What you see isn’t all there is

Shark attack

It’s always entertaining to regale European friends with tales of Australia’s deadliest flora & fauna, from giant stinging trees, brown snakes, and the lethal irukandji jellyfish, to salties, funnel-webs, and – if you’re feeling particularly vindictive – the vicious drop bears.

Shark bites are a favourite scare topic, but in reality such attacks are rare, and generally most plants and animals will leave you alone if you don’t provoke them (or in the case of the estuarine croc, venture into their habitat).

In fact, as a statistics-minded person, I’m duty-bound to note that a trip to the beach would far more likely be terminal due to you having an accidental fall, or via the increased melanoma risk, or simply through flailing in the surf & drowning in the case of inebriated Brits.

In saying that, you really should watch out for those drop bears.

What springs to mind?

It’s not surprising that sharks get such a bad rap despite causing fewer deaths than, say, horse drawn vehicles or hot taps, because a shark attack or even a near miss makes for such a compelling story.

Media is more widely accessible than it once was, but it still can only cover a small part of what happens, while the good news is that the world has generally become more peaceful, safer, and on average we’re living longer too.

The availability heuristic, as studied by psychologist Daniel Kahneman, holds that we rely heavily on mental shortcuts and place an over-reliance on things we can remember, while underestimating the importance of events we never see or hear about.

We also have a leaning towards substituting challenging or complex questions with easier ones, meaning that we often don’t evaluate odds correctly.

In other words, what you see is not all there is, even if what you do see creates a vivid picture or memory.

Broadening your horizons

If you’ve ever experienced the rollercoaster ride of setting up a business or investing in a dud asset, you might recognise some of these potential effects of the availability heuristic:

(i) Recency bias – excessive reliance on current or recently recalled news & events;

(ii) Misplaced dependence on ‘gut feel’ – the disposition to recall unreliable mental images and emotions rather than using systematic research or analysis; and

(iii) Poor assessment of risk – evocative memories of a thriving (or deteriorating) economy or market inclining business leaders & investors towards ill-judged decisions, in so doing failing to account for the inevitable cycles.

So much for the biases; how to combat them?

Firstly, don’t jump to snap decisions, for if times are good (or bad) they probably won’t stay that way forever.

Instead use detailed investigation with complete & reliable statistics to identify long-term trends or patterns.

The most thrilling aspect of the availability heuristic is that it impacts everyone to some extent, meaning that for clear thinkers it can periodically be highly profitable to go against the grain.

Read widely, and be open-minded; what you see isn’t all there is!