What does it mean to be the exception? You know someone who smoked their whole adult life and lived to be 95. Is that person the rule or the exception? What does that even mean? It matters because if you think it’s the rule, then go smoke. There’s no reason you won’t live to be 95. That guy did it, right? Or what if they’re the exception? The rule is that you die early but there are exceptions? Or what if neither of those is the way to think about it? Then what is? The rule of probabilities. You have a hundred people and on average, 28 people will die 10 years early, and 42 people will die at least 5 years early. But here’s the problem. If you take one group of 100, you might have just 14 people who die 10 years early. And another might be 40 people. So how do you make your decision? You base it on probabilities. If I want a 95% chance of living as long as I can, then I don’t smoke. That’s because on average if you smoke, you won’t live as long. Hey but I know a guy who smoked and lived to be 100…is not the right way to think about it.
So how do you make decisions about what lotto ticket to buy?
How do you decide which career to choose? Red light to run? Amount to exceed the speed limit?
Everything we do is based on probabilities. We don’t realize it but we are calculating them every day. When you decide to drive 45MHP instead of 40MPH, you’re most likely calculating the odds. Why don’t you drive 70MPH? Some will only drive exactly 40MPH but many will speed. Why? Because we estimate that we can get away with it. Based on experience, we calculate we have a 99.9% chance of not getting caught or a ticket. This is based on a long observation on all of our driving.
But what if you don’t have all of those observations to base your decision on?
What if you’re trying to choose a career and you only have a few data points. Your Aunt Betty, the lawyer. Your Uncle Frank, the truck driver. How do you decide then?
It has to do with making policy.