As we’ve been learning over the last several months, an awareness of the mental shortcuts we tend to take can help us control our behavior to our advantage. Here is a quick look at two more heuristics from Daniel Kahneman’s book, Thinking, Fast and Slow.
THE LAW OF SMALL NUMBERS
Our brains have a difficult time with statistics. Small samples are more prone to extreme outcomes than large samples, but we tend to lend the outcomes of small samples more credence than statistics warrant. Our emotions are impressed with the outcome of small samples but shouldn’t be. Small samples are not representative of large samples. Large samples are more precise. We err when we intuit rather than compute.
- Potential for error? We make decisions on insufficient data.
AVAILABILITY CASCADES
When news stories pile up our statistical senses get warped. A recent plane crash makes us think air travel is more dangerous than car travel. The more we fear air travel the more eager news reporters are to sensationalize plane crashes. A negative feedback loop is set in motion, a cascade of fear. “The emotional tail wags the rational dog.”
- Potential for error? Overreacting to a minor problem simply because we hear a disproportionate number of negative news stories than positive ones.
Onward and Upward,
Steve
