Survivorship Bias: Why Winners Don't Tell All
During World War II, U.S. military analysts were trying to improve survival rates of their bombers.
They did what any analyst would do - looked at the data from the bombers, plotted the bullet holes to study where the most damage had occurred and then came up with the most logical answer - adding armor to the tail, body, and wings would improve their odds of survival.
Image Concept Credit: Cameron Moll
However, a young statistician named Abraham Wald looked at the same data and pointed out what was a major flaw in this approach.
The logic was sound, but the data was incomplete.
By only considering the planes that returned, the analysts ignored those that never came back—the exact data that was required to understand the vulnerability of the bombers.
Wald argued that, paradoxically, the undamaged regions were the most vulnerable precisely because planes with damage in those areas were missing from the dataset altogether.
His insight led the military to reinforce the engine and other untouched areas, thereby drastically enhancing crew safety.
This illustration brings to light a cognitive distortion we now call Survivorship Bias.
Survivorship Bias blinds us to the invisible failures, leads us to believe that success is the norm, and skews our perception of reality.
We focus on the triumphant outliers without considering the vast array of unreported failures. And so, the survivors dictate the narrative while countless others fade into statistical invisibility.
Thousands fail for every spectacular success. Yet, the narratives of failures are buried in the debris of anonymity because triumph, not failure, is the currency of storytelling.
A college dropout becomes a billionaire, a chain-smoker lives to 118, and we marvel. We see them as templates, as guides. But these are not rules; these are exceptions, daring us to question, to probe deeper.
These are not mere anecdotes; they are cautionary tales. Bill Gates and Batuli Lamichhane defy conventional wisdom but represent extreme cases on the curve of life's distribution. Mistaking these outliers for norms can be a perilous undertaking, an undertaking that skews our judgment.
We cling to the compelling tales of Gates and Lamichhane as if they offer a replicable formula for success. In doing so, we ignore the myriad factors—timing, luck, socio-economic conditions—that contribute to these anomalies. Survivorship Bias clouds our judgment and lures us into a misleading cause-and-effect relationship.
Especially in the business realm, Survivorship Bias is pervasive. Companies that soar receive endless accolades, while those that falter are often forgotten, skewing our perception and interpretations of market dynamics. Nassim Taleb notes, "We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract." For every Zuckerberg and Gates, it's imperative to remember the countless others who took similar risks but did not survive to tell their tales.
In dissecting success, we often overlook the monumental role of failure. We choose to focus on the visible survivors, ignoring the invaluable lessons buried in the stories of those who did not make it.
Why would such a bias be a part of our psyche though?
Could it be that there is an evolutionary imperative at play here.
If our brains were good at calculating true probabilities …
Would our ancestors go out looking for better prospects?
Would we have had explorers looking for better lands with more resources?
By overestimating chances of success our ancestors took risks that made no sense on an individual basis but did make sense when done en masse.
After all, one of an infinite number of monkeys banging at keyboards is bound to write Hamlet.
In other words, this is a case where Survivorship Bias actually works in our favor.
Unfortunately, the environment has changed drastically.
We drown in data while our ancestors starved for it.
They lived in an environment where they had to take risks to survive.
We, on the other hand, are living in an era where we risk survival by taking risks we don't need to.
While the environment has evolved drastically, our internal mechanics have not.
In a world obsessed with the stories of winners, it's vital to remember the silent symphony of failures that accompanies every tale of success.
Survivorship Bias isn't just a statistical misstep; it's a lens that colors our perception, often misleading us down paths of irrational optimism or neglect.
The next time you encounter an extraordinary narrative, don't just pause; probe. Look beyond the success story in front of you and consider the hidden stories of failures that frame it.
Because understanding Survivorship Bias isn't about stifling our ambitions; it's about refining them, grounding them in a reality that accounts for both the visible victors and the invisible vanquished.
Thanks for reading Wisdom & Prosperity!