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Survivorship Bias

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Re: Survivorship Bias

#161

Post by ryandrake »

ux-app wrote: post #158
ryandrake wrote: post #144

Earlier quoted context omitted.

It's not about whether they're single-digit millionaires or billionaires. It's about falsely attributing a causal relationship between the people's actions and their success. It's about ignoring the counterfactual cases. What about the factory workers who also practiced prudent money management and did not end up millionaires? What about the many other dirt movers who worked just as hard but did not end up being the…

> It's about falsely attributing a causal relationship between the people's actions and their success. Yes of course that's the definition of survivorship bias. For the most part that doesn't apply to most rich (>$1mm net worth for argument's sake) people. The vast majority of millionaires achieved their success in a perfectly repeatable fashion. This is self evident. How many people globally are at the Zuckerberg ti…

I think you're helping to make my point, so thanks!

For every $1mm net worth person who chose a safe boring white collar job, ran a local service business, or saved aggressively over decades, I'll show you ten people who who attempted a safe boring white collar job, tried to run a local service business, or planned to save aggressively over decade, but did not achieve $1mm net worth.

Re: Survivorship Bias

#162

Post by jerf »

EduardoBautista wrote: post #160
jerf wrote: post #151

Earlier quoted context omitted.

No, that would completely miss the point. This isn't about inequality or privilege, this is about survivorship bias. The entire point is to completely remove all those issues in a way that makes it obvious to everybody that the only possible explanation in this made-up example is blind luck. In the real world, it isn't all blind luck, but sometimes there are cases where the luck signal does in fact overwhelm everythi…

Yes, and these are _extreme_ examples. Examples that try to make success appear to be just luck.

"The entire point is to completely remove all those issues in a way that makes it obvious to everybody that the only possible explanation in this made-up example is blind luck."

Re: Survivorship Bias

#163

Post by reallydontask »

crusso wrote: post #102
graphitezepp wrote: post #99

Earlier quoted context omitted.

I certainly agree that your better off throwing your full efforts at well, anything other than lotto tickets, is the better decision but it is extraordinarily unlikely in the example of music that you achieve something resembling a decent career regardless of talent and hardwork. More like you get more popular at parties.

It varies. My uncle had a band and toured the small venue scene in South Louisiana back in the day. My mom was a chorus singer in the New Orleans opera company. Both made varying levels of careers out of their talents and hard work. Both were popular at parties.

isn't this a case of survivorship bias?

after all, just because it worked for you uncle and mother doesn't really mean that it works for anybody else.

Re: Survivorship Bias

#166

Post by ux-app »

ryandrake wrote: post #161
ux-app wrote: post #158

Earlier quoted context omitted.

> It's about falsely attributing a causal relationship between the people's actions and their success. Yes of course that's the definition of survivorship bias. For the most part that doesn't apply to most rich (>$1mm net worth for argument's sake) people. The vast majority of millionaires achieved their success in a perfectly repeatable fashion. This is self evident. How many people globally are at the Zuckerberg ti…

I think you're helping to make my point, so thanks! For every $1mm net worth person who chose a safe boring white collar job, ran a local service business, or saved aggressively over decades, I'll show you ten people who who attempted a safe boring white collar job, tried to run a local service business, or planned to save aggressively over decade, but did not achieve $1mm net worth.

> I'll show you ten people who who attempted a safe boring white collar job, tried to run a local service business, or planned to save aggressively over decade, but did not achieve $1mm net worth

For the purpose of this discussion that's irrelevant.

As you yourself stated

> [Survivorship bias is] about falsely attributing a causal relationship between the people's actions and their success

Given that within a 50km radius of wherever you currently are in the world there are almost certainly 1000s of people with >$1mm net worth it would be absurd to think that they achieved this outcome through actions which had little or no causal relationship to their success.

The numbers speak for themselves. In Australia where I'm from there are approx 234,000 high net worth individuals (HNWI) (defined as having more than US$1 million ($1.35 million) in investable assets, excluding their primary residence, collectibles and consumables). We have 8 capital cities. Using a simple naive, even, distribution gives approx 30,000 people per capital city that fit this definition.

This means that being "rich" is relatively common. If it's common, then it's silly to think that all these people got rich through actions that have little or no

>causal relationship between the people's actions and their success

The uncomfortable conclusion which follows from this is that if you're not rich by this definition you're not trying hard enough.

Edit:

and just to put those numbers into further context, In AU there are approx 70,000 flu cases in 2015. In the same year approx 9,000 new HNWI joined the ranks. Becoming "rich" is almost as common as getting the flu!

Re: Survivorship Bias

#167

Post by Jeremalloch »

ryandrake wrote: post #161
ux-app wrote: post #158

Earlier quoted context omitted.

> It's about falsely attributing a causal relationship between the people's actions and their success. Yes of course that's the definition of survivorship bias. For the most part that doesn't apply to most rich (>$1mm net worth for argument's sake) people. The vast majority of millionaires achieved their success in a perfectly repeatable fashion. This is self evident. How many people globally are at the Zuckerberg ti…

I think you're helping to make my point, so thanks! For every $1mm net worth person who chose a safe boring white collar job, ran a local service business, or saved aggressively over decades, I'll show you ten people who who attempted a safe boring white collar job, tried to run a local service business, or planned to save aggressively over decade, but did not achieve $1mm net worth.

The issue is that of the three issues you listed, they aren't all due to luck. There is some degree of chance associated with running a business, but you're missing that there is a difference between 'planning to save aggressively' and saving aggressively, which is a matter of living below your means. There's no luck in how much of your paycheck you put towards your savings account.

Re: Survivorship Bias

#168

Post by et-al »

thenomad wrote: post #33
arximboldi wrote: post #28

Earlier quoted context omitted.

> It is not that hard to become a millionaire, way easier than being a salaried person Sure. If it is not so hard, everyone would do it. If everyone was a millionaire, who would do actual unpleasant work? Who would clean, run hospitals, build infrastructure? Who would work for your startup so you can make money? Your comment is such an example of survivorship bias! Capitalism is a competition. You won, good for you.…

The "actual unpleasant work" is to a significant extent the domain of entrepreneurs. For example, cleaning companies - often started by one person doing the cleaning - are an absolutely textbook example of entrepreneurship. Some of those entrepreneurs then become millionaires :) (Updating this post: obviously a lot of unpleasant work is done by non-entrepreneurs. But the maxim of "find something necessary but unpleas…

Along those lines, the idea of meeting a millionaire who makes bottle caps tickles me more than meeting most well known entrepreneurs like Phil Knight. Something about commonplace, yet invisible products.

Re: Survivorship Bias

#169

Post by [deleted] »

crusso wrote: post #75
pg314 wrote: post #66

Earlier quoted context omitted.

> There's no survivorship bias in going to med school, becoming a specialist and then earning 400k/yr. There is, just not as pronounced as in the lottery example. You ignore all the students who failed or dropped out of med school, didn't make the cut to become a specialist, or had to take a job that didn't make 400k/yr.

But if some make it to med school but then don't succeed, how many of those failure cases ended up not working hard enough? Once you have a class of medical students, it's not a lottery system on who succeeds. Short of those who, through no fault of their own, run out of money or have some unfortunate circumstance that takes them out of the program - the ones who succeed seem very likely to have made it on merit of s…

[deleted]

Re: Survivorship Bias

#170

Post by 989throwaway66 »

frgtpsswrdlame wrote: post #120
989throwaway66 wrote: post #65

Earlier quoted context omitted.

I am a small business owner, doing unpleasant work. My business has been doing well, exactly because it is unpleasant: a lot of people want to outsource what I do, even if it is a bit expensive. I also have found that many people are OK to do some jobs for me that I find really really unpleasant. You need to find the right person for the right "unpleasant" though. This is the beauty of capitalism. And I am now a mill…

How much of your success would you attribute to "luck"? How much to your upbringing?

Quite a bit. Good brain, good upbringing, good education, that's my biggest luck in life.

I got lucky with finding that opportunity that really met my skills. But I actually had been looking for one for a while, so it's half lucky. And nobody gave me money. I forced it then, and ever since, because nothing comes easy.

But I am lucky also because I don't have a very strong competition. But maybe because I am in a niche, so not fully lucky?

Sorry for being not very specific in all this...

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