a distorted view of reality. In the book The Black Swan, Nassim Taleb said:
The cemetery of failed restaurants is very silent.
He's suggesting that we might easily be affected by Survivorship Bias when looking at the restaurant industry.
In particular, those entering the restaurant business might not see (or focus on) the huge proportion of entrants that failed, but instead see the few of the very best that survived - buoying their enthusiasm and confidence of success. Entering the restaurant business might look like great way to make a living! Unfortunately a large proportion of entrants are doomed to fail.
In the Media
An even easier way to find examples of Survivorship Bias is to just look at any media outlet! They're littered with coverage of leading athletes or entrepreneurs and their so-called secrets to success.
One classic is the coverage of the story of Bill Gates dropping out of Harvard then becoming a billionaire... (or more recently Mark Zuckerberg). This is contrasted by probably near zero mentions of the college dropouts who aren't billionaires.
Here's an example in an article from CNBC. There isn't any mention of all the college dropouts that didn't achieve what Gates did:
We should be skeptical of these kinds of examples, which trigger our Survivorship Bias by leaving out any mention of the failed cases - in effect leaving them hidden.
To close this week - here's one more illustration that sums up Survivorship Bias pretty well - an extreme example from the clever xkcd comic. 😂
Want to go deeper?
👏 This post by Mike Sturm (@mikesturm) is a great counter point to all the survivorship-bias-infected content out there.
📖 The Black Swan by Nassim Taleb (@nntaleb) is a brilliant book (it's where I first came across the concept of Survivorship Bias).
Reply to this email if you have any thoughts, requests etc you want to share, otherwise ‘til next week dear Mental Modelers! 🙇