Survivorship Bias is one of the most deceptive and common traps in decision making.
It’s normal to examine the life stories of very successful people. Not only is it interesting by itself, but maybe we think that there is something to learn about success from them.
If they are successful, maybe we can imitate them?
The concept of survivorship bias is easy to understand but maybe not intuitive. Still, when a person does understand, it seems to be almost everywhere. That’s because it is.
There are so many examples.
It’s very common in advertising. Weight loss programs and diets feature people that look slim and trim. The ad says it’s because of the weight loss product/service. What it doesn’t tell you is that these people are the exception, the vast majority of people using the product don’t lose weight at all. They drop out. But you don’t hear about them. The promotion focuses only on the handful of winners and not the many losers, where the product/service didn’t work at all.
It’s very common in business strategy. Imagine a particular company that is successful and its competitors think of imitating the strategies of that company. But you don’t hear about the numerous other companies that tried the same ideas and failed. It may work for some or even just one company but for the majority, it doesn’t.
Here’s an example. General Electric had a human resources strategy to fire the 10% of those rated the lowest in annual performance reviews. They did this year after year. The idea was a disaster as eventually only good performers were left. Then they were fired. Of course, annual performance review ratings are highly subjective and often (maybe usually?) have nothing to do with the employee’s actual performance and contribution to a company. I’ve known a number of people who lived through this while working at General Electric, including a close relative, and each one said the policy was disastrous to productivity and morale.
In my opinion, Jack Welch was one of the most overrated CEOs in American business history. Ever. His reputation was just public relations. The long term performance of General Electric speaks for itself.
Maybe the original example of survivor bias was during World War Two. The American military asked the famous mathematician, Abraham Wald, to analyze the weakness of bombers flying over Germany. These bombers suffered a terrible survival rate and many aircrews were killed. They wanted to increase the survival rate of aircraft during these extremely dangerous bombing raids.
At first, they looked at where the returning planes were being hit by examining the bullet holes and anti-aircraft flax damage. Then strengthened those sections of the airplanes with armor.
But it occurred to Abraham that was a mistake. They were looking at the planes that survived. Not the ones that were shot down. This meant that the parts of the plane they were reinforced with additional armor were already strong because the planes were able to fly with those parts being damaged. The planes that were shot down were damaged in the parts of the plane that were being ignored! This is classic survivor bias in the most literal sense.
Looks consider some more recent and much more famous examples. The Tech Billionaires of Silicon Valley. For example, Bill Gates and Mark Zuckerberg. Their stories are legendary. Drop out of college (an Ivy League school, of course), start a tech company and the rest is history.
Dropping out of college to be successful in tech has become such a common story it could be considered a meme. It was reported all over the popular press. The billionaire Peter Theil even started a program that awards $100,000 to students who want to drop out of school and become an entrepreneur. The appeal of the college dropout beating the odds and becoming world-class successful is easy to understand. People want to think, if Gates or Zuckerberg can do it – So Can I!
It’s worth noting that as of 2013, those that earn a Bachelor’s degree earn $45,500 per year on average whereas those with only a high school diploma or a two-year associates degree earned $28,000-$30,000. Those with a college degree had an unemployment rate of 3.8% in 2013 and those only with a high school diploma were at 12.2%. About 5.8% of college graduates were living in poverty compared to 21,8% of high school graduates. It isn’t just monetary, college grads are significantly more satisfied with their careers than non-grads. This information is from the highly respected Pew Research Center.
The sad part is, many people believe this fallacy because of the Gates/Zuckerberg stories. Looking to the highly unusual, successful individual as a pattern to emulate is erroneous thinking. Every person’s situation is different.
The fact is that for virtually everyone, dropping out of college is an extremely bad idea. I used to teach at a college and lecture at major universities. It was a common scenario that an older student that had dropped out of school after high school came back to finish up their degree. Once out in the real world of work, they realized how valuable is an education.
What has been proven to result in consistent success over time is hard work (as unpleasant as some people may find that), education and personal connections.
Even the phrases of having ‘beating the odds’ or ‘big risks bring big rewards’ should be a huge red flag that there is something wrong with the logic of dropping out.
And as a final note on Silicon Valley Billionaires, please consider that Jeff Bezos has a B.S. in electrical engineering and computer science from Princeton. Elon Musk was a double major in economics and physics from Pennsylvania. Even Peter Thiel has a law degree even though he does not practice law. So much for that $100,000 to not attend college.
People want to believe that success may be caused by particular actions, characteristics, and personality traits. In fact, and very often, extreme success is just luck. Let’s spell that as L-U-C-K.
For decision making more generally, emulating the actions of some extremely successful role model may not be the best idea. It actually may backfire. Every person, company, and situation is unique. Know what that unique situation is and adapt.
