Strategy. Innovation. Brand.

Survivorship Bias

Protect the engines.

Protect the engines.

Are humans fundamentally biased in our thinking? Sure, we are. In fact, I’ve written about the 17 biases that consistently crop up in our thinking. (See here, here, here, and here). We’re biased because we follow rules of thumb (known as heuristics) that are right most of the time. But when they’re wrong, they’re wrong in consistent ways. It helps to be aware of our biases so we can correct for them.

I thought my list of 17 provided a complete accounting of our biases. But I was wrong. In fact, I was biased. I wanted a complete list so I jumped to the conclusion that my list was complete. I made a subtle mistake and assumed that I didn’t need to search any further. But, in fact, I should have continued my search.

The latest example I’ve discovered is called the survivorship bias. Though it’s new to me, it’s old hat to mathematicians. In fact, the example I’ll use is drawn from a nifty new book, How Not to Be Wrong: The Power of Mathematical Thinking by Jordan Ellenberg.

Ellenberg describes the problem of protecting military aircraft during World War II. If you add too much armor to a plane, it becomes a heavy, slow target. If you don’t add enough armor, even a minor scrape can destroy it. So what’s the right balance?

American military officers gathered data from aircraft as they returned from their missions. They wanted to know where the bullet holes were. They reasoned that they should place more armor in those areas where bullets were most likely to strike.

The officers measured bullet holes per square foot. Here’s what they found:

Engine                     1.11 bullet holes per square foot

Fuel System              1.55

Fuselage                   1.73

Rest of plane             1.8

Based on these data, it seems obvious that the fuselage is the weak point that needs to be reinforced. Fortunately, they took the data to the Statistical Research Group, a stellar collection of mathematicians organized in Manhattan specifically to study problems like these.

The SRG’s recommendation was simple: put more armor on the engines. Their recommendation was counter-intuitive to say the least. But here’s the general thrust of how they got there:

  • In the confusion of air combat, bullets should strike almost randomly. Bullet holes should be more-or-less evenly distributed. The data show that the bullet holes are not evenly distributed. This is suspicious.
  • The data were collected from aircraft that returned from their missions – the survivors. What if we included the non-survivors as well?
  • There are fewer bullet holes on engines than one would expect. There are two possible explanations: 1) Bullets don’t strike engines for some unexplained reason, or; 2) Bullets that strike engines tend to destroy the airplane – they don’t return and are not included in the sample.

Clearly, the second explanation is more plausible. Conclusion: the engine is the weak point and needs more protection. The Army followed this recommendation and probably saved thousands of airmen’s lives.

It’s a colorful example but may seem distant form our everyday experiences. So, here’s another example from Ellenberg’s book. Let’s say we want to study the ten-year performance of a class of mutual funds. So, we select data from all the mutual funds in the category from 2004 as the starting point. Then we collect similar data from 2014 as the end point. We calculate the percentage growth and reach some conclusions. Perhaps we conclude that this is a good investment category.

What’s the error in our logic? We’ve left out the non-survivors – funds that existed in 2004 but shut down before 2014. If we include them, overall performance scores may decline significantly. Perhaps it’s not such a good investment after all.

What’s the lesson here? Don’t jump to conclusions. If you want to survive, remember to include the non-survivors.

Leave a Reply

Your email address will not be published. Required fields are marked *

My Social Media

YouTube Twitter Facebook LinkedIn

Newsletter Signup