Survivorship bias is the logical error of concentrating on survivors (successes) and ignoring casualties (failures).
When we do so, we miss the true "base rates" of survival (the actual probability of success) and arrive at flawed conclusions.
Survivorship Bias 101
History is written by the victors. But if we exclusively focus on these successes, we allow survivorship bias to distort our understanding of the world.
But what is "survivorship bias" and how does it work?
Here's Survivorship Bias 101!
👇👇👇
Survivorship bias is the logical error of concentrating on survivors (successes) and ignoring casualties (failures).
When we do so, we miss the true "base rates" of survival (the actual probability of success) and arrive at flawed conclusions.
Put simply, exclusively focusing on successes may actually inhibit our ability to identify (and replicate) the actions that led to such success.
An atheist named Diagoras is shown portraits of people who prayed and were saved from death at sea as proof of God's existence.
Diagoras replies, "I see those who were saved, but where are those painted who were shipwrecked?"
Survivorship bias can lead to a deeply-flawed understanding of cause-and-effect relationships.
Let's look at some examples.
The U.S. wanted to add reinforcement armor to specific areas of its planes.
Analysts plotted the bullet holes and damage on returning bombers, deciding the tail, body, and wings needed reinforcement.
By only plotting data on the planes that returned, they were systematically missing data on a critical, informative subset - the planes that were damaged and unable to return.
The "unseen" planes had sustained damage that was not.
Wald concluded that armor should be added to the unharmed regions of the survivors.
Where the survivors were unharmed is where the planes were most vulnerable.
Wald had identified the survivorship bias and avoided its wrath.
Where else do we see survivorship bias arise?
We all love business success stories. We love to read about companies and people who have achieved incredible success and fame.
We scan their backgrounds in desperate search of the actions or features that led to that success.
But these conclusions are flawed.
For every company that pursued a moonshot idea and is now worth billions, there may be 10 who did the same and collapsed.
Analysts may try to calculate the performance of funds or groups of stocks using only the survivors at the end of the period.
By ignoring closed funds or stocks removed from an index, we bias the data and overstate returns.
Flawed data ➡️ Flawed decisions
To actively fight this, we must study the features of both successes and failures.
The "seen" and the "unseen" are equally important in guiding our decisions.
So the next time you read a story of the hero who won, be sure to reflect on all of the heroes who lost, whose stories are not told.
Special thanks to @austin_rief of @MorningBrew, whose interesting tweet on new founders sparked this thread. https://t.co/ldSVsPP4uX
1/ New founders spend too much time trying to emulate mature companies they admire, and not enough time learning what those companies did in the early days.
— Austin Rief \u2615\ufe0f (@austin_rief) December 5, 2020
Understanding the journey is more important than knowing where they are today.
Fooled by Randomness by @nntaleb: https://t.co/fB9ncIMlvE
Great blog from @ShaneAParrish and @FarnamStreet: https://t.co/o1T85OJMl7
1/ An Allegory of Finance
— Sahil Bloom (@SahilBloom) July 18, 2020
I have been posting a lot of educational (and humorous!) threads on finance, money, and economics.
My mission is simple: to demystify these concepts and make them accessible to everyone.
All of the threads can be found below. Enjoy and please share!
More from Sahil Bloom
From a young age, we are taught to view the world as black and white.
But many of life’s most important truths appear contradictory on the surface.
THREAD: 15 powerful paradoxes (on growth, business, careers, and life):
Sprezzatura (“Studied Carelessness”)
You have to put in more effort to make something appear effortless.
Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.
Simple is not simple.
Slow Down to Speed Up
Want to speed up? Try slowing down.
Slowing down gives you the time to be deliberate with your actions.
You can focus, gather energy, and deploy your resources more efficiently.
It allows you to focus on leverage and ROI.
Move slow to move fast.
Learn More to Know Less
The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.
This should be empowering, not frightening.
“The more I learn, the more I realize how much I don't know.” - Albert Einstein
Embrace lifelong learning.
Shrink to Grow
Growth is never linear.
In order to grow, sometimes you need to shrink.
Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.
This principle applies to your career, startup, or life.
One step back for two steps forward.
But many of life’s most important truths appear contradictory on the surface.
THREAD: 15 powerful paradoxes (on growth, business, careers, and life):
Sprezzatura (“Studied Carelessness”)
You have to put in more effort to make something appear effortless.
Effortless, elegant performances are often the result of a large volume of effortful, gritty practice.
Simple is not simple.
Slow Down to Speed Up
Want to speed up? Try slowing down.
Slowing down gives you the time to be deliberate with your actions.
You can focus, gather energy, and deploy your resources more efficiently.
It allows you to focus on leverage and ROI.
Move slow to move fast.
Learn More to Know Less
The wisdom paradox - the more you learn, the more you are exposed to the immense unknown.
This should be empowering, not frightening.
“The more I learn, the more I realize how much I don't know.” - Albert Einstein
Embrace lifelong learning.
Lifelong learning is a competitive advantage.
— Sahil Bloom (@SahilBloom) June 6, 2021
But contrary to what you\u2019ve been told, lifelong learners are built, not born.
THREAD: 20 lifelong learning habits you can start developing today.
Shrink to Grow
Growth is never linear.
In order to grow, sometimes you need to shrink.
Shedding deadweight may feel like a step back, but it is a necessity for long-term growth.
This principle applies to your career, startup, or life.
One step back for two steps forward.
More from For later read
I should mention, this is why I keep talking about this. Because I know so many people who legally CAN'T.
How do I know they have NDAs, if they can't talk legally about them? Because they trusted me with their secrets... after I said something. That's how they knew I was safe.
Some of the people who have reached out to me privately have been sitting with the pain of what happened to them and the regret that they signed for YEARS. But at the time, it didn't seem like they had any other option BUT to sign.
I do not blame *anyone* for signing an NDA, especially when it's attached to a financial lifeline. When you feel like your family's wellbeing is at stake, you'll do anything -- even sign away your own voice -- to provide for them. That's not a "choice"; that's survival.
And yes, many of the people whose stories I now know were pressured into signing an NDA by my husband's ex-employer. Some of whom I *never* would have guessed. People I thought "left well." Turns out, they've just been *very* good at abiding by the terms of their NDA.
(And others who have reached out had similar experiences with other Christian orgs. Turns out abuse, and the use of NDAs to cover up that abuse, is rampant in a LOT of places.)
How do I know they have NDAs, if they can't talk legally about them? Because they trusted me with their secrets... after I said something. That's how they knew I was safe.
And if the environment at the org was toxic or abusive, it is not uncommon to not realize the extent of that toxicity/abuse until after you're out. But by the time you realize that you signed under duress and presumed good faith where none existed, you're out of options.
— Lauren Thoman (@LaurenThoman) February 16, 2021
Some of the people who have reached out to me privately have been sitting with the pain of what happened to them and the regret that they signed for YEARS. But at the time, it didn't seem like they had any other option BUT to sign.
I do not blame *anyone* for signing an NDA, especially when it's attached to a financial lifeline. When you feel like your family's wellbeing is at stake, you'll do anything -- even sign away your own voice -- to provide for them. That's not a "choice"; that's survival.
And yes, many of the people whose stories I now know were pressured into signing an NDA by my husband's ex-employer. Some of whom I *never* would have guessed. People I thought "left well." Turns out, they've just been *very* good at abiding by the terms of their NDA.
(And others who have reached out had similar experiences with other Christian orgs. Turns out abuse, and the use of NDAs to cover up that abuse, is rampant in a LOT of places.)
Every single public defender. Every single day.
Bail arguments, motions, oral arguments, hearings. Judges don’t know, follow, or care about the law. Prosecutors are willing to take advantage of it. And mandatory minimums, withheld evidence, & pretrial detention coerces people to plead before trial. When theres a jury. A shot.
But defenders still fight. And still win. Most times wins aren’t “Justice.” It’s power of repetition of argument in front of same judges. Introducing those in power to the people they oppress. Not just a RAP sheet or words on a page. Defenders make it harder to be brutal & cruel.
I worked as a public defender at an office as well resourced as any in the country. Social workers, team of investigators, a reentry team, support staff, specialist attorneys in immigration, housing, education, family. Relatively low caseloads (80-100). And yet still injustice.
Most think that balancing the scales of justice means more funding for defenders. Thats part of it. Enough a attorneys to actually be at bail hearings. Wrap around services to be able to help people trapped in the system end up better off in their communities. Lower caseloads.
Raise your hand if you\u2019ve lost a case despite having the law, facts, quality lawyering, and justice on your side.
— Jon Feinberg (@JonFeinberg) February 13, 2021
Bail arguments, motions, oral arguments, hearings. Judges don’t know, follow, or care about the law. Prosecutors are willing to take advantage of it. And mandatory minimums, withheld evidence, & pretrial detention coerces people to plead before trial. When theres a jury. A shot.
But defenders still fight. And still win. Most times wins aren’t “Justice.” It’s power of repetition of argument in front of same judges. Introducing those in power to the people they oppress. Not just a RAP sheet or words on a page. Defenders make it harder to be brutal & cruel.
I worked as a public defender at an office as well resourced as any in the country. Social workers, team of investigators, a reentry team, support staff, specialist attorneys in immigration, housing, education, family. Relatively low caseloads (80-100). And yet still injustice.
Most think that balancing the scales of justice means more funding for defenders. Thats part of it. Enough a attorneys to actually be at bail hearings. Wrap around services to be able to help people trapped in the system end up better off in their communities. Lower caseloads.
