Survivorship Bias

Nov 22 / Network Capital
Never be judgemental or misunderstand people, things, concepts or events solely based on visible and obvious historical data. This may lead to false conclusions. Always think of the possible missing pieces of information and alternative perspectives.

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Survivorship bias or survival bias is the logical error of concentrat- ing on people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to false conclusions in several different ways.

During World War II, naval researchers concluded a study of damaged aircrafts that returned from missions. They used to analyse parts of the plane carefully and provide extra protection (armour) to the damaged parts in future missions. However, nothing changed. Things got worse, actually.Hungarian mathematician Abraham Wald came to the rescue. His insight was simple—the researchers were only analysing planes that survived. What about those that didn’t? His insight flipped the prevailing explanation on its head. He was able to prove that the areas with holes represented areas where a plane could be hit and still return safely. The parts of the plane without holes were the real danger. If hit there, planes did not return.

In the professional context, the merits of a formal college education are rightly debated on various forums. I agree that even the best of educational institutions have basically become high premium insurance policies but discounting the merits of a formal college education by naming college dropouts like Mark Zuckerberg and Bill Gates is a glaring abuse of survivorship bias. It ignores the hundreds of thousands of dropouts who didn’t accomplish anything. If we look at the entire spectrum of data of dropouts and their accomplishments, the picture isn’t pretty. Basically, it is very hard to prove that going to college makes someone successful or dropping out of it propels achievement.

Survivorship bias therefore paints a pretty, but an incomplete picture. It has a tendency to focus only on the visible evidence. By doing so it creates a polarized, unrealistic and inaccurate understanding of reality. To overcome survivorship bias, looking at the flip side, the missing data and forming a complete picture is important.